[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
H.R. 2513, A BILL DIRECTING THE ADMINISTRATOR OF GENERAL SERVICES TO
ACQUIRE A POSTAL SERVICE BUILDING IN TERRE HAUTE, IN
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
of the
COMMITTEE ON GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
ON
H.R. 2513
TO DIRECT THE ADMINISTRATOR OF GENERAL SERVICES TO ACQUIRE A BUILDING
LOCATED IN TERRE HAUTE, INDIANA, AND FOR OTHER PURPOSES
__________
SEPTEMBER 29, 1999
__________
Serial No. 106-118
__________
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
64-490 WASHINGTON : 2000
______
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, Idaho (Independent)
DAVID VITTER, Louisiana
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
David A. Kass, Deputy Counsel and Parliamentarian
Carla J. Martin, Chief 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
Bonnie Heald, Director of Communications/Professional Staff Member
Chip Ahlswede, Clerk
Michelle Ash, Minority Counsel
Trey Henderson, Minority Counsel
C O N T E N T S
----------
Page
Hearing held on September 29, 1999............................... 1
Text of H.R. 2513............................................ 2
Statement of:
Creed, Gordon, Deputy Assistant Commissioner for Property
Disposal, Public Buildings Service, General Services
Administration............................................. 33
Jenkins, Jim, Terre Haute, IN................................ 17
Nation, Todd, Save the Architecturally Magnificent Postal
Station, Downtown Terre Haute, Inc......................... 20
Pease, Hon. Edward A., a Representative in Congress from the
State of Indiana........................................... 9
Rynne, Edward J., Jr., real estate specialist, Asset
Management Group, U.S. Postal Service...................... 40
Whitlock, James, Assistant Regional Administrator for Public
Building, Great Lakes Region (Region 5), General Services
Administration............................................. 28
Letters, statements, et cetera, submitted for the record by:
Creed, Gordon, Deputy Assistant Commissioner for Property
Disposal, Public Buildings Service, General Services
Administration, prepared statement of...................... 35
Horn, Hon. Stephen, a Representative in Congress from the
State of California:
Letter dated September 27, 1999.......................... 27
Prepared statement of.................................... 4
Jenkins, Jim, Terre Haute, IN, prepared statement of......... 19
Nation, Todd, Save the Architecturally Magnificent Postal
Station, Downtown Terre Haute, Inc., prepared statement of. 23
Pease, Hon. Edward A., a Representative in Congress from the
State of Indiana, prepared statement of.................... 11
Rynne, Edward J., Jr., real estate specialist, Asset
Management Group, U.S. Postal Service, prepared statement
of......................................................... 41
Turner, Hon. Jim, a Representative in Congress from the State
of Texas, prepared statement of............................ 7
Whitlock, James, Assistant Regional Administrator for Public
Building, Great Lakes Region (Region 5), General Services
Administration, prepared statement of...................... 30
H.R. 2513, A BILL DIRECTING THE ADMINISTRATOR OF GENERAL SERVICES TO
ACQUIRE A POSTAL SERVICE BUILDING IN TERRE HAUTE, IN
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WEDNESDAY, SEPTEMBER 29, 1999
House of Representatives,
Subcommittee on Government Management, Information,
and Technology,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2203, Rayburn House Office Building, Hon. Stephen Horn
(chairman of the subcommittee) presiding.
Present: Representatives Horn, Ose, Turner, and Mink.
Also present: Representative Waxman.
Staff present: J. Russell George, staff director and chief
counsel; Randy Kaplan, counsel; Bonnie Heald, communications
director and professional staff member; Chip Ahlswede, clerk;
P.J. Caceres and Deborah Oppenheim, interns; Michelle Ash and
Trey Henderson, minority counsels; and Jean Gosa, minority
staff assistant.
Mr. Horn. A quorum being present, this hearing of the House
Subcommittee on Government Management, Information, and
Technology will come to order.
The focus of today's hearing is H.R. 2513, introduced by
our colleague from Indiana, Representative Ed Pease. This bill
is of great importance to Mr. Pease's constituents, the people
of Terre Haute, IN.
The bill would direct the Administrator of General Services
to acquire a Postal Service building located in downtown Terre
Haute. The building, a three-story Indiana limestone structure,
was constructed in 1935 through a Depression-era public works
project. The building is listed on the National Register of
Historic Places, but it is sorely in need of repair.
Historically, the building has housed Federal courts, the
Post Office and several other Federal offices, including the
Social Security Administration, the Federal Bureau of
Investigation, and the Internal Revenue Service. Following the
Postal Reorganization Act of 1970, the building was transferred
from the Federal inventory to the U.S. Postal Service. Because
of its declining condition, however, a number of Federal
tenants have already moved out. Without repair and
modernization, the local community fears that the remaining
tenants, including the Postal Service, will also leave. The
General Services Administration has estimated it will cost
between $4 million and $5 million to renovate the aging
building.
In 1997, the Postal Service's main processing and
distribution operation moved from the downtown building to a
new location; however, a small retail outlet still remains at
the site. In addition, building tenants include the U.S.
district and bankruptcy courts, the Federal Bureau of
Investigation, the U.S. attorney, the U.S. Marshal, and
Representative Pease's district office.
The subcommittee marked up the bill and reported it to the
full committee without amendment on September 22, 1999. Today's
hearing is being held at the request of the ranking member of
the full committee Mr. Waxman and the subcommittee's ranking
member, Mr. Turner, both of whom requested further
consideration of this legislation.
We have a knowledgeable group of witnesses before us today.
We will hear from Representative Pease; local officials,
including the mayor of Terre Haute, Jim Jenkins. We will also
hear from representatives of both the Postal Service and the
General Services Administration. We want to learn about the
Postal Service's efforts to maintain this historic structure
and potential restoration plans under the property management
leadership of the General Services Administration.
We welcome the witnesses. We look forward to your
testimony.
[The text of H.R. 2513 and the prepared statement of Hon.
Stephen Horn follow:]
106th CONGRESS
1st Session
H. R. 2513
To direct the Administrator of General Services to acquire a building
located in Terre Haute, Indiana, and for other purposes.
______
IN THE HOUSE OF REPRESENTATIVES
July 14, 1999
Mr. Pease introduced the following bill; which was referred to the
Committee on Government Reform, and in addition to the Committee on
Transportation and Infrastructure, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
______
A BILL
To direct the Administrator of General Services to acquire a building
located in Terre Haute, Indiana, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. ACQUISITION OF BUILDING.
(a) Acquisition.--The Administrator of General Services shall
acquire by transfer from the United States Postal Service the real
property and improvements located at 30 North Seventh Street in Terre
Haute, Indiana.
(b) Reimbursement.--The transfer under subsection (a) shall be made
without reimbursement, except that the Administrator shall provide to
the Postal Service an option to occupy 8,000 square feet of renovated
space in the building acquired under subsection (a) at no cost for a
20-year term.
SEC. 2. RENOVATION OF BUILDING.
(a) In General.--The Administrator of General Services shall
renovate the building acquired under section 1, and acquire parking
spaces, to accommodate use of the building by the Administrator and the
United States Postal Service.
(b) Authorization of Appropriations.--Subject to the requirements
of section 7(a) of the Public Buildings Act of 1959 (40 U.S.C. 606(a)),
there is authorized to be appropriated to carry out this section
$5,000,000 for fiscal years beginning after September 30, 1999. Such
sums shall remain available until expended.
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Mr. Horn. I now yield to the gentleman from Texas Mr.
Turner, the ranking member of the subcommittee, for an opening
statement.
Mr. Turner. Thank you, Mr. Chairman. It is appropriate that
we have this hearing and that the GSA has expressed some
reservations about the project. I am personally very
sympathetic to Mr. Pease's legislation. Being from a small town
myself, I understand how important it is to preserve the
downtown area. I think it is very important for us to have this
hearing today because the bill would transfer the building to
the General Services Administration, with reservations being
expressed by the GSA. It is important that we get them ironed
out and get the matter resolved satisfactorily in order for the
legislation to ultimately be meaningful.
So hopefully today, by having this hearing, all parties
have the opportunity to express their point of view. It is my
hope that the ultimate outcome will be to see this building
restored, its historical significance preserved, and it be an
enhancement, rather than a detraction, to the downtown of the
hometown of my good friend Ed Pease.
Thank you, Mr. Chairman.
Mr. Horn. Well, thank you. I also came from a small town,
and I agree with you, and we hope that the preservation aspects
and the historic value would be worth saving.
[The prepared statement of Hon. Jim Turner follows:]
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Mr. Horn. I want to now welcome the gentleman from Indiana,
Mr. Pease to introduce the witnesses, and then he is welcome to
join us here at the dais if he would like to pursue questions.
So, Mr. Pease.
STATEMENT OF HON. EDWARD A. PEASE, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF INDIANA
Mr. Pease. Thank you, Mr. Chairman, Mr. Turner, the ranking
minority member, to you and your staffs and the other members
of the subcommittee with whom I have met and with whom my staff
has met over the period of time in which we have worked
together to try and reach an appropriate resolution of an
admittedly difficult situation involving formerly Federal and
now Postal Service property in Terre Haute, IN.
I have prepared a statement that goes into much greater
detail than I plan to orally and would request, Mr. Chairman,
that that statement be included in the record.
Mr. Horn. Without objection, it will be included at this
point.
Mr. Pease. Thank you, Mr. Chairman.
Briefly, the background of the situation is this: The
building that is currently occupied by the--that is owned by
the U.S. Postal Service at Seventh and Cherry Streets in Terre
Haute, IN, was originally a Federal building. It was a WPA
building, and it housed a number of Federal agencies and the
Post Office for many years until the Postal Reorganization Act
divided some properties between the Federal inventory and the
U.S. Postal Service, and this property, which was the main
postal facility in western Indiana, was transferred to the
Postal Service. In its modernization program of the last 25
years, eventually there was built a new distribution center
closer to the interstate in Terre Haute, IN, and the need for
the extensive amount of space that the Postal Service had
required before was no longer there.
The building has included a number of Federal agencies
through the course of its history. Some are still there. Most
prominent among them, the U.S. District Court, the bankruptcy
court, the FBI, the Marshal Service and several others, but
those being the most prominent ones. One of our district
offices is located in this building as well.
The building is typical of many buildings from the WPA era.
It is an imposing building. You will be told more about it, but
it is also a large building that needs maintenance, and which
the Postal Service has done the best they can, I believe,
through the period of their stewardship. But to make the
building more attractive and more competitive for other tenants
is going to require more work, and the Postal Service has made
it clear, and I do understand, that their major priority is
delivering the mail. Management of buildings is secondary to
that goal, and their presence in this building will be much
reduced from what it was before, leaving them with a large
building to manage really outside of the realm of their primary
mission.
The Terre Haute community, like many communities, has had
difficulty in maintaining its downtown area, despite
commitments by the city and by Indiana State University, which
is an urban campus in downtown Terre Haute. There has been
progress made, particularly in the most recent past, in trying
to turn that around. The city has made substantial investments
in the downtown area, but this is the most prominent historic
building in downtown Terre Haute, and its presence as an anchor
for the business and government activities of downtown Terre
Haute is critical to the success of the efforts of the city,
the Chamber and others to make the downtown area more viable
than it has been in the recent past.
