Table Of Content\V
TO AMEND THE PUBLIC BUILDINGS ACT OF
1959 CONCERNING CALC=ULATION OF =PUB—LIC
^^ ^ ^
BUILDING TRANSACTIONS ==
Y 4. P 96/11: 103-46
(103-46)
To Anend the Public Buildings Act o...
HEARING
|
BEFORE THE
SUBCOMMITTEE ON
PUBLIC BUILDINGS AND GROUNDS
OF THE
COMMITTEE ON
PUBLIC WORKS AND TRANSPORTATION
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
ON
H.R. 2680
TO AMEND THE PUBLIC BUILDINGS ACT OF 1959 CONCERNING
CALCULATION OF PUBLIC BUILDING TRANSACTIONS
OCTOBER 28, 1993 _
Printed for the use of the
Committee on Public Works and Tranns?portation
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78-708 WASHINGTON
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TO AMEND THE PUBLIC BUILDINGS ACT OF
1959 CONCERNING CALCULATION OF PUBLIC
____
BUILDING TRANSACTIONS
' 4. P 96/11: 103-46
(103-46)
o Anend the Public Buildings Act o...
HEAEING
BEFORE THE
SUBCOMMITTEE ON
PUBLIC BUILDINGS AND GROUNDS
OFTHE
COMMITTEE ON
PUBLIC WORKS AND TRANSPORTATION
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
ON
H.R. 2680
TO AMEND THE PUBLIC BUILDINGS ACT OF 1959 CONCERNING
CALCULATION OF PUBLIC BUILDING TRANSACTIONS
OCTOBER 28, 1993
Printed for the use of the
Committee on Public Works and Transportation
U.S. GOVERNMENT PRINTING,OFFICE
WASHINGTON
78-708 :
ForsalebytheU.S.GovernmentPrintingOffice ^^.fOT'i'r
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-044674-0
COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION
NORMAN Y. MINETA, California, Chair
JAMES L. OBERSTAR, Minnesota BUD SHUSTER, Pennsylvania
NDIOCUKGLJ.ASRAAHPAPLLLEGIAI,TWEe,stOhViiorginia WTIHLOLMIAASMEF..PCELTIRNIG,ERWi,scJorn.,siPnennsylvania
RON DE LUGO, Virgin Islands SHERWOOD BOEHLERT, New York
ROBERT A. BORSKI, Pennsylvania JAMES M. INHOFE, Oklahoma
TIM VALENTINE, North Carolina BILL EMERSON, Missouri
WILLIAM O. LIPINSKI, Illinois JOHN J. DUNCAN, Jr., Tennessee
JRAOMBEESRTA.E.TRWAIFSEI,CAJNr.T,,WJeRs.,tOVhirigoinia SWIULSLAINAMMOHL.INZAERLIIF,F,NeJwr.,YoNrekw Hampshire
PETERA. DeFAZIO, Oregon THOMAS W. EWING, Illinois
JIMMY HAYES, Louisiana WAYNE T. GILCHREST, Maryland
BOB CLEMENT, Tennessee JENNIFER B. DUNN, Washington
JERRY F. COSTELLO, Illinois TIM HUTCHINSON, Arkansas
MIKE PARKER, Mississippi WILLIAM P. BAKER, California
GREG LAUGHLIN, Texas MICHAEL A. "MAC" COLLINS, Georgia
GPEETOERGGEEREE.NS,ATNeGxMaEsISTER, Illinois JDAAYVIKDIMA, CLaElVifYo,rnNiaew York
GLENN POSHARD, Illinois STEPHEN HORN, Cahfornia
DICK SWETT, New Hampshire BOB FRANKS, New Jersey
BUD CRAMER, Alabama PETER I. BLUTE, Massachusetts
BARBARA-ROSE COLLINS, Michigan HOWARD P. "BUCK" McKEON, California
ELEANOR HOLMES NORTON, Districtof JOHN L. MICA Florida
Columbia PETER HOEKSTRA Michigan
LUCIEN E. BLACKWELL, Pennsylvania JACK QUINN, New York
JERROLD NADLER, New York
SAM COPPERSMITH, Arizona
LESLIE L. BYRNE, Virginia
MARIA CANTWELL, Washington
PAT (PATSY ANN) DANNER, Missouri
KAREN SHEPHERD, Utah
ROBERT MENENDEZ, New Jersey
JAMES E. CLYBURN, South Carolina
CORRINE BROWN, Florida
NATHAN DEAL, Georgia
JAMES A. BARCIA, Michigan
DAN HAMBURG, California
BOB FILNER, California
WALTER R. TUCKER, California
EDDIE BERNICE JOHNSON, Texas
PETER W. BARCA, Wisconsin
Subcommittee on Public Buildings and Grounds
JAMES A. TRAFICANT, Jr., Ohio, Chair
ELEANOR HOLMES NORTON, District of JOHN J. DUNCAN, Jr., Tennessee
Columbia, Vice Chair THOMAS E. PETRI, Wisconsin
EDDIE BERNICE JOHNSON, Texas BILL EMERSON, Missouri
