Good morning.  Thank you for inviting me to testify today on behalf of the Department of Health and Human Services.  Secretary Thompson sends his thanks to this committee for deciding to address an issue that many Executive agencies are experiencing with Federal real property assets.  As stated in the General Accounting Office report on real property, many Federal assets are no longer effectively aligned with, or responsive to, agencies’ changing missions and are therefore no longer needed.  

I have been asked specifically to speak about one such asset that the Department of Health and Human Services holds.  The West Campus of St. Elizabeths Hospital, located in Southeast, Washington, DC, has been excess to the Department’s needs for many years.  However, due to a unique set of circumstances that I am about to describe, we have not been able to dispose of the property.  To fully understand the significance of St. Elizabeths Hospital, I would like to start with a bit of history of the facility.

St. Elizabeths Hospital began operations in 1855 as the Government Hospital for the Insane, one of the nation’s earliest asylums to offer moral treatment and enlightened human care to persons with mental illness.   For more than a century, St. Elizabeths was internationally recognized as a leading clinical and training institution.  During the Civil War, the property was also used to house wounded soldiers.  A reluctance of the soldiers to write home stating that they were recuperating at the Government Hospital for the Insane gave rise to the use of the name St. Elizabeths, the historic name of the old royal land grant of which the campus was a part.  Thereafter, the institution was informally referred to as St. Elizabeths for decades until the name was formally changed by Congress in 1916. 

St. Elizabeths is comprised of two distinct sections; now known as the East Campus and West Campus.  The West Campus is comprised of sixty-one buildings on approximately 185 acres, and contains the oldest structures on the Hospital grounds.  The first building on the West Campus, now known as the Center Building, was opened in 1855.  In all, the buildings on the West Campus represent approximately 1.1 million square feet of space.  In addition to the historic buildings, the West Campus is the site of a Civil War cemetery, reported to be the only public cemetery containing the remains of both Union and Confederate, black and white soldiers.

In 1902, construction of the East Campus began with the erection of four buildings.  Most of the development on this site took place between the World Wars and after World War II.  The East Campus is currently comprised of approximately forty-seven buildings.

With the advent of limited Home Rule in the 1970's, Congress began the process of identifying various governmental functions that would be transferred to the nascent Government of the District of Columbia.  After many years of debate, Congress adopted the St. Elizabeths Hospital and District of Columbia Mental Health Services Act, otherwise known as the Transfer Act, in 1984.  The Act provided for the transition of responsibility for management of the District’s mental health system to local control and gave the District two opportunities to take title to the St. Elizabeths Hospital grounds and buildings.

The first transfer of property took place on October 1, 1987, and included those buildings identified by the District as necessary for its mental health system.  The District received title to these buildings which comprised the entire East Campus except for one building, in addition to title to five buildings on the West Campus, and approximately $27 million dollars to pay for repairs.

The Act also provided the District a right of first refusal for the remaining property, which included most of the West Campus.  Although the District occupied about 34 buildings on the West Campus, this second transfer did not take place as planned.  The District did not meet two statutory deadlines for submitting its master plan for the West Campus, and although the District eventually did submit the plan, title to the property cannot shift without further legislation from Congress, or through the General Services Administration’s property disposal process.

In 1987, then Mayor Marion Barry signed a Use Permit with the Department of Health and Human Services for occupancy by the District which specifically stated that “All of the west side of the Saint Elizabeths Hospital property in the District of Columbia, excepting all property heretofore conveyed to the District by deed...”  The Use Permit further states that , "During the term of this Agreement, the District shall preserve, maintain, and repair the West Campus in accordance with the Saint Elizabeths Hospital Physical Plant Audit of 1985...;" and, "During the term of this agreement, the District shall be fully responsible for all maintenance, repair, and operations of the West Campus..."   The Use Permit was extended indefinitely in 1997.  

In April 1989, the District, HHS, and the Advisory Council on Historic Preservation executed a Memorandum of Agreement detailing specific measures to preserve the historic character of St. Elizabeths.  The MOA stipulates preservation and rehabilitation of most of the buildings, landscaping, vistas and the cemetery on the West Campus in accordance with the Secretary of the Interior’s Standards for maintaining historic properties.  In December of 1990, St. Elizabeths was designated a National Historic Landmark, the highest level of designation given to historic properties.

The buildings have deteriorated significantly since that time.  To prevent further damage to the Center Building, HHS spent one million dollars on a new roof and gutter system in 1991 and another million dollars on mothballing and stabilization projects in 2000.  Funding requested in the amount of one million dollars from Congress in 1998 was not appropriated.

We have mentioned that the District was responsible for maintaining the property.  Although HHS oversight was minimal, our records show that we notified the City of various violations throughout the years, but no action was taken besides the notification.  And truly, what was the recourse available?  An adverse action taken against the city would in turn have an adverse affect on the patients at the Hospital.

However, once we were notified by City officials in 2000 of their intent to vacate personnel from the campus the following year, we immediately began to take the steps necessary to protect and dispose of the property.  GSA instructed HHS on the steps necessary to declare the property excess.  In September 2000, we completed Phase I of the required Environmental Assessment.  In January 2001, HHS officially notified GSA of its intent to declare the property as excess to our needs.

In April 2001, the General Accounting Office, on behalf of the Committee on Appropriations, completed a review on real property issues related to the West Campus, and verified the need for funds associated with the property disposal process.  The funds were required to fulfill requirements under the National Environmental Policy Act and the National Historic Preservation Act.  Later in 2001, Congress provided 6.5 million dollars to begin the disposal process and mothballing.