Because the building is not as attractive in terms of
office space and other facilities in Terre Haute have been, we
have seen some of the Federal agencies that used to occupy that
building move to private commercial leases in other space
within the city of Terre Haute. Most prominent among them are
the Internal Revenue Service, the Social Security
Administration, the armed services recruiting offices, and the
Department of Agriculture, although there are others. It is our
belief that if this building is transferred, as we propose it
should be, to the General Services Administration, which is in
the business of managing buildings, and if we provide the
resources that are necessary to make the building as attractive
as we would like for it to be, that when those other leases
expire for Federal space that is being rented elsewhere in
Terre Haute, those tenants could be brought back to the Federal
building, fully occupy the building, and make it a viable,
government center for the city of Terre Haute, as well as
preserve the historic integrity of the building and its
importance in the downtown community.
We have worked with the Postal Service and the GSA for
almost 2 years on this project, trying to find ways that will
work to the best advantage of everyone. We are convinced that
this is the best proposal at this time, but we remain open to
further conversations and discussions as the matter progresses.
Thank you, Mr. Chairman, Mr. Ranking Member.
[The prepared statement of Hon. Edward A. Pease follows:]
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Mr. Horn. Well, if you would like to join us now, and if
you could introduce the witnesses, we would like to hear from
them, and please come up here and introduce them one at a time,
and then we will ask the General Services Administration and
the Postal Service to speak.
Mr. Pease. Thank you, Mr. Chairman. I think first I should
introduce the mayor.
Mr. Horn. Let me swear in everybody just so we do not have
to go through this every time. Why don't you all stand up. This
is an investigatory committee of government reform, so
everybody is sworn.
[Witnesses sworn.]
Mr. Horn. The clerk will note that all five witnesses have
affirmed.
Mr. Pease. Mr. Chairman, would you like me to introduce
everyone at the same time, or introduce one at a time and let
them present?
Mr. Horn. One at a time, and in the order you would like
them to testify.
Mr. Pease. Thank you, Mr. Chairman.
The mayor of the city of Terre Haute is my good friend Jim
Jenkins. Mayor Jenkins was the sheriff in Vigo County before he
became the mayor of the city of Terre Haute. He has worked for
years in community service in a variety of capacities, and he
has been one of the leaders in trying to find appropriate ways
to partner public and private investment in the city of Terre
Haute to revitalize the downtown and to preserve our historic
structures there.
Mayor Jenkins has been part of our conversations from the
first day in trying to find a way to resolve this positively
and productively. I am grateful that he is here, the Honorable
Jim Jenkins.
STATEMENT OF JIM JENKINS, TERRE HAUTE, IN
Mr. Jenkins. Good morning, Mr. Chairman, gentlemen. Thank
you very much for allowing us to appear and speak to you today.
We appreciate the opportunity.
Approval of this bill is in the best interests of the city
of Terre Haute, IN, and its citizens and businesses. We believe
the existing Post Office building in downtown Terre Haute
currently serves broad clientele that is important to our
downtown. Major users of this Post Office include Indiana State
University, Indiana Regional Government Center, City Hall, the
Vigo County courthouse, and also our downtown retail and office
community.
The city of Terre Haute is working very hard to improve
this downtown to make the city a more desirable place for
people to choose to live and to enhance the marketability of
the community as a whole.
A new vision statement has also been adopted to guide our
downtown development. Businesses are converting upper floor
space to apartments, building facades are being restored, the
streetscape is being enhanced, an art museum is being
renovated, and a major mixed-use urban renewal project is under
way. The Post Office renovation has the potential of being the
next major downtown civic improvement project.
The Terre Haute community is working together in a united
front to maintain the Post Office downtown and see that this
building is restored. Entities such as Indiana State
University; Downtown Terre Haute, Inc.; the Alliance for Growth
& Progress; the Chamber of Commerce, both of whom are
represented here today with the Alliance director Mr. Bill
Price, the Chamber of Commerce incoming chairman Mr. Thomas
Francis is also with us today; the Indiana Landmarks
Foundation, and also local government, we are committed to the
purpose of and the adoption of H.R. 2513.
I believe the Post Office should remain in its present
downtown location for the convenience of the public. The
building is certainly able to accommodate the space needs of
the Post Office, especially now that they have been reduced. In
addition, there are a number of other Federal offices in Terre
Haute that could be consolidated into this downtown building
that are now scattered throughout the city. Moving these
offices to a building that is already owned by the Federal
Government would save money, we believe, and be beneficial to
the downtown economy.
I was born and raised in Terre Haute, a citizen, and have
lived there all my life, served in public office, and I have
seen Terre Haute change a great deal, especially over the past
30 years. Prior to the building of the interstate, which is
located south of the city about 3 miles, U.S. 40 was the main
route through the middle of town, the National Road, as you may
be aware of, going from the east coast all the way to St.
Louis. Once the interstate was constructed, the downtown
virtually moved 3 miles south of its original location. The
retail and commercial shopping all centered and located around
the interstate, and as such, the downtown languished and
withered over those 25 or so years. It finally bottomed out, if
you will, buildings being torn down and businesses moving out,
and the community as a whole has decided over the past 5 to 7
years that we must restore the heart and soul of the community
of Terre Haute, and that is its downtown.
It is a story not unlike many others throughout the Midwest
where the downtown has withered, languished, and we want to
show the rest of the world that the community of Terre Haute
has a past, has a history that we are very proud of, and it
also has a very viable heart and soul, and that is the
downtown.
This particular building is very prominent in the downtown.
It is just a half block off the National Road. It would serve
any number of purposes, it does serve any number of purposes,
especially as a tie to the university. The university is
separated from the downtown again by one block. This particular
building allows for Post Office boxes and mailing services,
window services and other kinds of services for the students at
Indiana State University.
So we believe it does any number of things, but it is
essential to us restoring our heart and soul, and we would
appreciate greatly your support of the adoption of Congressman
Pease's bill. Thank you.
[The prepared statement of Mr. Jenkins follows:]
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Mr. Pease. Mr. Chairman, I would next like to introduce
Todd Nation. Todd is a businessman in downtown Terre Haute, has
been actively involved in Downtown Terre Haute, Inc., but he
has also been involved in the historic preservation programs of
the community and in a particular volunteer civic association
whose goal it was to maintain a postal presence in this
building and to maintain the viability of this building.
As an aside, I note for the chairman's benefit that Todd
owns an independent book shop in downtown Terre Haute, because
the chairman looks for independent book shops whenever he
travels, and I hope someday we will get you to downtown Terre
Haute and you can go to BookNation.
Todd Nation.
STATEMENT OF TODD NATION, SAVE THE ARCHITECTURALLY MAGNIFICENT
POSTAL STATION, DOWNTOWN TERRE HAUTE, INC.
Mr. Nation. Thank you, Congressman, Mr. Chairman. As Ed
said, my name is Todd Nation. I have traveled here at Chairman
Horn's invitation to represent the business community of
downtown Terre Haute, IN. I own and run BookNation, a small,
independent book shop on Wabash Avenue, about a block from the
historic Post Office and Federal building in question here
today.
As a long-time member and immediate past president of our
local Main Street organization, Downtown Terre Haute, Inc., I
have been very involved with local efforts to persuade the U.S.
Postal Service to keep downtown's post office box and window
services in the Post Office and Federal building. My neighbors
and I agree that the historic facility is in the neighborhood's
best location for these services.
We also believe that this property should again become the
central location for Federal offices like the IRS, Social
Security, military recruiters, and the Department of
Agriculture, as the mayor just said. Those offices and others
are now scattered throughout the community, while space within
our taxpayer-built Post Office and Federal building has sat
empty downtown for years.
STAMPS Downtown, our organization. In 1997, the U.S. Postal
Service announced their intention to relocate all postal
functions housed in the historic main station. Offices, sorting
machinery, fleet parking, retail windows and other operations
were consolidated in the new Terre Haute postal facility at the
southern edge of town. Luckily, Postmaster Ken Hartweck
recognized the need to maintain post office box and window
service somewhere downtown, but he began advertising for
leasable space to locate a new retail unit within a mile of the
historic facility. Most available options would be too far away
from their neighborhood customer base, most of whom now walk to
the centrally located Post Office and Federal building.
These announcements caused great concern in the downtown
community. Neighborhood businesses and residents joined forces
with local government, Indiana State University, the Historic
Landmarks Foundation of Indiana, our Chamber of Commerce and
other local, not-for-profit agencies in an extraordinary
demonstration of community resolve to form Save the
Architecturally Magnificent Postal Station Downtown, known by
its acronym, STAMPS Downtown. We have been very fortunate to
have the support of our Congressman Ed Pease, who has helped us
carry our message all the way here to you in Washington, DC.
Why this legislation is necessary.
This situation merits your attention for a number of
reasons. I will briefly explain the top three. No. 1, restoring
the Post Office and Federal building to accommodate postal
retail operations and relocated Federal offices will save
taxpayers money and serve us better in the long run. Renting
offices and parking lots throughout the city, while our
historic and centrally located downtown facility deteriorates
further, is wasteful. Local taxpayers expect better stewardship
of our funds and facilities than we have seen in recent years.
No. 2, the General Services Administration ownership of the
Post Office and Federal building will ensure proper maintenance
and management of this taxpayer-built landmark. Postal
officials have repeatedly cited the high cost of remodeling and
maintenance as being their primary reasons for looking
elsewhere for space.
No. 3, keeping post office box and window services in the
historic facility is the best thing that the Federal Government
can do to help support State and local efforts to revitalize
downtown Terre Haute. A regional State office building was
established about a block away from the Post Office and Federal
building a few years ago. In the past 2 years, local
initiatives have aided the development of housing for nearly
100 new residents within two blocks of the old Post Office.
Those are all people who would use this facility and continue
to use it. Indiana State University has recognized the
importance of having an attractive, convenient downtown at
their southern border and has repeatedly stated their wish to
have postal services maintained where they are.
Why doesn't the USPS just stay there?
Throughout many meetings and discussions that we have had
with the U.S. Postal Service, the only vision that postal
officials could articulate for the Post Office and Federal
building was their intention to try and find a suitable tenant
to lease the building, but they made it clear that they did not
intend to invest in upgrading the facility to make it more
appealing. The USPS's advertised rental rates per square foot
are also considerably higher than those of similar downtown
office and retail space.
The more information that we gathered about the U.S. Postal
Service's management of this property, the more alarmed members
of the STAMPS Downtown became. Local opinions were expressed
through letters to elected and USPS officials, on the editorial
page of the Tribune Star, our local newspaper, and in public
meetings where the Postmaster and other USPS officials were
begged to reconsider their plans for downtown service and the
historic facility.
The members of STAMPS Downtown hereby ask you to lead your
fellow Representatives to the best solution for all parties
involved. In H.R. 2513, Congressman Pease has proposed a
solution to this set of problems that balances taxpayer
concerns with the long-term
maintenance and management needs of our historic Terre Haute
Post Office and Federal building.
I stand ready to answer any questions that you might have
about our organization's support of this legislation.
Mr. Horn. Thank you very much.
[The prepared statement of Mr. Nation follows:]
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Mr. Horn. I would ask Mr. Pease, is this the last witness
locally?
Mr. Pease. Yes, Mr. Chairman.
Mr. Horn. I would like to read into the record the
testimony of another witness from Terre Haute. I happen to know
this gentleman to be a person of high integrity and a great
educator. John W. Moore, president of Indiana State University
at Terre Haute, happened to be a colleague of mine when I was
president of California State University in Long Beach, and he
chaired and was president of the Stanislaus campus, which is a
growing campus in the central valley, and he writes me this
note:
I am writing to support the GSA receiving ownership of the
Terre Haute Office and Federal Building from the United States
Postal Service. It is crucial to the day-to-day operations of
Indiana State University and others that the Federal building
have a landlord that will maintain and invest in its historic
significance and the services it provides to the community.