DOUGLAS APPLEGATE, Ohio BUD SHUSTER, Pennsylvania
JAMES E. CLYBURN, South Carolina (Ex Officio)
WALTER R. TUCKER, Cahfornia
NORMAN Y. MINETA, California
(Ex Officio)
(ID
CONTENTS
Page
V
H.R. 2680 (textof)
TESTIMONY
Rivlin,Alice M., Deputy Director, Office ofManagement and Budget 11
Shehadi, Michael T., Group SeniorVice President, Charles E. Smith, Manage-
ment, Inc., Arlington,Virginia 71
Stasch, Julia, DeputyAdministrator, General Services Administration, accom-
paniedby Dennis Fischer, ChiefFinancial Officer 57
Stevens, L. Nye, Director of Planning and Reporting, General Government
Division, U.S. General Accounting Office, accompanied by Paul Posner,
Director, Budget Issues Group, and David Matheson, Assistant to the
ComptrollerGeneral 79
Williams, J. McDonald, President and Chief Executive Officer, Trammell
Crow Company, Dallas, Texas 71
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Rivlin, Alice M 85
Shehadi, MichaelT 90
Stevens, L. Nye 100
Williams, J. McDonald 169
SUBMISSIONS FOR THE RECORD
Clyburn, Hon. James E., a Representative in Congress from South Carolina,
posthearing questions submitted toAlice M. Rivlin, Deputy Director, Office
ofManagementand Budget 49
Rivlin, Alice M., Deputy Director, Office ofManagementand Budget:
Office of Management and Budget's position on the proposed Atlanta
lease 16
Savings from implementation ofscoringrules 46
Responses to post-hearing questions submitted by Hon. James E.
Clyburn 49
Stevens, L. Nye, Director of Planning and Reporting, General Government
Division, U.S. General Accounting Office, "Federal Office Space: Increased
OwnershipWouldResultin SignificantSavings" (December 1989report) .... 113
Traficant, Hon. James A., Jr., a Representative in Congress from Ohio, letter
toHon. Leon E. Panetta, Director, OfficeofManagement and Budget 9
(III)
103d CONGRESS H. R. 2680
1st Session
To amend the Public BuildingsAct of 1959 concerningthe calculation of
public buildingtransactions.
IN THE HOUSE OF REPRESENTATIVES
July 20, 1993
Mr. Traficant (for himself, Mr. DUNCAN, Mr. Mineta, Mr. Shuster, Mr.
Borski, Ms. Norton, and Mr. Lewis ofGeorgia) introduced the follow-
ing bill; which was referred to the Committee on Public Works and
Transportation
A
BILL
To amend the Public Buildings Act of 1959 concerning the
calculation ofpublic building transactions.
1 Be it enacted by the Senate and House ofRepresenta-
2 tives ofthe United States ofAmerica in Congress assembled,
3 SECTION 1. PUBLIC BUILDINGTRANSACTIONS.
4 Section 7 of the Public Buildings Act of 1959 (40
5 U.S.C. 606) is amended byadding at the end the following
6 new subsection:
—
7 "(g) Calculation" of Transactions. For pur-
8 poses of calculating public building transactions, any con-
9 tract entered into by the Administrator under this Act for
(V)
VI
2
1 the purchase, lease-purchase, or lease of a public building
2 approved pursuant to subsection (a) shall be treated in
3 the same manner as ifthe contractwas entered into imme-
4 diatelyprior to fiscalyear 1991.".
•HR 2680 IH
—
AMENDING THE PUBLIC BUILDINGS ACT OF
1959 CONCERNING CALCULATION OF PUB-
LIC BUILDING TRANSACTIONS
THURSDAY, OCTOBER 28, 1993
House of Representatives,
Committee on Public Works and Transportation,
Subcommittee on Public Buildings and Grounds,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:32 a.m. in room
2253, Rayburn House Office Building, Hon. James A. Traficant, Jr.
