[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

L.A. COURTHOUSE: GSA'S PLAN TO SPEND
$400 MILLION TO CREATE VACANT SPACE

=======================================================================

(112-100)

FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

OF THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

AUGUST 17, 2012 (Los Angeles, California)

__________

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
ANDY HARRIS, Maryland MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania GRACE F. NAPOLITANO, California
CHIP CRAVAACK, Minnesota DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas MAZIE K. HIRONO, Hawaii
LARRY BUCSHON, Indiana JASON ALTMIRE, Pennsylvania
BILLY LONG, Missouri TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio HEATH SHULER, North Carolina
PATRICK MEEHAN, Pennsylvania STEVE COHEN, Tennessee
RICHARD L. HANNA, New York LAURA RICHARDSON, California
JEFFREY M. LANDRY, Louisiana ALBIO SIRES, New Jersey
STEVE SOUTHERLAND II, Florida DONNA F. EDWARDS, Maryland
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
VACANCY
------ 7

Subcommittee on Economic Development, Public Buildings, and Emergency
Management

JEFF DENHAM, California, Chairman
TIMOTHY V. JOHNSON, Illinois ELEANOR HOLMES NORTON, District of
ERIC A. ``RICK'' CRAWFORD, Columbia
Arkansas, HEATH SHULER, North Carolina
Vice Chair MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio DONNA F. EDWARDS, Maryland
PATRICK MEEHAN, Pennsylvania BOB FILNER, California
RICHARD L. HANNA, New York NICK J. RAHALL II, West Virginia
CHARLES J. ``CHUCK'' FLEISCHMANN, (Ex Officio)
Tennessee
JOHN L. MICA, Florida (Ex Officio)

CONTENTS

Page

Summary of Subject Matter........................................ iv

TESTIMONY

Mark L. Goldstein, Director, Physical Infrastructure Issues, U.S.
Government Accountability Office............................... 4
Kevin Richards, Acting Regional Commissioner, Pacific Rim Region,
Public Buildings Service, U.S. General Services Administration. 4

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Lucille Roybal-Allard, of California........................ 24

With attached statements from:
Hon. Barbara Boxer, a U.S. Senator from the State of
California............................................. 27
Hon. Antonio R. Villaraigosa, Mayor, City of Los Angeles,
California............................................. 28
Gary Toebben, President and CEO, Los Angeles Area Chamber
of Commerce............................................ 29
Carol E. Schatz, President and CEO, Central City
Association............................................ 30
Richard J. Burdge, Jr., President, Los Angeles County Bar
Association............................................ 31
Evan A. Jenness, President-Elect, Los Angeles Chapter of
the Federal Bar Association............................ 33
Robbie Hunter, Executive Secretary, Los Angeles/Orange
Counties Building and Construction Trades Council...... 35
Michael P. Huerta, Business Manager, Sprinkler Fitters
U.A. Local 709......................................... 36

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Mark L. Goldstein................................................ 37
Kevin Richards................................................... 49

SUBMISSIONS FOR THE RECORD

Hon. Margaret M. Morrow, District Judge, United States District
Court for the Central District of California:

Written statement and letter from California
congressional delegation in support of the Los Angeles
courthouse project, October 28, 2011................... 54
Letter and enclosures to Hon. Jeff Denham, a
Representative in Congress from the State of California
and Chairman, Subcommittee on Economic Development,
Public Buildings, and Emergency Management; and to Hon.
Eleanor Holmes Norton, a Delegate in Congress from the
District of Columbia and Ranking Member, Subcommittee
on Economic Development, Public Buildings, and
Emergency Management, September 20, 2012............... 61

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L.A. COURTHOUSE: GSA'S PLAN TO SPEND
$400 MILLION TO CREATE VACANT SPACE