Indiana State University, located adjacent to the Federal
building, employs over 1,700 faculty and staff, serves a
student population of nearly 11,000, over half of whom live on
campus and some 500 of whom are international students. Also,
each summer the university hosts literally thousands who come
to the campus to participate in Hoosier Boys and Girls State,
Special Olympics, Summer Honors, State Police, cheerleader and
other such camps, to name but a few. The sheer volume of mail
flowing in and out of the campus is staggering, not to mention
the foot traffic to and from the Federal building.
Also within the block housing the Federal building and in
close proximity are the offices of the Vigo County School
Corp., the Deming Center, a residential facility housing the
elderly, city and county government operations, downtown
merchants and businesses, a bus terminal. And a new city center
project is currently under construction directly behind the
Federal building.
Revitalization of Downtown Terre Haute is critical to the
city and university leadership and those we serve. A vital
Wabash Valley depends on the revitalized downtown district, and
the Federal building is a major component to that success. I
strongly urge your endorsement of this effort.
My respect and best wishes go to you and your colleagues in
the House with this letter.
Sincerely, John W. Moore, President, Indiana State
University.
Without objection, that letter then will also be put in the
record at this point.
[The information referred to follows:]
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Mr. Horn. So now we are pleased to have the experts on the
Federal Government side, and we will start with Mr. James
Whitlock, the Assistant Regional Administrator for Public
Buildings in the Great Lakes region, region 5, of the General
Services Administration. We thank you very much, Mr. Whitlock.
We are happy to have you here, and we look forward to your
testimony. Please proceed.
STATEMENT OF JAMES WHITLOCK, ASSISTANT REGIONAL ADMINISTRATOR
FOR PUBLIC BUILDING, GREAT LAKES REGION (REGION 5), GENERAL
SERVICES ADMINISTRATION
Mr. Whitlock. Thank you, Mr. Chairman. We, too, have
submitted an opening statement, and I would like to submit that
for the record and just sort of summarize some points.
Mr. Horn. Without objection, it will be inserted in the
record at this point.
Mr. Whitlock. It is impossible for us to disagree with the
Congressman and the mayor representing the downtown, and the
university president. The goals that are being outlined there,
we face those in every one of the cities of this size with
buildings of this character, especially one as attractive,
historic, one that has murals. I mean, it has all of the
ramifications of the types of things that should be preserved.
And you can tell from the last couple of years of activity that
there has been a lot of attempts to find ways to do that, and
we have not yet found any. And one of the attempts--and this is
not something just in Terre Haute. It happens in community
after community. Finding ways to accomplish this is very
difficult.
The Congressman outlined some of the agencies that are in
the community. GSA is no longer a monopoly. We have not the
ability to order them to the space. It is interesting how
Agriculture, which is basically funded through the State
universities, tends to be, or demands to be located at the edge
of town, serving farmers. They refuse to come downtown, and
they think that is the proper thing for them to do, so they do
it because they think that is the right answer, not because
they are obstructionists about rebuilding downtowns.
Recruiting, which you may have read in this morning's USA
Today, is not meeting their goals. They tend to move wherever
the movie theaters are, wherever they can pick up candidates
for the services. So they are very concerned about getting
close to where they see potential recruits.
The last two agencies that are perhaps candidates, IRS and
SSA, they moved from the building not so much because the space
is not attractive, that is not their issue. They usually base
their discussions on the need to be handicap-accessible, which
is normally a first floor or a single location without steps.
They stressed adequate parking as being very important because
they are becoming customer-service agencies. But the most
critical issue is it wraps around; going back into the Postal
Service building is a technological difficulty with the
functional obsolescence of getting cabling and wiring into
those work stations, so they prefer to do that in a more modern
building where they can do that at a lower cost.
So there is a set of practical reasons why this just does
not fall into place as we all wish it would. Based on that, GSA
has taken the position that this is probably not a good
building for us to own. We do not disagree we can manage it,
that is not the issue. The issue is how can we keep it
occupied.
I wanted then to pass the baton to Gordon, who can talk
about some of the ways that--there are other ways perhaps some
buildings of this character might be able to be utilized.
Mr. Horn. Thank you.
[The prepared statement of Mr. Whitlock follows:]
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Mr. Horn. Mr. Gordon Creed is the Deputy Assistant
Commissioner for Property Disposal of the General Services
Administration here in Washington. Mr. Creed.
STATEMENT OF GORDON CREED, DEPUTY ASSISTANT COMMISSIONER FOR
PROPERTY DISPOSAL, PUBLIC BUILDINGS SERVICE, GENERAL SERVICES
ADMINISTRATION
Mr. Creed. Good morning, Mr. Chairman and members of the
committee. I am Gordon Creed, Deputy Assistant Commissioner of
the Office of Property Disposal within the General Services
Administration.
I am pleased to have the opportunity to appear before you
today to discuss H.R. 2513, a bill that directs the
Administrator of General Services to acquire a building located
in Terre Haute, IN, and for other purposes.
I will briefly discuss GSA's role in the disposal of
government-owned property and how GSA would view the
redeployment of this U.S. Postal Service asset under existing
statutory authority.
Commencing with the Surplus Property Act of 1944, which was
administered by the War Assets Administration, and continuing
with the enactment of the Federal Property and Administrative
Services Act of 1949, GSA's mission has included the promotion
of real property disposal, consistent with sound asset
management practices.
GSA promotes asset management in the property disposal
program by three ways. One, we encourage agencies to release
unneeded properties; two, recycling unneeded Federal property
to agencies that are in need of real property; and three,
disposing of property no longer needed by any Federal agency.
GSA has more than 50 years of experience in the transfer
and disposal of government real property assets, spanning from
simple easements to complex military bases. Taxpayers benefit
from the efficient transfer of property to non-Federal public
and private interest. Surplus properties that are returned to
local tax rolls contribute to economic growth and job creation.
GSA objects to the enactment of H.R. 2513 because no
administrative effort was ever made to promote and successfully
market the redeployment of the Terre Haute property.
In July 1985, GSA and the Postal Service entered into an
agreement that covers the transfer, exchange and disposal of
real property. The agreement established procedures for the
Postal Service to notify GSA of postal real property that was
no longer needed for its purposes; that is, excess to its
needs. The agreement covered real property that is excess to
the Postal Service for purposes of ownership, yet remains
encumbered by existing tenant agreements.
In recent discussions with Postal Service officials, I have
learned that there is no need for the Postal Service to retain
ownership of the Terre Haute property. I further understand
that there are outleases issued by the Postal Service that need
to be honored in any potential reuse of the property.
Mr. Horn. I am going to have to interject for a minute. I
have a commitment that I have to meet in Transportation. Mr.
Ose will preside while I am gone, and then if you finish your
testimony, Mr. Turner will have 10 minutes for questioning, and
then next will be Mr. Ose, and then Mr. Pease and then Mrs.
Mink.
Mr. Ose [presiding]. Please continue.
Mr. Whitlock. Thank you.
GSA's leases account for 13,250 square feet of the
building.
I note that GSA successfully solved this same, very same,
situation in 1998 when it disposed of the 11-story Federal
building to the city of Philadelphia. Although this facility
was excess to the needs of the General Services Administration,
there was a continuing need to provide space for the Military
Recruitment and Induction Center located on two floors of the
building. After acquiring the property, the city of
Philadelphia entered into an exchange transaction with the
Pennsylvania Academy of Fine Arts so that the academy could
gain additional space in which to accommodate its growing need
for academic and gallery space. It is important to note, this
disposal was favorably reviewed by this subcommittee.
Another example of this type of successful redeployment of
unneeded government-owned property is the former Federal office
building in Asheville, NC, known as Grove Arcade. In 1997, this
property was conveyed to the city of Asheville, without cost,
for use as a historic monument. Section 203(K)(3) of the
Federal Property Act authorizes this type of conveyance, and,
in addition, allows for the transferee to generate income in
operating the property. Thus, a revenue stream for repair,
rehabilitation, restoration and maintenance of the property
remains an option should the city of Asheville seek to outlease
any available vacant space in this building.
Is the Terre Haute property a potential historic monument?
While the Advisory Board on National Parks, Historic Sites,
Buildings and Monuments established by section 463 of Title 16
makes the recommendation over the suitability of property as a
historic monument, clearly the property's age, design and
history seem to lean in that direction. Successful reuse of the
Postal Service property appears to be the goal of the
legislation, and to that end GSA stands available to assist the
Postal Service in marketing this property.
Because of the proximity of the Terre Haute building to the
Indiana State University, it is also possible that an
application could be submitted to the Department of Education
for public educational use of the property. Section 203(K)(1)
of the Federal Property Act allows for the conveyance of
surplus real property for public educational use.
Finally, I note that GSA's experience and brand name
connote a quality in the real estate market often sought by
developers who seek trophy properties for their portfolio. This
could, in fact, be one of those desired properties.
Mr. Chairman, this concludes my statement, and I will be
pleased to respond to any questions you or any members of the
subcommittee may wish to ask.
Mr. Ose. Thank you, Mr. Creed.
[The prepared statement of Mr. Creed follows:]
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Mr. Ose. Our next witness is Edward J. Rynne, who is a real
estate specialist with the Postal Service.
STATEMENT OF EDWARD J. RYNNE, JR., REAL ESTATE SPECIALIST,
ASSET MANAGEMENT GROUP, U.S. POSTAL SERVICE
Mr. Rynne. Good morning, Mr. Chairman and members of the
subcommittee. My name is Edward J. Rynne, and I am on the staff
of the Asset Management Group at Postal Service headquarters. I
thank you for this opportunity to discuss H.R. 2513, a bill to
direct the Administrator of General Services to acquire the
Federal building owned by the Postal Service in Terre Haute,
IN.
At the outset, I would like to thank Congressman Pease and
his staff for the considerable time and energy they have
expended on this matter. I would also like to state that we
share the Congressman's desire to resolve this matter in a way
that preserves the character and usefulness of the Federal
building while also meeting the need of our customers in Terre
Haute, as well as the practical and financial interests of the
Postal Service and the government as a whole.
Mr. Chairman, much of the information in my prepared
statement has already been conveyed and with your permission, I
would like to submit my entire statement for the record and
offer a few brief comments.
Mr. Ose. Without objection.
Mr. Rynne. The proposed legislation, H.R. 2513, would
attempt to resolve the current situation by requiring a no-cost
transfer of the Federal building to the General Services
Administration. In turn, GSA would provide the Postal Service
with an option to occupy approximately 8,000 square feet of
renovated retail space on the ground floor of the building at
no cost for a 20-year term. The bill would also authorize the
appropriation of $5 million to GSA in future fiscal years to
renovate the building and to acquire parking spaces.
This proposal would achieve at least two major goals. It
would preserve and improve a historic Federal building for use
by key government tenants and maintain an active Postal Service
presence in the Federal building, which we believe serves the
interests of our downtown and university customers. We also
understand that it would pose some interesting challenges for
the General Services Administration.
In conclusion, I want to reiterate that we appreciate the
progress that has been made on this issue, and we look forward
to working with the interested parties to resolve this matter
in a way that serves the important interests of all concerned.
At this time I would be glad to respond to your questions.
Mr. Ose. Thank you, Mr. Rynne.
[The prepared statement of Mr. Rynne follows:]
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Mr. Ose. Mr. Turner.