[chairman ofthe subcommittee] presiding.
Mr. Traficant. The subcommittee will come to order.
This morning the subcommittee will hear testimony from officials
of the Executive Branch, the Administrative Office of the General
Services Administration; Alice Rivlin, Deputy Director ofthe Office
of Management and Budget; and Mr. Nye Stevens of the General
A
Accounting Office. panel of private sector real estate experts will
also participate in today's proceedings.
We are all here today to receive testimony on H.R. 2680, an idea
that is overdue, and for some reason Congress wants to pile on and
continue to pile on long-term debt rather than face the realities of
real scoring as far as the deficit is concerned.
H.R. 2680 is a bill to restore to the General Services Administra-
tion a full set of financing tools that the committee believes the
agency needs to conduct an efficient and effective real estate trans-
action opportunity for our Government. As members ofthe commit-
tee which authorizes GSA—real estate appropriations, we believe
that GSA should present and be able to include and discuss
lease-purchase options as the committee arbitrates on GSA project
funding.
Lease-purchase combines characteristics of ownership with char-
acteristics of leasing, and should be available to the committee for
comparison and consideration with other funding alternatives. Our
job is to authorize funding. In order to make the most informed de-
cision, all funding options should be presented to the committee.
In its role as the Federal Government's central property man-
ager, GSA has a very broad array of responsibilities and tasks.
GSA has control over approximately 258 million square feet of
space through ownership and leasing. Contrary to popular opinion,
GSA's record as a central property manager is excellent, an excel-
lent record, and we want to make their presence in the real estate
field even more significant than it is. They are in the forefront of
energy management; handicapped accessibility programs; design
(l)
awards; small business opportunity programs, and health and safe-
ty measures.
However, in the financial arena GSA is in left field. They are
playing, at best, second nature. Scoring rules imposed by the Budg-
et Enforcement Act of 1990 have severely limited GSA's ability to
consider bargains: bargains for the taxpayer. That's what we're
here about today. For the past three budget cycles this subcommit-
tee has been presented with countless prospectuses which analyze
in detail various alternatives to acquiring Federal office space. Too
often, the committee has been informed that in the absence of di-
rect Federal appropriation, a cost-effective lease arrangement, such
as lease-purchase, is not available to GSA, and therefore, by exten-
sion, not available to the taxpayer.
There has been ample articulation of this problem. In December
of 1989, GAO did a report entitled "Federal Office Space: Increased
Ownership Would Result in Significant Savings." Nobody—no-
—
body responded. In fact, we have seen a lot of excuses. We've
heard an awful lot of complaints, a lot of analytical garbage, but
nobody has responded to that GAO report. On page 2, Results in
Brief, "Funding limitations and biases in the current budget struc-
ture have led GSA to lease space that would be more economical
to own." And on page 3, "Efforts to increase ownership are also
hampered by a budgetary bias against capital investment. The Fed-
eral budget makes no distinction between the benefits associated
with a capital asset, which produces a future stream of benefits,
and an outlay for an annual rent payment, which does not."
Further, the Office of Management and Budget, in agency com-
ments in the same report, states, "GSA and OMB plan to work
with Congress to achieve legislation to authorize GSA to enter into
least cost financing mechanisms."
soImcaonulydpaelompolsetsafayllsoasmlaeenpytgaolkoidngthaibnogustatnhdatd.oInhoatvhienngeivnermyhelairfed,
and I'm getting phone calls that we should back off.
Further, the Office of Management and Budget in agency com-
ments in the same report states, "We have to have least cost fi-
nancing mechanisms." I should read that a third time.
In more recent GAO testimony, in July of 1993 before Senator
Levin, Mr. J. William Gadsby testified, "Our work has shown that
GSA could save billions of dollars by increasing the amount of fed-
erally-owned space and reducing leased space." I think Ronald
McDonald wrote a letter to that effect to the Congress.
Administrator Johnson, in his testimony before Senator Glenn on
June 8, 1993, said, "The current budget scoring rules need to be
reevaluated. It seems to me that the scoring techniques, at best,
make the budget difficult and confusing; and at worst, may not be
in the best interest ofthe taxpayer because they often do not result
in the most cost-effective decision."
Further, on October 14th, 1993, Mr. Johnson stated, "The Gov-
ernment should ensure that there is no budget bias against long-
term investments. Poor choices of capital investments and the
means ofacquisition are currently costing taxpayers millions ofdol-
lars each year."
