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GSA leases held up in real estate power play

Jun. 17, 2012 - 02:48PM   |  
By ANDY MEDICI   |   Comments
The Federal Trade Commission building is seen in Washington, D.C.
The Federal Trade Commission building is seen in Washington, D.C. (Paul Richards / AFP via Getty Images)

House Transportation and Infrastructure Committee Chairman Rep. John Mica, R-Fla., is holding up approval of 20 federal leases, affecting thousands of federal employees.

Mica wants the General Services Administration to move the Federal Trade Commission out of its headquarters building, located just off the National Mall in northwest Washington, so the building can be used as an annex for the Smithsonian Institution’s National Gallery of Art, which needs more space.

Mica’s committee has authority to approve GSA leases, and the chairman has long championed what he says is a way to save up to $400 million by moving the FTC out of its current headquarters and consolidating all its operations into a single leased office building.

Mica’s plan is to let the National Gallery of Art pay for what he says are $200 million of needed renovations to the FTC building. The other $200 million in savings, Mica proposes, would come from avoiding current and future real estate costs for additional space needed by the National Gallery of Art.

Mica has held up approval of GSA leases until the agency provides the committee with a cost-benefit analysis of the proposed FTC move.

On June 12, acting GSA Administrator Dan Tangherlini provided that analysis, saying the move is “not physically possible.”

He said the administration would oppose any legislation that would direct the transfer of the FTC headquarters, called the Apex Building, to the National Gallery of Art.

“While I appreciate your strong desire to have the Apex Building transferred to the NGA, it does not appear to be cost effective or in the best interests of the taxpayers to do so,” Tangherlini said in the letter.

He said it would be far cheaper to consolidate two locations the FTC currently leases into one location, while keeping the FTC in its current headquarters.

The House Transportation and Infrastructure Committee has final say over any GSA lease valued at more than $2.66 million.

The hold on the leases means that more than $140 million in annual rent is stuck in limbo.

Not enough information Justin Harclerode, spokesman for the committee, said the latest information provided by GSA was not enough.

“This is just one of a number of areas where the GSA has inadequately responded or not responded at all to a committee request,” Harclerode said.

He said Mica has requested information regarding staffing levels for a Nuclear Regulatory Commission facility in Maryland, regarding a request for additional space reductions for an Energy Department lease in Washington, and regarding a courthouse complex in Orlando, Fla.

“This is not about any single issue — it’s about multiple committee requests to GSA for information that we need to help reduce costs associated with housing federal agencies and saving taxpayers’ money,” Harclerode said.

He said that unless GSA cooperates, the committee will continue to delay approval of proposed leases.

“The committee has been approving GSA resolutions [leases], just perhaps not as blindly or with the minimal amount of scrutiny that GSA would be more comfortable with,” Harclerode said.

He said the committee has identified space reductions in recent leases that will save more than $23 million a year.

But 10 leases have been pending since last fiscal year and another 10 have been submitted this fiscal year but not been acted upon, according to GSA.

One of those proposes a new single leased space for FTC employees now working at two separate leased spaces. One of those leased spaces is set to expire Aug. 8. The additional cost to GSA for keeping FTC employees at that leased space after the lease expires will be $474,500 a month.

GSA business suffers Kurt Stout, executive vice president for government solutions at real estate firm Colliers International, said Mica’s hold on leases will degrade GSA’s bargaining power when it renews its leases.

He said normally GSA opens up new or expiring leases to competition, but if it is running short on time it could narrow its scope to a smaller group of properties.

Mica’s committee approved 11 leases on March 8, and some of those had been long delayed, including some that were pending for 545 days.

Leases being held up by Mica’s committee include:

• An effort to consolidate several offices of the National Institute of Allergy and Infectious Diseases into a larger leased location in Bethesda, Md. The agency needs additional space to accommodate staffing increases, according to a GSA lease justification.

• An extension of the current lease for the Treasury Department’s Financial Management Service in Hyattsville, Md. The lease expires at the end of September and the agency needs time to evaluate its long-term needs, according to a GSA lease justification.

FTC battle since 2005 Mica has long been pressing GSA to relocate the FTC.

Mica made attempts in 2005, 2008 and 2011 to pass legislation that would have forced FTC to move out of its headquarters and convey that property to the National Gallery of Art.

Former FTC commissioner Orson Swindle said he first remembered Mica proposing his idea to relocate the FTC in 2000.

“I said that’s the most insane idea I’ve heard in my entire life,” Swindle recalled.

Former FTC Commissioner Tom Leary said that no one at the agency wanted to leave the building, which he described as “magnificently located” and built to fit its needs. “We did not choose to waste time on plans for an unwelcome event that we did not think would actually happen,” Leary said.

He said the side effects of the lease impasse are regrettable, but he sees a fix for the problem.

“The simple solution would be for Congressman Mica to back off.”

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