Mr. Turner. Thank you, Mr. Ose.
One of the comments I wanted to inquire about was made by
you, Mr. Creed. You made the statement, GSA objects to the
enactment of H.R. 2513 because no administrative effort was
ever made to promote and successfully remarket the deployment
of the Terre Haute property.
Expand on that a little bit. Are you referring to the
Postal Service's inaction?
Mr. Creed. No. What I am suggesting here, Congressman, is
that GSA has not had the opportunity to conduct a nationwide
canvass of those parties that are interested in acquiring
government assets. We have not attempted to market this
property.
Mr. Turner. So when you refer to no administrative effort
was ever made, you are talking about your efforts. You haven't
had the opportunity to make those efforts?
Mr. Creed. That is correct.
Mr. Turner. As I understand the intent of the bill, it was
to transfer the property to your agency and then have your
agency renovate it and lease it. That seems to be totally
inconsistent with what you just referred to about marketing it
or disposing of it. Am I missing something here?
Mr. Creed. No. You are absolutely correct.
Mr. Turner. And do I take it that your vantage point is
that you really do not want to even consider renovation and
leasing of the property?
Mr. Creed. Respectfully, Mr. Turner, I think that Mr.
Whitlock can better address that question.
Mr. Whitlock. I think we were trying to point out that even
though we know the building needs to be preserved, I mean,
there is no disagreement about that, we are trying to point out
that the use of further Federal occupancy, the agencies that
were sort of outlined, most likely would not agree to reenter
the building, with or without renovation. So it puts us in a
financial dilemma to take $5 million, give or take, out of our
resources and to modernize the building.
There is also the issue of a 20-year postal occupancy,
which is sort of a fairly expensive cost issue that we are not
quite sure why that provision is there other than to perhaps
reimburse the Postal Service for their ownership of the
building.
From a strictly financial standpoint, and we are trying to
analyze our projects on the basis of financial practices, it
doesn't work with that equation with Federal agencies. But we
did not want to close out the discussion of making the building
work with all kinds of other possibilities between both the
disposal, which is a formal process, declaration of excess by
one agency giving it over to GSA and then goes through a
formalized process. Our involvement to this point has simply
been to look from a localized standpoint what is available
within the community to make the building viable in the future.
So there is a difference between the short term or the local
activity versus the broader-based activity.
Mr. Turner. You made reference to the fact that you don't
think other Federal agencies would come back to this building.
When their existing leases expire, how would you attempt to
attract those agencies back? Would you just be a bidder as any
other bidder in that process, and would you submit a bid to the
agency for the space?
Mr. Whitlock. Well, that is a good question. In prior
times, we would have ordered them to the building, and their
appeal process would have been to OMB, and we would usually
win, because economics would rule. But in the last decade, that
has changed. And if we were to attract them to a building we
own, we have to modernize it and offer it to them, and they
must accept it on the basis of what we have done for that
particular agency, and then they have the opportunity to say,
well, that doesn't meet our requirements, and on that basis
then, we go into the lease market.
I would like to note that most of our leasing for IRS and
SSA, for example, we do still insist that they remain in the
downtown areas. But that is controlled by residential Executive
order, so they have to follow that as well as we do. So even if
we are in the lease market, we are still in the downtown of
these communities.
Mr. Turner. So I guess some of our Federal agencies could
simply, in their specifications, when they advertise for bids,
expect that you wouldn't even be an eligible bidder because of
your location or because of some other characteristic of the
property?
Mr. Whitlock. It is inevitably wrapped around excess,
parking, and technology requirements.
Mr. Turner. What is the parking situation at this building?
Mr. Whitlock. My understanding is there are 20 parking
spaces.
Mr. Turner. Somebody estimated a $5 million cost of
renovation including the acquisition of additional parking
spaces? Is that part of the plan, to acquire additional space?
Mr. Whitlock. I think that is in the proposal.
Mr. Turner. Is there space available for that?
Mr. Jenkins. Yes, sir.
Mr. Turner. It seems that obviously we have a variety of
players here with different interests. I think it is probably
important to step back and look at the big picture. I think
Congressman Pease and the community leaders have done so in
trying to fit this all together in a way that will preserve
this building. My impression, just seeing the picture here of
the building, is it certainly appears to be one that is
structurally sound and has historical significance and deserves
to be preserved. I am as interested, as are you, in trying to
figure out how to accomplish that.
I think it was important for us to have this hearing. If we
have chosen a pathway of trying to resolve this problem that is
meeting resistance by one of the partners, that is in this case
the GSA, it is going to be a difficult road to travel down,
even if the legislation passes. I think it is real important
for us to try to figure out a way to get through this.
If the GSA did acquire the building, would you then be in a
position of being able to use the resources of the GSA to
explore the various options for the preservation of the
building, or are you constrained in some way that you basically
could not accomplish that end result that we all seek? It would
seem to me that the GSA should be in a better position to do
that and to work through that than perhaps the Postal Service.
The resources you have, the expertise you have, it seems to me
you are uniquely suited in trying to help resolve this
particular issue.
If we made a decision legislatively that the building was
going to be preserved and the building was going to be
utilized, could you take that task on and attempt to resolve
that in some way that would make sense?
Mr. Whitlock. I think we have been in that situation many
times before. When the Postal Service and GSA separated
inventories almost 30 years, it was basically whoever
controlled the majority of the space in the building became the
owner of the building. Here now in this time, we have a lot of
buildings of this vintage facing the same circumstance. It is
very difficult to find the continuing use that almost always
becomes a money problem: Where do the funds come from to do the
renovations or to do the maintenance? And it becomes then from
an investment standpoint difficult to rationalize the amount of
dollars it takes. It is just a difficult equation, and I
absolutely agree that we need to find solutions for it. And
GSA, of course, could do that.
We have simply two concerns. One is using the resources
that we gather from rents around the country in the buildings
we lease to our Federal tenants, directing them to be utilized
for a specific project is not our preference. We usually do
that through an economic analysis, and based on the tenant,
expectations of the tenant base, we wouldn't see this coming up
high on our economic analysis. That has been our concern. Of
course, the second one would be a rent-free occupancy to a
given agency that would simply be all cost and no income.
So this discussion from our perspective is strictly on the
financial side of the business. It is not on the emotional
side, it is not on the preservation, it is not on supporting
the city, it is on the financial investment side.
Mr. Turner. I think we all know is that your responsibility
is to look at it in terms of the economics. Yet it is apparent,
I think, to all of us that there are other, valid
considerations such as historical preservation.
The Department of Agriculture has a plan to have one-stop
shopping in all of our communities where you can go into one
location and see the different agencies. It seems to me to be
even a valid suggestion for all of our Federal agencies, that
if there can be collocation, that that is helpful to the
general public, because they know there is one place to go to
to reach the Federal Government and its services.
Is this a policy of the government and of your agency, to
value a collocation of Federal agencies?
Mr. Whitlock. Yes, and has been for as long as I can
remember. Collocation would be desirable because of reducing
costs and the usual discussions of why that would make sense.
The thing I have noticed, and perhaps the chairman has,
too, in some of his investigations, is that the reform effort
takes place, agencies are making more and more decisions to
deal with technology and the cost of technology and how they
deliver their services. It has occurred to us that the cost of
technology per person exceeds the cost of space. It changes the
equation in how we have to look at these things. So it becomes
more difficult for us to simply drive decisions based on space
costs when personnel and technology costs are rising. So it
makes them behave differently now compared to how they used to
in the past.
Mr. Turner. Thank you.
Thank you, Mr. Chairman.
Mr. Horn [presiding]. I notice the ranking member of the
full committee is here, and I would be delighted to yield you
time now if you have other things to do, or I can go to Mr. Ose
and then to you; but if you need to go, you can go right now.
Mr. Waxman. I appreciate it. I will take advantage of this
opportunity. I will try not to take the full 10 minutes.
I am trying to think this thing through. We all want to
help out a colleague who wants to accomplish something
worthwhile in his district, but on the other hand, as I
understand it, this is a building where there is a lot of
vacancy, and it would be transferred over to the GSA that
doesn't want it, and we would tell the GSA, you have to take
it, and then we would spend $5 million of taxpayers' funds to
fix it up. And then after you rent it for a while, I gather you
still believe there would be a lot of vacancy in the building.
Is that an accurate statement of where things are?
Mr. Whitlock. Pretty much. I mean, from the standpoint of
the potential clients we see coming back into the building are
quite limited.
Mr. Waxman. So are people that always say, let's run
government like a business. I can't imagine a businessman
undertaking such a transaction.
Now, one possibility, it seems to me, is directing the sale
to a private entity using the historical or education use
exceptions to a public sale, and then including in the contract
that the private entity give USPA a 30-year lease option.
Wouldn't that accomplish the goal? Isn't this what we would
want to do, privatize things rather than have government run
something that is a money-loser? And if we can privatize it,
you would still have the building, and you have an entrepreneur
who has a reason to want to fill it up. I just think the
private sector could do this better than GSA, if you will
forgive me, because it doesn't sound like it makes a lot of
sense for GSA to take this on. Mr. Pease or others, what are
your views on that?
Mr. Creed. There are many other opportunities available for
the redeployment of the property. In California, at Riverside
County, the Riverside County Sheriff'S Department has submitted
an application to acquire a portion of the former March Air
Force Base to establish the Ben Clark Public Safety Training
Center. With the proximity of this facility to the Indiana
State University, and the Indiana State Police's intent in
acquiring classrooms, this structure could be redeployed as a
successful law enforcement/educational-type facility where you
have shared accredited classes for law enforcement. This is
something that Riverside County is pioneering. A successful
redeployment is possible, I believe, in fact, there is a
courtroom that could potentially be deployed on a part-time
basis for law enforcement training--giving evidence,
prosecuting cases, cross-examining witnesses. There are those
types of connections, away to connect the dots to find a
successful redeployment.
We talked to the Department of Education yesterday and
asked if a program of use for education were presented to the
Department of Education for this facility, could a Post Office
operation be consistent with an educational use of the
building? Education says, yes, we think so. And the reason for
that is because--and from what we heard earlier--is that
students have mailboxes, mailing needs, packages, and those
activities could be reviewed as supporting an educational-type
use.
Mr. Waxman. So you think this idea makes sense.
What would be the timeframe for doing such a sale? Could
this be done rapidly?
Mr. Creed. Things like this can be expedited, yes.
Mr. Waxman. Let me get the reactions from others, because
this seems to me like a good solution to the problem. What
troubles me is the solution that is being proposed, which is to
take taxpayers' money, put $5 million into this building, force
GSA to take a building they don't want, and run it with the
expectation that it is going to lose money. That just doesn't
add up to me, but this other one sounds like it accomplishes
everybody's goals.
Could we have some further reaction to this?
Mr. Jenkins. Mr. Waxman, part of the problem we see here is
the building has now been leased up due to its--the purpose of
it and who owns the building is all up in the air. We just--
people are hesitant, I think, to lease space or to try to
utilize space in the building because they don't know what is
going to happen to it. The city has taken on a project called
Center City Project to construct a $6 million building right
downtown, right across the alley from this Post Office
building, in an effort to try to bring people downtown, to
cause people to live downtown, those that choose to, and the
private sector has taken up the task here of locating various
businesses downtown, that kind of thing.
Mr. Waxman. Are you saying that you don't think the private
sector would be interested in this?
Mr. Jenkins. I don't know that--I am sure it could be
interested in it, but I would feel more comfortable with GSA
managing, owning it, in that it is such a large building.