In 2002 HHS funded a contract to hire a company to conduct a building-by-building mothballing assessment of the Federal buildings located on the West Campus and completed the Phase II Environmental Survey.   In May 2002, the Urban Land Institute conducted a study to develop suggestions on potential land use for the entire St. Elizabeths campus (approximately 300 acres).  GSA, HHS, and the District were participants in the study. The District also formed an Executive Steering Committee and a Working Group Committee, both of which had members from HHS,  GSA and citizen groups, to provide some structure in planning for the future of the St. Elizabeths Campus.  In addition, GSA sent out a notice to all Federal agencies informing them of the property’s availability.

As I am sure Ms. Knisley will address, in late 2002, the District hired an architectural firm to develop a framework plan for the campus to specifically identify appropriate uses for the site including new projects and adaptive reuse, and to establish implementation strategies. 

To start off 2003, in January, Mayor Williams held a public meeting to inform the community about the planning process for St. Elizabeths.  Also at the beginning of this year, the District vacated its last employees from the campus and in the spring, HHS received the report from the contractor who was hired to conduct the building-by-building mothballing/stabilization assessment. GSA arranged for three contractors to bid on the mothballing of the property based on the building-by-building report and onsite inspection.  It was immediately apparent, based on conversations with the contractors, that to complete the mothballing and stabilization project would cost far in excess of the approximate $6 million appropriated for the work.  Therefore we plan to complete the mothballing and stabilization in three or more phases, depending of course on available funding.  HHS recently completed a reimbursable work authorization with GSA to contract this work and the first phase, which will involve roofing, boarding-up windows, securing the entrances and pest control, should begin within the next two months.  We have also started the environmental remediation process on a small amount of contaminated land outside of the buildings as noted in the environmental studies conducted earlier. 

As previously mentioned, most of the buildings on the West Campus were constructed from 1855 to the early 1900s, and consist of a total of approximately 1.1 million square feet of space.   Nearly every building suffers from severe deterioration, including structural failure in several, due to age and lack of proper maintenance.   Therefore, the estimate we now have to finish the mothballing and stabilization of the buildings is approximately $20 million.  This figure continues to rise as natural causes such as Hurricane Isabel and this past year’s severe winter do further damage.  The rate of deterioration and decline in the buildings, when not adequately addressed, is enormous.

Although the District has vacated its employees from the West Campus, it is still in the process of removing furniture, files and other articles from the buildings.  The District is also required by the terms of the Use Permit to issue a written 180-day notice that the property is no longer needed.  HHS has no current or future plans for this facility, but will be responsible for security and maintenance for the property until GSA assumes this responsibility.  The estimates we have received from GSA range from approximately $3.7 million to $4.4 million annually to maintain the campus after the initial scheduled mothballing and to provide security.  By comparison, to fully maintain an old facility such as this if fully occupied, would run approximately $9 - 13.5 million per year.  In addition to security, these figures include building maintenance, grass cutting, tree and shrub maintenance, snow removal, pest control and water and electric costs.  

In planning for the future of St. Elizabeths, we must recognize that this is one of the largest, mostly undeveloped tracts available in the District of Columbia and, therefore, an extremely valuable asset to the Federal Government, the community and the future of Southeast Washington.  In addition, redevelopment of this site will have a positive impact on the City and  promote economic growth in the area around St. Elizabeths.  The government can, and should, make every effort to ensure that the property is redeveloped in such a way to make it worthwhile to preserve the historic buildings and site lines, as well as create new jobs.

Neither the Federal government nor the District can be shortsighted in this endeavor.  The redevelopment of this property will have far-reaching effects on the area surrounding it, much the same way that the MCI center has had on the existing businesses and new development in the area in which it was built. 

However, there are negatives in redeveloping the property in addition to the collapsing floors and ceilings.  Since the entire site is listed as a Landmark on the National Register of Historic Places, all renovations must comply with the Secretary of Interior’s Standard for Historic Properties.  In addition, almost all of the buildings will require costly lead and asbestos remediation, and complete replacement of heating and air conditioning systems. 

Although the property is protected by the covenants of the National Historic Preservation Act, this does not necessarily preclude some limited, sensitive development at the site based on conversations with officials in both the National Park Service and the Advisory Council on Historic Preservation.  In fact, allowing adaptive reuse, integrated with historic preservation responsibilities, may be the best way to preserve the historic buildings.

With its rich heritage, St. Elizabeths Hospital offers a wonderful look at an important aspect of our nation’s history.  Creativeness must become part of the negotiation process between the Federal government, the District and, if needed, private entities.  Only then will this important cultural asset be saved.

GSA informed HHS that there may be other Federal uses for the property.  Although we have no further information regarding the interest, if a Federal transfer occurs, we believe that it will greatly benefit the immediate community and the city as a whole.  The continued mothballing and maintenance of the property is costly, and decisions need to be made as soon as possible to ensure that money is not being wasted and that the community can feel confident that this vital and historic asset is revitalized.

The Administration feels that the challenge of maximizing the use and benefits of all Federal real property requires a new approach to property management.  In 1998, the National Research Council stated that Federal assets must be well maintained, and operationally cost effective to protect their function and quality, and to provide employees and the general public with a safe, healthy, and productive environment.  However, as GAO has pointed out in its High-Risk Series, Federal Real Property, the Government’s landholding agencies are confronted with a growing challenge of not being able to satisfy this standard.  One such approach that Federal landholding agencies support is for the Congress to pass Government-wide property reform legislation that provides the appropriate tools and financial incentives to help promote sound and innovative real property management.

At Secretary Thompson’s initiative, HHS is redoubling our efforts to work with GSA, the District and the community to make certain that the potential of St. Elizabeths Hospital is realized.  Thank you for allowing me to speak with you today.