Capital Improvement Program




MAY 11, 1999


Good Morning Mr. Chairman, and Members of the Subcommittee. My name is Paul Chistolini and I am the Deputy Commissioner for the General Services Administration (GSA) Public Buildings Service.

The GSA's Public Buildings Service manages space in approximately 8,300 buildings. Over 1,800 are government-owned and 6,500 are leased from the private sector. More than 400 of the Government's properties have historic significance based on their age, building type, architectural style, or involvement in culturally significant events. PBS customers include all Federal departments, independent agencies and commissions, the Judiciary, and Members of Congress.

This past March, we submitted to Congress GSA's Fiscal Year 2000 Capital Investment Program, which is before you today. The highlights of the program include:

7 prospectus-level design and new construction projects estimated at $92.2 million;

13 prospectus-level repair and alteration projects budgeted at $201 million;

13 prospectus-level repair and alteration designs for future projects at $17.7 million;

An elevator program to repair existing elevators and escalators in 5 buildings for $24.2 million; and

An ongoing chlorofluorocarbon reduction and energy-saving programs each budgeted at $20 million.

Our Capital Investment and Leasing Program plays a key role in providing the necessary resources to maintain current real property assets and acquire new or replacement assets. The capital program supports several portfolio objectives:

?aximizing Federal Buildings Fund (FBF) income;

?inimizing the drain of unproductive assets;

?reserving the historical and cultural assets placed in GSA's trust; and

?anaging other diverse responsibilities integral to the management of the nation's largest real estate portfolio.

All proposed projects across the country are evaluated in the context of the entire national portfolio. We consider three options when evaluating our client agency requirements. These include the construction and acquisition of new facilities, repair and alteration of existing facilities, or leasing space from the private sector. Generally speaking, we consider a number of factors when evaluating and prioritizing our capital program:

?conomic justification in terms of financial return and present value cost;

?roject timing and execution;

?hysical urgency based on building conditions;

?ustomer urgency; and

?istoric preservation and community considerations.

REPAIR AND ALTERATION Our first capital program priority is the repair and alteration of our existing inventory to ensure that its value and condition does not decline. More than 43% of our owned buildings are over 50 years old, and 5 1 % are between the ages of 21 to 50 years old.

With the limited resources of the FBF and an increasingly aging inventory, we use a ranking process and several tools to help us determine resource allocation. For instance, we consider the following criteria when evaluating repair and alteration projects:

?rotecting the safety and health of tenants in owned and leased assets;

?ltering vacant space in owned assets to relocate client agencies from leased space into Govemment-owned space when available; and

?ompleting planned phased modernizations (follow-on phases of multi-phased projects).

A specific tool we use is a return on investment (ROI) methodology to determine the financial impact of each repair and alteration project. ROI determines if a project adds or detracts from the net income the building contributes to the FBF after project completion. Using a ROI methodology in evaluating projects assists our efforts in strengthening the longterm fiscal health of the FBF.

When evaluating repair and alteration projects, we also closely examine proposed project scopes to ensure that they meet client agency requirements and facility needs. We work to determine if any possible changes in project scope can be made to realize cost savings, without jeopardizing the project's goals. Refining project scopes may free up additional funding for more projects.

Additional criteria we consider when prioritizing major repair and alteration needs in the context of our entire national portfolio include:

?bility to award projects within the fiscal year;

?rgency of a project's execution, such as imminent system failure and health and safety issues;

?mminent nature of tenant requirements; and

?ssurance that the leasing of swing space is appropriately timed with project execution to avoid duplication of costs.

By applying these criteria to our decision-making process, we prioritize our major repair and alteration projects and ensure that the most important ones in our national portfolio are funded.

NEW CONSTRUCTION AND ACQUISITION Our proposed fiscal year 2000 program requests a modest new construction and acquisition program, including: five border stations; demolition to allow for the construction of a new U.S. Mission to the U.N.; and additional funding for the FDA consolidation in Montgomery, MD. This year we are also requesting a fiscal year 2001 advance appropriation to the FBF for the ATF Headquarters project and the FDA consolidation. This program--excluding the advance appropriation requested as an appropriation to the FBF--will be funded entirely by FBF revenues.

Finally, we are evaluating various options to increase funding resources for new construction and reduce our need to lease space to meet our clients' needs. With the 50th anniversary of the Federal Property and Administrative Services Act of 1949 (Property Act), we have been studying the impact that additional asset management tools would have on the government's management of real property, and are preparing legislation to amend the Property Act to help the Federal government to more efficiently manage its diverse portfolio of assets.

Mr. Chairman, this concludes my formal statement. I would be glad to answer any questions you may have about our proposed Fiscal Year 2000 Capital Investment Program.

Last Reviewed 2010-04-30