Mr. Waxman. What you are saying, it sounds to me, is if it
is going to lose the money, the government should take it on
and lose the money rather than let private enterprise try to
make it work.
Mr. Jenkins. Well, here the government--it is our tax
dollars that would be going----
Mr. Waxman. This bill is asking for my taxpayers to pay for
your building.
Mr. Jenkins. That's right.
Mr. Waxman. It is hard for me to explain. This is a small
thing, the people aren't going to notice it, but a billion
here, a million here does add up. But if you take $5 million
from everybody in the country, put it into this building to
upgrade it, force GSA to take this building and then divert
resources they would spend on other things to take on this
enterprise, and with everybody's expectation that it is
probably going to lose money----
Mr. Jenkins. Well, we would also like to see the
centralization of services as discussed here also. The State of
Indiana has done just that in a building one block away,
centralized the State offices in the Indiana State government
center there, and it has been quite successful and met with a
great deal of praise, because you can go to one building and
receive all of the State services that are available. It would
be nice, it would be very efficient, I think, to go to this
building and receive the Federal services that are available in
the city as opposed to going to Social Security.
Mr. Waxman. I don't disagree with that, and I think we can
get the Federal agencies to locate there. That is all a plus.
I haven't been involved in this, but Mr. Ose from
California has, and maybe I will even yield to him, to hear
what he would have to say about this kind of a project. He has
advised people and probably made some intervention, or, Mr.
Pease, if you want to comment on it.
Mr. Pease. Just one response, Henry. I am not certain that
I agree, although I admit that I am not the expert, with the
assertions made by GSA that the other Federal tenants would not
move to this building. There is provided in the material
distributed this morning information on the leases of other
Federal agencies in the city of Terre Haute which exceed the
square footage of available space in this building. Now, it is
the other tenants that are in private facilities, obviously
have chosen to be there because they are nicer quarters or for
whatever reason, but we know from our conversations with, for
instance, the Social Security Administration that they need
more space than they have now in their private lease space.
Mr. Waxman. So you think they will relocate here.
Mr. Pease. I think it is premature to say it will not
happen and, therefore, you should not proceed with the bill.
Mr. Waxman. Well, we want it to happen, we want it to
happen. But why not shift it over to somebody in the private
sector to make sure that it is going to be more attractive than
to force GSA to take funds away from other efforts to hope that
they will do it?
You are supposed to be a conservative, and I am supposed to
be a liberal. Now, wouldn't the conservative point of view be
that government should not be throwing money and wasting it,
and we ought to privatize; we have a historical building, we
ought to preserve it. That is fine. The government could say,
continue to do that. But if you think that it is going to be
occupied, let's turn to the private sector to run it rather
than have the taxpayers take the chance.
Mr. Pease. I don't disagree with that. In fact, we have
said from the beginning that we will explore every option to
make this work. Our objective is to make it work for the city
of Terre Haute.
Mr. Waxman. Do we need legislation if we are going to have
a sale to private enterprise?
Mr. Whitlock. No, we do not need legislation for that.
Mr. Pease. GSA needs to own the building for it to dispose
of the building, though.
Mr. Whitlock. The property would need to be reported excess
by the Postal Service to GSA, and what we do is we go and meet
with the local authorities, the mayor, the county, the State
government, those interested parties, prior to even going to
the private sector to see if coalitions can't be made and
opportunities can't be matched, to see first--because as a
historic monument, the city could acquire the property without
cost and then lease out the facilities, maybe as a police
substation or a precinct or campus police, to try to make those
matches for the competing needs prior to the time that we would
go ahead and take the property to the market.
Mr. Waxman. I sure would like to try that out before we
take this other approach.
I wanted to yield to Mr. Ose, but I gather it will be his
time anyway. He has had these experiences. If people came to
him, what would you do?
Mr. Horn. Well, he will be next. The moderate progressive
between the liberals and the conservatives just wants to get a
question in here.
Mr. Creed, I think you are familiar with the Fort Mason
situation, aren't you, in San Francisco and what happened on
that property? As I remember, GSA briefly owned that property.
Give us a little background on that.
Mr. Whitlock. I think we are speaking in San Francisco in
the marina district it was a U.S. Army facility that was
successfully redeployed and turned into a cultural center for
the performing arts, and it has been a very much big success,
being able to preserve it and to invite the community and to
participate in it. So there are other activities that are
available. Parks and Recreation has a performing arts center as
a potential reuse for this property.
Mr. Horn. Let me just mention one more thing. I am not
familiar with the Terre Haute Post Office, but I happen to have
in my district a beautiful Post Office with wonderful materials
in it, WPA, Works Progress Administration, paintings and murals
all over, and this is in San Pedro in my district, and if this
Post Office is something like that, built in the 1930's, it is
probably a work of art that should be kept, because it
personifies the solidity, shall we say, of government, just
like the bank buildings in that era also. It looked like your
money was safe. So if it was that kind of Post Office, I agree
with you, I think it ought to be worth saving for a good
purpose.
Mr. Waxman. I don't think anybody disagrees with that.
Mr. Horn. So I now yield 10 minutes to the gentleman from
California Mr. Ose, and then we will recess for the vote, since
we apparently have votes on the floor.
Mr. Ose. Thank you, Mr. Chairman. I appreciate the
confidence my good friend from California vests in my opinion.
I am struck, as I am every day, by the realization that
real estate remains an exceptionally local industry. I don't
pretend to be able, having come from Sacramento, to understand
the nuances of the Terre Haute market, for instance. I think
the financial questions that you might deal with a 70,000-
square-foot office building are pretty straightforward, but I
am--I have a hard enough time understanding what is going on in
Roseville 8 miles down the road as opposed to what is going on
in Terre Haute. My inclination is to put great faith in the
valuations provided by my good friend Mr. Pease and the mayor
of Terre Haute in an effort to expedite a solution, because if
there is anything that doesn't serve this property's--one
truism, if you will, is that what doesn't serve the interest of
this property is uncertainty. We need to come to a conclusion
one way or the other.
I am going to put great stock in the testimony or the input
that I take from folks who actually live in Terre Haute on this
issue. I just don't have the wherewithal to understand the
nuances of the Terre Haute market sufficiently that it would
give me comfort to override their input.
Mr. Waxman. Will the gentleman yield?
Mr. Ose. Certainly.
Mr. Waxman. I can understand that point of view, and maybe
we can ask Mr. Pease. Why not try this private sector option,
and we could all together do whatever is necessary to push that
forward. It would protect the historical site, and it wouldn't
be calling on taxpayers to take on something that smells like a
money-loser and force GSA to take on property they don't feel
they can handle properly. It just doesn't add up to me. Do you
think we can do something like that?
Mr. Pease. I have been willing for the last 2 years of
working with GSA, who has apparently communicated more with you
than they have with me, to resolve this project, but I dispute
the premise of your questions, which is that it could not be a
viable facility and would be a drain on the taxpayers, because
GSA is leasing more space in the city now than is available in
this building, and the building is 75 percent occupied now.
I have been and will continue to be willing to talk about
any possible option and to operate in good faith with those
that I hope will do the same in return.
Mr. Waxman. Well, I thank you for that. I want to work with
you to accomplish what you want. If this is a viable business
option, it seems to me that it ought to be appealing to the
private sector, and I think you have GSA's attention, if they
haven't been as forthcoming as you would like. I think we ought
to sit down and talk about this as we consider this legislation
and see if we can try this option first before we move to a
government solution with taxpayers at risk and the taxpayers at
risk of losing more money, let alone the $5 million that the
taxpayers are going to have to put up for this legislation to
upgrade the building so that it does become, hopefully, a
viable option.
I would urge that we pursue that together, and I want to
work with you, and I hope we can accomplish what you want.
Mr. Ose. Mr. Chairman, reclaiming my time, I yield back.
Mr. Horn. We have a decision to make here. We have a rule
vote, which is simple, followed by a 5-minute vote on the
journal, which is idiotic, but we have to do these things. So
we are going to be in recess, shall we say, for about 15
minutes. Maybe we can make both votes. So with that, we are in
recess.
[Recess.]
Mr. Horn. I recognize the gentleman from Indiana for 5
minutes, and then we will move to Mr. Turner for 5 minutes, and
then back to the gentleman from Indiana.
So please begin.
Mr. Pease. Thank you, Mr. Chairman.
I am not sure which of the witnesses from the General
Services Administration this would be best directed to, but I
will let you decide that. Does the General Services
Administration include factors other than the financial
management of property in its decision regarding investment or
utilization of buildings, such as downtown location, historic
significance, those--well, are there other factors besides the
finances that go into your decisions, and if so, what are they?
Mr. Whitlock. GSA is covered by 29 laws and 9 Executive
orders, so we have a lot of factors.
Mr. Horn. You might get that mic a little closer.
Mr. Whitlock. We are covered by 29 laws and 9 Executive
orders, so we factor in lots of things. A lot of that has to do
with historic preservation, downtown locations, you know,
keeping downtowns viable, but we try to wrap all of those
together and take the values of those things and come up with
an economic equation to make those decisions, as opposed to
make them on one individual or singular factor. It is hard to
do, because all of them are valuable. So in the final decision,
we try to base it on, well, do the economics make sense, and
that is how we try to keep all of that in balance.
Mr. Pease. Do you want to talk about the Wilson Building in
Washington, DC, what factors went into that decision?
Mr. Whitlock. Well, Congressman, I don't know about the
Wilson Building in Washington, DC.
Mr. Pease. Does somebody from GSA?
Mr. Horn. Is it Wilson or Reagan?
Mr. Pease. No. The Wilson Building, a historic building
that was acquired by GSA. I assume there were other factors
that went into that decision besides the economics. I am just
curious what they are.
Mr. Whitlock. I don't know. I don't know the decisional
factors on that building, Congressman.
Mr. Horn. Perhaps Mr. Creed would be the one who would
know, I would think.
Mr. Ratchford. Mr. Chairman, my name is Bill Ratchford, in
charge of professional affairs at GSA.
The people who can respond to that are not at this table,
and they were not asked to come to this hearing. We have the
region representative; we have the disposal representative. We
would be happy to provide that briefing in a timely fashion for
other members of the committee.
Mr. Horn. I would be glad to hold a hearing.
Mr. Pease. I don't need a hearing. My question is, which is
what I wanted an answer to, your response was we do think about
other things, but it is only economics. My understanding is
that there is an example right in the city where there were
other factors that drove that decision other than economics,
and that is all I want to know.
OK.
Mr. Horn. Well, we will get an answer for that, and we will
put it at this point in the record. Could we get it, Mr.
Ratchford, in a week's time or 2 days' time, because I guess
this is going to full committee for discussion.
Mr. Ratchford. Yes, Mr. Chairman.
Mr. Horn. Great.
Mr. Pease. The bigger question is what are the factors, and
that is really all I need to know. I just--that would be
helpful to know.
Mr. Horn. Mr. Rynne, we have heard a number of discussions
here about other alternatives or possibly looking at other
alternatives, which the Postal Service has been very
cooperative, I will say, for the record with our office in
trying to find other options. Are you familiar with this
project and whether there have been other efforts explored,
including private ownership, or would you also need to get us
an answer on that?
