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PURPOSE

BACKGROUND

CHAIRMAN'S OPENING STATEMENT

WITNESSES

The Subcommittee on Economic Development, Public Buildings and Emergency Management will meet at 10:00 a.m. on March 30, 2006 in Room 2253 Rayburn House Office Building to receive testimony on the General Services Administration’s (GSA) Fiscal Year 2007 Capital Investment and Leasing Program (CILP). Immediately following the hearing, the Subcommittee will reconvene to markup three Capitol Ground Concurrent Resolutions and GSA FY 2007 CILP projects ready for consideration.

GSA FY 2007 RESOLUTIONS

The GSA CILP represents detailed prospectuses submitted by GSA to the Committee, which contain information on the need, extent of authority, scope, location, cost, size and related information regarding repair, alteration, construction, and leasing projects. Prospectuses are required when the total cost of the project exceeds $2.54 million, which is the current threshold under 40 U.S.C. §3307¹. The CILP consists of requests for authority to repair existing federal buildings, design projects for future repair of existing buildings, construction of new buildings, lease of space for federal agencies and national programs such as upgrading energy conservation measures, upgrading fire, life, and safety systems, or the removal of harmful substances from federal buildings.

Generally, 40 U.S.C. §3307(a) provides that appropriations to construct, alter, or acquire by lease or otherwise any building for use as a public building in excess of the $2.54 million threshold, “...may be made only if the Committee on Environment and Public Works of the Senate and the Committee on Transportation and Infrastructure of the House of Representatives adopt resolutions approving the purpose for which the appropriation is made…”

On February 14, 2006, GSA submitted the alteration, design, and construction portion of the FY 2007 Capital Investment and Leasing Program. The Committee received part of the FY 2007 leasing program on March 7, 2006. The Committee received a total of 37 prospectuses, including 11 for alterations and design, 8 for construction, and 18 for leases. In total, the Subcommittee will be considering 34 prospectuses, including one held over from the FY 2006 program, 11 of the alteration and design prospectuses, 8 construction prospectuses, and 15 of the lease prospectuses, which require authorization.

The Administration’s FY 2007 budget includes requests for authority to acquire sites, design, and construct new federal buildings and border stations. Many of the projects have received authorization for site, design, or construction phases in previous years and are requesting a new phase of funds for FY 2007. In addition, many of these prospectus level projects are multiyear in nature. Other major repair and renovation projects span several years, and the Committee’s approval of a prospectus for these projects is subsequently funded over multiple years. While the judiciary proposed several new courthouses for the FY 2007 budget, the Office of Management and Budget (OMB) did not approve them and they were not included in the President’s budget.

The Administration’s FY 2007 budget includes requests for authority to enter into leases for office and related space for federal agencies. The majority of the leases are 10, 15, or 20-year leases. Although it is expected that some of these may result in long-term occupancies, due to budgeting constraints, OMB and Congressional Budget Office scoring rules, GSA is forced into shorter-term leases that tend to be more expensive over time.

Charts summarizing the prospectuses under consideration are attached to this memo. More detailed information, including copies of the prospectuses, is available upon request.

The Repairs and Alterations program funds design, construction, and management and inspection costs for the repair, alteration, and modernization of Public Building Service’s (PBS) existing real estate assets. It funds projects to improve health and safety, recapture vacant non-revenue producing government-owned and leased space, and other various special programs.

For FY 2007, GSA has requested new authority totaling $489.8 million for design, modernization, repair, and alteration of 18 Federal buildings and courthouses, with a good portion of this activity being in the Washington, D.C. region. This includes $465 million for basic Repairs and Alterations projects and $24.8 million for the design of future projects and a request for funding for an alteration project in leased space in Woodlawn, Maryland. However, in each of these locations, there is a long-term occupancy by the federal government. In FY 2006, GSA requested $865.2 million for the Repairs and Alterations Program.

The Construction and Acquisition of Facilities program funds the site, design, construction, and management and inspection costs for the construction of federal facilities, including executive agency facilities, border stations, federal judiciary projects, and other non-prospectus level construction projects.

