Advertisement

You will be redirected to the page you want to view in  seconds.

Trading up

As construction budget drops, GSA looks to exchange buildings, land

Oct. 19, 2012 - 05:55PM   |  
By ANDY MEDICI   |   Comments
GSA is hoping to trade a 72-year-old, underused 783,000-square-foot courthouse in Los Angeles for a new, more appropriately sized 175,000-square-foot facility.
GSA is hoping to trade a 72-year-old, underused 783,000-square-foot courthouse in Los Angeles for a new, more appropriately sized 175,000-square-foot facility. ()

As the General Services Administration grapples with reduced budgets, it is increasingly looking to private-sector partnerships to help it maintain the more than 9,000 buildings it owns or leases.

For instance, GSA is asking the private sector for ideas about how best to dispose of the aging David W. Dyer Federal Building and U.S. Courthouse in Miami. The building has mold problems and needs renovation. Still, GSA hopes to sell the property — or even trade it for another facility or for renovations to its existing buildings. “Potential redevelopment could involve an exchange, exchange for services, lease, or sale of the property,” according to the Aug. 1 request for information.

“These responses will help GSA proceed with a strong repositioning strategy for the Dyer Courthouse,” said Shyam Reddy, administrator for GSA Region 4 headquartered in Atlanta.

Not exactly a traditional real estate deal for the government, but expect more deals like this from GSA.

“We’ve … developed a new approach to disposing of unneeded federal facilities by trading vacant or underutilized properties for needed capital investments in the federal building portfolio,” GSA spokesman Dan Cruz said in a statement.

GSA also is hoping to trade a 72-year-old, underused 783,000-square-foot courthouse in Los Angeles for a new, more appropriately sized 175,000-square-foot facility. GSA is soliciting private-sector feedback.

Special authority with 2005 appropriations allows GSA to enter into leases or other special financing deals with the private sector to exchange, trade, lease or otherwise negotiate for new construction or renovation projects.

For instance, GSA could arrange for a private developer to finance the renovation of a federal building. GSA could increase rents at that building from federal tenants and pay back the developer over time.

GSA also could trade facilities or land for facilities in other locations.

GSA has rarely used this authority in the past.

Congress has slashed GSA budgets to the bone in recent years. Funding for GSA construction projects dropped from $894 million in 2010 to $82 million in 2011, and to $50 million in 2012. The renovation budget dropped from $414 million in 2010 to $280 million in 2011, holding steady at $280 million in 2012. GSA asked for $494 million for 2013, but it has only $280 million under the current continuing resolution.

GSA also is working to award $175 million in Energy Savings Performance Contracts (ESPCs) by the end of fiscal 2013 in response to a December presidential memo calling on agencies to enter into at least $2 billion in ESPCs over the next two years.

Under an ESPC project, the vendor pays the upfront investment for building renovations and retrofits in exchange for payments from the government’s energy savings over time.

John Dukes, vice president of federal and public sector energy efficiency at Constellation Energy, said agencies are using ESPCs to help replace or maintain aging infrastructure in their buildings.

While the contracts are focused on energy savings, agencies can replace ventilation systems, air conditioners and other systems without appropriated funding, he said.

Contractors are then responsible for maintaining and repairing those systems for the life of the contract, according to Dukes.

“Bundling the unseen but necessary infrastructure improvements into an ESPC saves real taxpayer dollars and is going to be there for the next 50 years,” Dukes said.

For example, GSA is wrapping up a two-year, $39 million ESPC project to link the building systems at 39 of its high-energy-use facilities in Texas, Louisiana, Arkansas and New Mexico. GSA then will be able to monitor and control all of the buildings’ heating, cooling, lighting, water and security systems from its Greater Southwest Region headquarters in Fort Worth, Texas. The project will help control costs by monitoring trends in energy use, identifying poorly performing buildings and quickly fixing broken systems.

These public-private partnerships have grown in popularity among state and local governments, but they are just now emerging as a tool for federal agencies, said Ben Brubeck, director of labor and federal procurement for Associated Builders and Contractors Inc.

Now is the perfect time for agencies to turn to private contractors, since interest rates and financing are low, he said. Contractors also can start on renovation and maintenance projects sooner than agencies can, he said.

But he said the budget-scoring process the Office of Management and Budget uses to tally the costs of projects upfront instead of spreading them out over time discourages agencies that don’t want to expend their budget authority upfront.

“Some of those standards are preventing federal agencies from realizing as many [public-private partnerships] as they should,” Brubeck said. ---------------------------

Sarah Chacko contributed to this report.

More In Facilities, Fleet & Energy