Mr. Rynne. I think I can speak reasonably specifically to
that. This building was from the 1997 time period; in fact,
almost 2 years ago exactly. Obviously it became our problem
within the asset management group at headquarters and passed
from the greater Indiana district. We had engaged the services,
put under contract a local reputable property management firm
called Newlin & Johnson, who have tried to marshal up as
effective a marketing effort as they could, certainly
principally focused on leasing alternatives for the building,
rather than on an outright sale, but I do know from speaking
directly with Mr. Newlin that he is constantly searching for a
private user, and if that came within his field of vision, he
would certainly communicate that to us. But his activities are
specifically basically weekly advertising for the space at
rates that we think are competitive within the Terre Haute
downtown area, which at this point is about $10 a square foot
triple net, it would seem.
Mr. Horn. So it is $10 a square foot downtown; what is it
outside?
Mr. Rynne. It would presumably fall off. We are talking
simply about the central business district, and admittedly it
is not a thriving real estate market. That is one of the
reasons we are all here today.
Mr. Pease. If I could just ask one other question, Mr.
Chairman.
Mr. Horn. Sure.
Mr. Pease. For Mr. Nation. Todd, I know you are here
representing STAMPS and have an active role with the downtown
merchants, but have you worked with larger umbrella historic
preservation groups on this issue, and if so, can you tell us
what their feelings are; how much of a priority, if any, this
project is in the historic preservation community in western
Indiana and in the State of Indiana?
Mr. Nation. Sure. I have had contact with the Historic
Landmarks Foundation of Indiana, which is a statewide historic
preservation advocacy group, on this building. I am also--one
of the many hats I wear is the vice president of a local
historic preservation group called Terre Haute Landmarks. Terre
Haute Landmarks has identified this as one of the 10 most
endangered buildings in downtown Terre Haute.
They are all of the opinion that this is a very significant
property and that it is infinitely reusable, and it would be
fairly easy to accommodate the kinds of uses that we have been
talking about today.
Mr. Pease. Thank you.
Thank you, Mr. Chairman.
Mr. Horn. Thank you. I will yield 7 minutes to Mr. Turner
for questioning.
Mr. Turner. Thank you, Mr. Chairman.
In trying to seek a resolution to this problem, it seems
that the GSA, even though right now you don't have the ball,
that if you would be willing to go in and take a look at this
building and give us some assessment of what options might be
there, it would be very helpful to us. And I know you don't own
the building, the Postal Service does. Could you assume that
role for us and give us some analysis of options without first
owning the building? Is that outside of your purview?
Mr. Creed. Mr. Congressman, I think we could pursue that
approach and attempt a Herculean effort. We would ask that the
Postal Service provide us some documentation, and I am sure--we
have a good relationship with the Postal Service. They could
give us that documentation in one letter that authorizes us to
go ahead and to start making an outreach to see what potential
reuse opportunities that may exist which we are presently
unaware of.
Mr. Turner. I think that would be very helpful to us. I
commend Mr. Pease for trying to move forward with a solution,
because it is very apparent, I think, to all of us here that we
have different Federal agencies involved with different primary
interests, and about the only way to kind of get everybody to
come to the table at one time and talk is to put some
legislative proposal out there.
You know, I feel very strongly that Federal Government
collectively has a responsibility for this building. It needs
to be a continued asset to the community, rather than a
detraction. It seems to me that whether you find options for
some private concern taking over the building or whether it is
the government continuing to run it, manage it, that this is a
building that deserves preservation, and it deserves to be run
efficiently.
I noticed when the comments were made about the efforts
that have been made locally through the leasing agency, Mr.
Mayor, I am kind of in the position of Mr. Ose, I don't know
anything about the Terre Haute real estate market, but it does
seem pretty apparent to me that over the long term, there is
not going to be too much success in leasing this building
unless somebody goes in and makes some renovations and
improvements. And the efforts that have been made by a leasing
agent to lease the building as is seems to be somewhat of an
uphill battle.
One question I would like to ask. When we talk about
exploring various options, obviously the GSA is in the position
of being able to do that, but ultimately if we choose to
dispose of this building, transfer it at no cost to some third
party, doesn't the GSA actually have the legal authority to do
that kind of thing, as opposed to the Postal Service? Either of
you, I welcome your comments on that.
Mr. Creed. GSA does have that authority in the Federal
Property Act to convey the property without cost for historic
monument purposes. And I believe the Postal Service has
authority to sell and to lease, but I don't know about without
cost. That seems to be a substantial factor for any grantee
receiving the property, because in essence, it's capital coming
to propel the project. We have seen in other parts of the
country where custom houses have been conveyed and successfully
leased out as historic monuments--maintaining the facade of the
building. So, yes--there have been past practices and successes
in that area.
Mr. Turner. From the Postal Service, what is your
authority?
Mr. Rynne. Our general policy--and clearly this is an
unusual circumstance--but our general policy would be to
dispose of an excess facility in a way that would garner the
best result for the Postal Service, sort of a prudent steward
rule. Currently, I think in the current bill what we very much
appreciate and what we realize has become somewhat of a
challenge, one thing is--theoretically about trying to
reposition the asset is the treatment of the postal space.
To take just a quick historical step back, when the Postal
Service relocated its principal operations from this particular
building at Seventh and Cherry to the West Margaret location,
which is a new, approximately 150,000-square-foot processing
and distribution facility, the plan was to move entirely out of
the Federal building and to reposition a small retail station
of about 3,000 or 4,000 square feet very proximate to that
location, and clearly, because of subsequent events, we have
decided to maintain the presence in the building. That raises--
that brought us to the nub of the issue, where we are in more
space than we would need to be in an exterior location.
One thing I think we would certainly attempt to do in a
good faith way is to squeeze down the amount of space we would
need for the retail station. That is purely a function of the
configuration of the first floor of the Federal building at
Seventh and Cherry. There is a historic lobby that is really a
monumental public space. It is actually very nice space. The
trick would be to try to renovate that in such a way that it
was an appropriate historical treatment of the building and to
narrow down the space that the Postal Service would actually
need. But that is the side of the building that the loading
docks are on, and they would need to be included.
I think that clearly a principal benefit we see from
Congressman Pease's bill here is the right to remain there. It
clearly wasn't our original intention, but recognizing the
customer interest in that, I think the long-term goal would to
be remain, but clearly under our disposal policy, I think that
would be what we would figure would be the recompense for it.
Mr. Turner. OK. I can understand why the bill is structured
that way. You own the building, and, obviously, to transfer it
to you, you see that as some remuneration. But I think you need
to be flexible a little bit on that, if we ask the GSA to take
a good hard look at really what are the options here.
How long, Mr. Whitlock and Mr. Creed, would it take the GSA
to report back to this committee with a full display of
possible options that would give us something that we could
look at as this bill moves forward so that we will be sure at
the end of the day that we have arrived at a satisfactory
resolution that preserves this building?
Mr. Creed. Congressman, we would ask for the maximum
allotted time to give us our best opportunities here, because
we are abridging and shortening the process. Whatever time that
we could be allotted we would ask for. So I don't wish to
constrain our efforts here--I don't know what that period would
be for your purposes.
Mr. Turner. It just seems to me that it is appropriate that
this bill move forward, because ultimately, it seems that
placing title with the GSA is the best option, no matter where
you end up at the end of the road, because you have the legal
authority to do things that the Postal Service does not. It
does trouble me a little bit that the transfer as proposed is
encumbered with the 20-year lease at no consideration. But then
again, there obviously are considerations there. I think
ultimately it is important for that postal outlet to remain in
that building for the long term. It is important for the Postal
Service, and it is important, I think, for the community.
But it would help us a little bit if you could give us some
indication of what you would be comfortable with in terms of
trying to give us some report, just as if the bill had already
passed and you were now the owner of that building and you
would have to make some assessment of what to do with it. That
kind of information would be helpful to Mr. Pease and the
committee in being sure that we resolve this successfully. This
is our opportunity to have all of the agencies that have an
interest here at the table and, in essence, craft a solution
that is satisfactory to everyone.
Mr. Whitlock. At the break we were talking about trying to
come to some solution. Everyone spent a lot of time trying to
think through this not only today, but in the couple years
past, and we were fashioning that thought process to say, let's
assume we do the maximum effort to acquire whatever
possibilities there are to use the building. That is almost a
blitz on the part of Gordon's people and some of ours to find
imaginative solutions that perhaps don't just fall in the
category as we have already discussed this morning. And Gordon
can outline all over the country some of those unique things
that have happened, and you don't know what the answer is until
you kind of do that. So we were going to commit to working hard
to do that, and it would take a number of weeks. I picked some.
We are not quite sure how many would be appropriate.
Mr. Horn. How many do you think would be appropriate?
Mr. Whitlock. Well, probably a month to get us well into
it.
The other factor which occurs to me, because it becomes the
basic problem, is the money, where does the money come from.
And that almost inevitably is what makes a project work or not
work. And a couple of contributions to an income stream make it
a lot better when you are dealing with people who would be
willing to take on this kind of a challenge, as the Postal
Service calls it, a challenge. One is we would guarantee the
rental from the courts; as long as the courts maintain
occupancy, we will, of course, make rental payments to whomever
the owner or the final disposition of the building would be to.
We would make those payments. We were debating a little bit
with the Postal Service about also making a contribution to the
income stream for the space they occupy. I know that they
consider it remuneration for ownership.
Our problem we deal with here is there is almost no value
to a building that has no occupants. In spite of how beautiful
it is, it still has little value.
So one of the things that we would try to do over this next
month, if this is the right timeframe, is try to find
possibilities, including as much income that we can contribute
to it, so that whoever would have an interest would be able to
depend on that as being part of covering their operational
costs and things like that. So that would be--and then maybe
that is the right solution to approach at this point in time.
Mr. Horn. Let me just get a few things on the record in
terms of the space and how it is utilized. As I look at this
table I have been given, the total rented space is roughly
31,000 square feet, 75 percent occupied, which is pretty good.
The Post Office has really half of that square footage now, and
that is 15,314 square feet.
Could you tell me, Mr. Rynne, what that space allocation
is? Is it mailboxes that people can come and get a lockbox
there? Do you have clerks at the counter to process packages
and help with stamps and all the rest? I would just be curious
what is going on.
Mr. Rynne. Yes. It is what we would refer to as a retail
station, which is sort of the classic, over-the-counter stamp
trade. There is also a very large post office box section.
Because of the layout of the building on the first floor and
the way the lobby penetrates that space, it is a long axis
running the length of the building. Ideally, we would have
tried to squeeze in something smaller. It is the nature of the
architecture of the building that causes that occupancy to be
so large for us at this point.
Mr. Horn. So you are saying you could do it in less space.
Mr. Rynne. Yes. The challenge would be how to design that,
and I think one of the brief discussions we had with our GSA
colleagues was to see if perhaps--I think we were using a
figure of about 8,000 square feet currently. We would certainly
try to assist in reducing that if that could assist. Once
again, clearly we find that occupancy provision of the bill
attractive, but we realize that if that could be reduced, it is
less of a burden on a repositioning of the asset, clearly, if
that space could be used to produce income.
Mr. Horn. Now, that 15,000 plus square feet is all interior
space.
Mr. Rynne. That is correct. It is about 12,700 feet on the
first floor; a small mezzanine space of about 2,500 or 2,600
square feet.
Mr. Horn. Now, when it was a full-blown Post Office for the
city, you probably had space in back for the various office
vehicles.
Mr. Rynne. Right.
Mr. Horn. What has happened there now?
Mr. Rynne. Currently we have--it is approximately 20 spaces
that are actually attached to the Federal building. We also
lease a slightly larger than 16,000-square-foot site that is
immediately abutting the property to the building. There are 56
spaces in that. We have a lease on that that expires in 2002.