GSA has requested $520.148 million in new authority for new executive agency facility construction projects, including $96.5 million for construction of border facilities in Nogales and San Luis, Arizona, Columbus, New Mexico, and El Paso and McAllen, Texas, as well as $383.9 million to support the consolidation of the Coast Guard in Washington, D.C. New courthouses have been proposed by the Administrative Office of the Unites States Courts but they were not included in the President’s budget for FY 2007. In FY 2006, GSA requested $426.7 million for the Construction and Acquisition of Facilities, including $194.4 million for executive agency facilities and $232 million for federal judicial facilities.

There is an additional resolution authorizing $19,155,000 for four projects that have seen significant price increases since originally authorized, due mainly to increases in cost for steel, concrete, and skilled labor. The four projects receiving additional authorization are the U.S. Courthouse in El Paso, Texas; U.S. Courthouse in Las Cruces, New Mexico; U.S. Border Station in El Paso, Texas; and U.S. Border Station in Del Rio, Texas.

The lease prospectus program requests authority to enter into leases for office and related space for federal agencies. The lease prospectuses submitted by GSA include authority for new leases, replacement leases, succeeding leases, superseding leases, and expansion leases. These include leases for new agency space requirements and for expansion of existing space, leases to consolidate agencies into more efficient space configurations, and replacement leases for expiring leases that no longer meet the needs of the agency. All of the prospectuses submitted by GSA are for authority to enter into an operating lease.

For FY 2007, GSA’s rental of space account is expected to be approximately $4.32 billion, a slight increase over the FY 2006 level of $4.046 billion. Only those leases above the prospectus threshold of an annual cost of $2.54 million require authorization. GSA is requesting authority for 15 leases for FY 2007. Of these, three are for 20-year terms, two are for a term of 15 years, nine are for 10-year terms, and one is for a term of 5 years, a needed extension of a current lease prior to BRAC requirements to relocate to DOD owned space. Three submitted lease prospectuses are not being considered at this time due to requests for additional information from GSA. In total, the leases we are considering today represent an annual cost of $154.8 million dollars. Most of the prospectuses propose a new annual cost that is higher than the current cost, partially due to the tight commercial real estate market. A majority of the leases in the FY 2007 lease program are for 10-year leases. The shorter-term leases are more expensive, but are required for budgeting purposes so the Federal Building Fund is not charged a capital expense in the first year of the lease.

H. Con. Res. 349 authorizes the use of the Capitol Grounds for the 65th Annual Greater Washington Soap Box Derby qualifying races to be held on June 17, 2006. The races will take place on Constitution Avenue between Delaware Avenue and Third Street, NW. Participants competing in the event range from ages 8 to 17 and come from the Washington, D.C. metropolitan area. Winners of the event will represent the Washington, D.C. metropolitan area in the National Soapbox Derby competition held annually in Akron, Ohio.

H. Con. Res. 359 authorizes the use of the Capitol Grounds for the 21st Annual Law Enforcement Torch Run, benefiting the Special Olympics of the District of Columbia. The Capitol Police, along with the D.C. Special Olympics, will participate in the torch run to be held on June 9, 2006.

H. Con. Res. 360 authorizes the use of the Capitol Grounds for the 25th Annual National Peace Officers' Memorial Service to be held on May 15, 2006. The memorial service will honor the federal, state, and local law enforcement officers killed in the line of duty in 2005. The Grand Lodge of the Fraternal Order of Police and its Auxiliary are the sponsors of the event.

All organizations will work closely with the Capitol Police and the Architect of the Capitol to see that these events are in full compliance with the rules and regulations governing the use of the Capitol Grounds. Furthermore, these concurrent resolutions do not authorize any expenditures.

ATTACHMENT
General Services Administration, Public Buildings Service, FY 2007 Capital Investment and Leasing Program - Alterations

1) 40 U.S.C. §3307 specifically requires a prospectus when a project’s total cost will exceed $1.5 million, with an annual adjustment for inflation. $2.54 million is the current threshold amount.