There is a renewal option to kick that forward to 2007.
Mr. Horn. And that is a privately owned?
Mr. Rynne. That is privately owned. I believe there are six
postal vehicles there currently.
Mr. Horn. Do you run routes out of that Post Office?
Mr. Rynne. No, we do not. Those 41 units moved to the new
processing and distribution facility.
Mr. Horn. Because what I am thinking, since I see Social
Security is in the building, obviously if people get there,
some could walk.
Mr. Rynne. Actually, Social Security isn't in the building
currently. They had moved out. IRS and Social Security had
moved out.
Mr. Horn. I see. Well, there are apparently a few people
there, like the district court is still in.
Mr. Rynne. Correct.
Mr. Horn. Bankruptcy trustee, marshal, the representative
that is with us, and the Federal Bureau of Investigation, the
GSA joint use, and then the U.S. Attorney and a private
attorney.
Mr. Rynne. Correct. And also a bankruptcy trustee.
Mr. Horn. How much of a problem was parking space to get
access to the building by clients or whoever?
Mr. Rynne. At this point I don't think there is a
difficulty given the configuration of tenants in the building.
Clearly, if this building were leased up, and depending on the
nature of the use, parking starts to become--becomes a central
issue, clearly.
Mr. Horn. Can they use some of those 20 spaces, or is that
all government use?
Mr. Rynne. No, government tenants are using those. I know
that the FBI is utilizing those on the right side of the
building, and the potpourri of users are currently using the
remaining spaces.
Mr. Horn. And the 56 spaces, is that a parking lot that
charges, essentially?
Mr. Rynne. That is correct. We are currently leasing that
space, and since the move-out, since we don't have a need for
all of those spaces, we have been subleasing that, basically as
a cost control item.
Mr. Horn. I wonder, Mayor Jenkins, what is the downtown
situation in terms of parking so people can go to stores and
lawyers' offices, whatever it is?
Mr. Jenkins. Generally people want to park right in front
of the store and walk right in.
Mr. Horn. You don't have to worry about it.
Mr. Jenkins. We have a parking garage located just one
block away.
Mr. Horn. Is that free parking then, or validated?
Mr. Jenkins. Darn near. It is 25 cents an hour.
Mr. Horn. Hey, I want to move there.
Mr. Jenkins. Come on down. We will be glad to have you.
That is a city-owned facility, and it has adequate--there are a
number of spaces still available, and there are plenty of
spaces for day parking. We have also looked to a number of
other options, including a cooperative effort with the
university. They have a parking, plat, level ground parking on
the northeast corner, directly across the street from the
building, and we have discussed possibilities with the
university there about another parking garage in this vision
statement that we have prepared.
So the parking, although I guess you would say it is
cramped according to some local residents, possibly, it is
absolutely nothing like you have here in larger cities. There
is adequate parking, and there are plans to increase the
parking spaces.
Mr. Horn. I am curious, Mr. Creed. How does GSA determine
what the cost per square foot ought to be, and is there
flexibility for you to, if you wanted to attract people back
into the downtown--like the Social Security lease expires in
February 2001, and that is 6,143 square feet. Could you make a
deal they couldn't refuse?
Mr. Whitlock. We determine the value of the space by an
appraisal mechanism, comparing other rents in town. We do the
whole inventory that way so it is the same in each location and
so it is a local rate, based on local conditions.
Yes, we can make some concessions to attract tenants into
the buildings. Their refusals are usually not driven by the
dollars, but they are driven by the condition and technological
improvements that are needed for the space. So we have the
ability to do that, but that is often where we don't win that
argument with those customer agencies.
I think one of the things that, if we are drawn into trying
to do something here where GSA reenters the equation, we
certainly can revisit with those two agencies, those two
primary, IRS and SSA, and again ask them to consider such. I
mean, that is a no-cost way to get back into the discussion.
With as much attention that has been drawn to the building and
to the location, maybe with the Congressman's help we can
persuade them to rethink that.
Mr. Horn. What is the transit system like in Terre Haute?
Is there a bus system?
Mr. Jenkins. Yes, there is. It is also a city-owned
facility. The transfer station is located two blocks away,
obviously, and then various bus stops around the building.
Generally, a lot of the traffic that we see there now is
foot traffic, coming from the university, local businessmen,
the downtown merchants, that is what we are seeing in that
area; and then also from the Deming Center, which you referred
to, which is an elderly housing development just a half block
away at the corner of Sixth and Cherry. So it is very necessary
for this neighborhood that we are trying to create, a mix of
retail, commercial and residential.
Mr. Horn. The gentleman from Indiana Mr. Pease can have 7
minutes, 10 minutes, whatever.
Mr. Pease. I won't use it all, Mr. Chairman. You have been
more than generous.
I am just curious if any of the witnesses would have
recommendations to us on the bill before us, if there are
additions, amendments, or other actions you think should be
included or changed in the legislation. I do understand that at
least the GSA's preferred position would be not to have a bill
at all, and I would not ask you to bid against yourself. But if
there are things that any of you would suggest either now or
later, we would appreciate having those suggestions.
Mr. Creed. We will take a look at it and comment back.
Mr. Pease. I appreciate that.
Mr. Chairman, I just wanted to thank you and the ranking
member. This is obviously a difficult situation for everybody,
and it has been for some years, and the people in the Terre
Haute community have worked very hard to try and find a
resolution that accommodates everyone's needs, and we
understand that that is not easy. I appreciate the local
government and the local private sector involvement. We have
had help from staff from the Transportation and Infrastructure
Committee that have been very helpful on this.
I appreciate the Postal Service's time with us, and I know
GSA has frustrations and concerns, but I am grateful for the
opportunity for us to work together to try and find a way to
solve this for the benefit of the people that I represent.
Nobody could have been more helpful and supportive than the
chairman and the ranking member have been, and I am very
grateful for that. Thank you, Mr. Chairman.
Mr. Horn. Well, I thank you. Let me just ask a few for the
record that we feel we have to ask.
Mr. Whitlock, I guess this really would be to you. Could
you tell us how GSA reached the conclusion that there is not
enough interest to sustain this building? Was that strictly in
the Federal market because they wanted to move out into other
areas, or does GSA look at a potential private market in any
way? There is a private lawyer in there now, and I guess that
is the only private use, is that correct, in the building?
Mr. Whitlock. From the information we had, yes.
Mr. Horn. It looks like it. All the rest are government
services of one sort or the other.
Mr. Whitlock. The analysis we did, which was based on the
cost assumptions of similar buildings, our conclusions were
that the income stream that was in the building, what we could
expect to move back to the building, the income stream was less
than the operating costs. That has, of course, been debated a
number of times based on what assumptions one uses, but
clearly, if it is not fully occupied at the rental rates in
this community, it is hard for us to say this is a good
economic investment.
I don't want to keep saying this is just an economic
equation, but investing $5 million in the building and then
trying to make it pay out has been difficult. It is perhaps why
we were encouraging the use of trying to find a private or
third party that would wish to take over the building.
There is a unique thing that happens to us when we acquire
a building. I mentioned the 29 laws. All of a sudden they all
apply. They own it, we are obligated to remove the asbestos and
handicap the rest rooms and all of those kind of things.
Mr. Horn. Is there asbestos in this building?
Mr. Whitlock. The asbestos is mostly in the floor tile,
which is not terribly dangerous, but remains an issue. So when
we take over a building, we find ourselves having to do these
things to accommodate most of that legislation. Sometimes when
it goes to a third party, they don't have to do some of those
things, so their investment level is going to be less.
What I am trying to communicate is that we know where we
need to be, we know what would be the right answer, but there
is holes in getting there, and we haven't quite found a way to
do that.
Mr. Horn. Mayor Jenkins, let me ask you, having heard what
Mr. Whitlock has to say and the thought we are exchanging here
on the attraction of private people to that building as well as
public service people, would there be a real rebellion downtown
in other office buildings: What are you doing taking away my
customers, et cetera? How much of a problem would that be if
they found 1 of those 23 laws said they could move the square
footage up and down?
Mr. Jenkins. I am sure there would be some individuals who
would have objection to that, especially if any of the other
Federal agencies were to return to this building, obviously
someone is going to be harmed, because they are paying rent to
a private individual there. But for the greater good, the
community wants the downtown revitalized. They want activity
there; they don't want holes, they want buildings, they want
people, they want activity. The local merchants want activity.
They want customers. We also want a good mix of university and
citizenry, a good marriage there, and this speaks to that.
I try to look at this as basically this way. It is a
Federal building. It has housed a Federal agency. It is owned
by the Federal Government and maintained by the Federal
Government. I would hate to see it change. It just causes--as
Mr. Whitlock pointed out, change does cause problems at times,
and in this particular instance I don't think change is
necessarily that useful. I think we should do everything we can
to bring the building up to snuff and then have all of these
agencies return if at all possible and truly make it a Federal
building with Federal services available to the local
residents. It seems to be the most logical to me, and we would
have all of this income stream from these agencies that are
paying out rent to other places.
Mr. Horn. Mr. Rynne, just for the Post Office, for the
record, I am curious. Does the Post Office and the facilities
it operates around the country try to get in private tenants to
make up some of the space, or is that considered a no-no in the
new postal corporation?
Mr. Rynne. No. Actually, very definitely, we try to do
that. In fact, it is our particular group, the Asset Management
Group, that has that particular responsibility.
Mr. Horn. How has that worked out? I mean, have you had
customers ready that can use some of that space?
Mr. Rynne. Oh, sure, sure.
Mr. Horn. I would think, depending on the type of business,
that they would love to be inside a Post Office.
Mr. Rynne. Yes. There are occasions when it is a very, very
nice fit.
Mr. Horn. So how difficult is that in Indiana, in the
Midwest, and what do you find there? Is there not that much
movement or what?
Mr. Rynne. My knowledge is, I think, fairly specific to the
Terre Haute area and this particular facility. Generally--and
it has clearly been a challenge. I think the most recent
efforts, we have sort of detected a slight heartbeat over the
last month or two, and it appears that there is a State agency,
the Western Indian Community Action Agency, that appears to be
interested in leasing a little under 2,000 square feet of
space, and the bankruptcy trustee, who I think is actually
listed as the U.S. Bankruptcy Trustee, I believe it is a
private tenant, leases at 1,400 or 1,500 square feet and is
interested in expanding that by about 500 or 600 square feet.
The FBI also wants to add a little space. So without
overstating that, there seems to be at least a heartbeat.
If I could interject for a moment on the cost of the
building, it currently--I think over the last year our
extrapolated costs for running the building are a little over
$200,000. Those are 1999 figures. I think the lease revenue,
the projected rent stream for the building at this point is
about $258,000, to the best of our calculations. So it doesn't
seem--it is not a horror show, but it is clearly--but clearly,
there is not a huge surplus there. It would be very helpful to
pack some more tenants into that building.
Mr. Horn. As I understand it now, if the Postal Service has
excess space there, you could turn that over to GSA and just
carve out, say--among that 15,314 square feet, you could carve
out an area, could you, and then give the rest of the building
to them? How does it work?
Mr. Rynne. You mean and condominiumize the building in a
sense?
Mr. Horn. No. I am thinking if you have a situation where
you have this facility outside in the suburbs, what--and you
say maybe 8,000 feet is all you need, not 15,000 feet downtown,
depending on how you do the internal architecture.
Mr. Rynne. And we would hope even perhaps to squeeze it
down from the 8,000 if it is possible.
Mr. Horn. So if you turned that building over to GSA, how
does that that work? Do you simply do a transfer to GSA, where
you say, we don't need all of that space, but we would like to
have 8,000 or 10,000?
Mr. Rynne. Under normal circumstances, if we were simply to
excess the building, which, once again, had been the original
plan since there had not been under that scenario a postal
retail station remaining in the building, under the interagency
agreement that exists between the Postal Service and the
General Services Administration, they would get first crack at
the building, and then we would go through the normal triage of
State and local agencies to see if there were public interest.
Failing that, then we would try to market it publicly to the
private sector.
Mr. Horn. So it would be the routine Federal system, where
it goes through HUD and HHS and Justice and so forth?
Mr. Rynne. Right. That's right.
Mr. Horn. Now, as I understand it, the Postal Service has
the authority to enter into arrangements such as what was
talked about earlier, public-private partnerships to leverage
private sector financing to restore aging buildings, and I
wonder, has the Postal Service explored this type of option to
restore and outlease the building, and if not, why not? Have
you done that in other cities?
Mr. Rynne. We have certainly done that in other cities, but
once again, that is principally a function of the market. I
think the greatest successes have been in the various cities
around the country; New York City, San Francisco. I think on a
grander scale we have a very large building in Chicago, in fact
it is the largest postal building in the world, almost 3
million square feet, which we are attempting to excess through
that type of method, but it is located near the Loop, and so
the financial projections on a property like that are clearly
vastly different from the current situation.
Mr. Horn. So you think you would have a lot of customers in
Chicago in that area?
Mr. Rynne. We are hoping to. That project is currently
under way.
Mr. Horn. Well, we wish you well.
How about projects more similar to the situation in Terre
Haute and throughout the Midwest?
Mr. Rynne. Not that I can think of in that area of the
country. I think the most local example which conceptually has
some similarities to what exists in Terre Haute is the building
on Massachusetts Avenue, the so-called Postal Square
Development, which is catty-corner from Union Station, which
was clearly a success story for us, and in which there are
many, many Federal tenants.
Mr. Horn. That is the one where the postal museum is.
Mr. Rynne. That is correct.
Mr. Horn. That is a wonderful museum.
Mr. Rynne. That is probably the apex of that kind of reuse.
Mr. Horn. Is that pretty well occupied?
Mr. Rynne. Yes.
Mr. Horn. Probably filled with lobbyists, right?
What is the general services organization's strategy, Mr.
Creed, with regard to investing resources to upgrade or
renovate historic properties, and when making investments
decisions, does GSA treat historic properties any differently
than other properties?
Mr. Whitlock. I can probably answer that. GSA's funding for
renovation, construction, and including historic properties
comes from the collection of rents that we collect from each of
our tenant agencies. We do not have the outside funding sources
to capitalize our projects, so there is tremendous competition
for the income we collect each year to aid the courthouses,
renovate existing buildings, and it is just simply a matter of
having no capital access. So it becomes a constant problem for
us to accrue that capital, to find that capital.
Mr. Horn. Now, you were a creation of the Hoover
Commission, as I remember, in 1949, in 1952; there were two of
them. You are not putting that money that you get from your
tenants--let's say they are all Federal tenants, might be some
private--into a revolving fund that you can use?
Mr. Whitlock. It is a revolving fund. I mean, it is similar
to a revolving.
Mr. Horn. So how does it work? Does each region of GSA put
in a plan that says, look, this is what we need to do the
renovation, this is what we need for maintenance, this is what
we need to maybe build new buildings or an extension of
existing buildings?
Mr. Whitlock. Yes. Precisely.
Mr. Horn. How does that system work?
Mr. Whitlock. The income stream is in the neighborhood of
$5 billion. Off the top comes government contracts to lessors.
That takes about $2 billion of it. Then the basic operation of
our own inventory, which is roughly the other half of the space
we control, takes another $2 billion. Those are the contracts
to heat and maintain and operate. The last $1 billion becomes,
in effect, the competition part for, A, construction, and, B,
for renovation of buildings. It works, but like a lot of other
public enterprises, it has probably over the years been
underfunded. At least that is our opinion.
Mr. Horn. So you have not tried to endow the system then, I
take it?
Mr. Whitlock. We have asked for endowments in either direct
appropriations or some kind of financing authority. It has been
discussed a number of times.
Mr. Horn. How about OMB on this? Are they favorable to back
you up on that?
Mr. Whitlock. They normally fall back into the scoring
rules and to the budgetary caps and find themselves limited in
supporting us on that.
Mr. Horn. How about the various appropriations
subcommittees, have they been supportive or not supportive?
Mr. Whitlock. Both. I mean, we have had appropriations
before. Right now we seem to be in kind of a tight crunch. I
know you all are, and so are we; so are most of the agencies.
Our discussion with most agencies is they are severely looking
at their costs, and it is causing changes in how they behave.
Mr. Horn. Well, are they, despite the cap bit, is GSA going
to push for that type of authority in the future? What is your
thinking on that? Maybe, Mr. Creed, you should answer that one.
Mr. Creed. I think we could look into that and get back to
you later--that would be appropriate for us at this point.
Mr. Horn. Yeah. Well, I would be interested in that just in
general, since we are your oversight agency, what makes sense
and what would give you flexibility to do your job better. I
would think we would all be on the same side on that one.
Mr. Whitlock. I think you would probably want to have an
indepth discussion of those issues, because it plays out in a
lot of areas. From strictly a real estate standpoint, without
trying to deal with all of the other influencing factors,
having a capital source becomes very critical in making it all
work out. So it is--especially with the amount of Federal
construction being requested. We have taken the position that
constructing courthouses, which are very complex, is probably
in the long term better than leasing them, so it becomes a
capital demand on us.
Mr. Horn. You mentioned maybe 4 weeks would give you enough
time to look at some of the options on this?
Mr. Creed. Yes, Congressman. With a 4-week period of time,
we will go ahead and mobilize immediately outreach and see what
we can come up with.
Mr. Horn. Well, today is the 29th. We are going to be here
on the next 29th, so what date would you like to pick? It is
wide open.
Mr. Creed. Well, the 29th.
Mr. Horn. OK, fine. The Speaker hopes we will get out of
here on the 29th, and we will hold a hearing. I have one
already that morning to the Y2K stuff and contingency plans. We
will just work in another. So let's shoot for that and try to
get it up here so that we at least can read it before the
hearing starts. We would appreciate that.
Are there any comments that the gentleman from Texas would
like to make, or any questions you would like to ask, or are
you going to round this up?
Mr. Turner. Just maybe two or three. One, I would like to
ask where did the $5 million estimated renovation cost come
from? Who came up with that number?
Mr. Pease. It came from a conversation in my office when we
asked the Postal Service and the GSA what it would cost to
bring this building up to--what the expectations were, and one
of them said, we don't know, probably $3 million. So we thought
we were being generous in authorizing $5 million.
Mr. Turner. OK. I think that is important, and I am sure as
you do your study here over the next month, you can take a look
at that. You know, even $100-a-square-foot renovation costs--I
believe somebody said the building was 31,000 square feet; is
that correct?
Mr. Whitlock. It depends how you wish to measure it. It has
roughly 70,000 of gross square footage, the only number that
probably everybody can agree to.
Mr. Turner. Well, obviously, that is important to
understand that number, where it came from.
Mr. Horn. Just for the record, total square feet is 75,202.
Rentable square feet is 41,318. The basement currently used for
storage is 18,800, and total rented space now is 30,899 square
feet, that was 75 percent occupied, and total vacant space is
10,419 square feet.
Mr. Turner. And the Postal Service currently uses 15,000?
Mr. Rynne. Approximately 15,000.
Not to confuse the issue, but the 75,000 square feet was
what we would refer to as the net interior measurement. The
gross square footage, which I believe we had communicated to
your staff, was approximatley 85,000 square feet.
Mr. Horn. Does GSA and the Post Office have the same square
footage?
Mr. Rynne. We have had a number of discussions, and I think
we are pretty close on the inside. The gross square footage is
simply from building wall to building wall.
Mr. Turner. Again, I commend Mr. Pease for bringing this
forward. I don't look at this as just an issue that pertains to
Terre Haute and Mr. Pease. This kind of problem occurs all over
this country, and Federal agencies end up in buildings they no
longer need, or tenants start moving out. There is a tendency
when you are not motivated by the profit incentive and
capitalistic drive to do something with the building to just
sort of let it drift along, and it goes further down and
further down and further down, and I think we have a
responsibility to realize that different agencies have
different primary interests, and those sometimes don't work
together very well to accomplish the goal of being a
responsible property owner at the Federal level.
So this is our test case, I guess, Mr. Chairman, and
hopefully these agencies will get together.
One thing I want to say to the Postal Service. I really
believe that you have to be a part of the solution here. It
sounded real good to say where you are going to get a lease for
20 years at no cost, but you are in the prime rental area on
the first floor of this building, and if we are going to
structure something here that is economically appropriate and
fair to the taxpayers, it is probably going to require the
Postal Service to take some responsibility here.
When we talk about, as Mr. Waxman did, trying to alleviate
the burden on the taxpayer, the last time I took note of the
Postal Service, I was proud to see that you are running your
business off of your own revenues now, and I commend you for
that. The taxpayers don't pay 1 dime to run the Postal Service,
and we may need just a little bit of that little profit you are
making to make this a viable project.
And to the mayor, one question I have for you is would the
city be willing to give GSA access to or the right to use for
perhaps an unlimited term some of the spaces in that city
parking garage about a block away, because obviously there is a
shortage of parking space to make this a viable rentable
building. I think if the city would step forward and negotiate
with the GSA in this discussion over the next month and perhaps
pledge to set aside some parking spaces that then could be
controlled by the GSA and leased, that would be a perfect
parking place for a lot of employees who could walk a block to
work and leave those closer spaces available to the customers.
Would the city perhaps be willing to chip in at that level?
Mr. Jenkins. Certainly, Mr. Turner. Thank you.
Mr. Turner. I think that would help in the mix of the
discussion here.
I appreciate the GSA being willing to take a lead here for
us. It wasn't your problem, you didn't ask for it. So we are
grateful that you are willing to step in and help us work
through this. Again, I commend Mr. Pease for his leadership on
a very difficult issue.
Mr. Horn. Well, I agree with the gentleman from Texas. I
think it was well said, how he summed this up.
Would the gentleman from Indiana have any comments or
questions?
Mr. Pease. My thanks to the chairman and the ranking
member. You have been very supportive, and I am very grateful.
Mr. Horn. Well, thank you.
Let me just ask you, Mr. Rynne, I have never had a problem
with the Post Office in my 68 years. Do you cover the North
Topeka Post Office in Kansas at all, I am curious?
Mr. Rynne. The asset management group of which I am a
member actually has a national charter, but our focus is on
trying to serve as a profit center for the Postal Service.
Mr. Horn. You are based here in Washington.
Mr. Rynne. Based in Washington, correct.
Mr. Horn. Well, if you could tell me who I should file a
complaint with. When I was at a hearing in Topeka, I sent 20
volumes bought by me to California in my district office, and
only one arrived, and the box looked like a Caterpillar tractor
had gone over it. But if you can tell me who I deal with, I
would appreciate it.
Mr. Rynne. I will try to do that.
Mr. Horn. Thank you very much. This has been a very
worthwhile hearing, I can assure you.
With that, we thank you all for coming. Each of you gave
very useful testimony for us. We look forward to your options
papers in 4 weeks.
Thank you.
[Whereupon, at 12:40 p.m., the subcommittee was adjourned.]