----------

FRIDAY, AUGUST 17, 2012

House of Representatives,
Subcommittee on Economic Development, Public
Buildings and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 9:58 a.m., in
room 809, Edward R. Roybal Federal Building and U.S.
Courthouse, 255 East Temple Street, Los Angeles, California,
Hon. Jeff Denham (Chairman of the subcommittee) presiding.
Present: Representatives Denham and Shuster.
Mr. Denham. The subcommittee will come to order. I want to
welcome, first of all, Chairman Shuster of the Subcommittee on
Railroads, Pipelines and Hazardous Materials, and the former
chairman of this subcommittee, to this hearing today.
I ask unanimous consent that Representative Shuster be
permitted to sit with the subcommittee at today's hearing.
Without objection, so ordered.
The purpose of today's hearing is to continue our
investigation into billions of dollars wasted on vacant and
mismanaged properties, and to highlight the waste we can avoid
here today by halting the construction of an unneeded
courthouse in L.A.
While we have received a statement for the record from the
courts, I am extremely disappointed that there is no
representation from the courts here today. The invitation
letter was sent to the chief judge, and we followed up directly
with the courts to identify a witness. We were told that there
were no judges available to testify today. It seems outrageous
that we are here in L.A., physically inside the Roybal
Courthouse, inside a courtroom, yet there are no judges
available to come to the hearing and testify.
It is even more troubling that many of them found time to
attend a conference in Maui this week but are not available to
testify today to justify spending $340 million of taxpayer
funds. After all the waste this committee has exposed on lavish
conferences and training sessions, it is mind-boggling that the
courts would host yet another conference in Maui, a conference
that reportedly is costing the taxpayer more than $1.1 million,
significantly more than the lavish Las Vegas vacation that was
hosted by GSA, with a total of 2,760 room nights in ocean-view
suites, including several suites and the large Palace
Presidential Suite.
In addition, it appears the special rates the hotel is
providing for this conference extended 3 days prior and 3 days
after the conference. So it wouldn't be surprising if today
judges aren't still in Maui even though the conference ended
yesterday.
I am also disappointed that GSA's acting administrator has
yet again chosen to not appear at today's hearing. Neither Mr.
Tangherlini nor anyone from GSA's headquarters showed up at the
committee's hearing on the wasteful spending unearthed, and yet
more conferences and exorbitant bonuses.
No one from GSA's headquarters showed up last week in
Miami, and today Mr. Tangherlini has chosen not to show up
today to explain $400 million for a courthouse that is not
needed. It is amazing on one hand that Mr. Tangherlini has
removed from GSA's regional offices the authority to approve
conferences, yet he defers to the regions on spending hundreds
of millions of dollars in taxpayer money here in L.A., and also
more recently signing a $351 million lease at the World Trade
Center.
So today we continue our oversight of GSA. Just last week
we held a hearing in the vacant Dyer Courthouse in Miami,
Florida, which sat vacant for 4 years. The judges in Miami
justified the need for a new courthouse, telling us that by now
they would have had 42 judges, and yet they only have 31. Those
projections never materialized, and now we have a vacant
courthouse sitting in the middle of downtown Miami, vacant
space in a new courthouse, and an abandoned court space in a
nearby Federal building. And 4 years later, the Dyer Courthouse
is sitting vacant, with GSA claiming, despite receiving $5.5
billion in stimulus, it had no money to renovate the building
for re-use, and GSA only announcing it is seeking ideas from
the private sector a week before the committee hearing. This
was the same thing that we saw in Georgetown with the 2.5-acre
piece of property. The day before we held a hearing, it went up
for sale.
So we will continue to hold hearings and hopefully continue
to sell property.
Miami is an example of what will happen here in L.A. if a
new courthouse is built. Over the last 11 years, the judiciary
projected there would be somewhere between 72 and 81 judges in
Los Angeles by 2011 or 2014. The judiciary claimed Los Angeles
the number-one judicial space emergency in the United States
and proposed a massive new courthouse. However, today we know
the primary justification for a new L.A. courthouse is wrong.
There are fewer judges in L.A. now than there were in 1997.
Today we have two buildings with 61 courtrooms and 59 judges.
In 2004, they projected 81 judges and today have only 59.
If a new courthouse is built, the courts will abandon the
Spring Street Courthouse and space in Roybal, yet there is no
budget to renovate those spaces for use by other agencies, and
questionable plans to dispose of Spring Street.
In the end there will be, in effect, 85 courtrooms for just
59 judges, half of which should be sharing courtrooms under the
judiciary's own sharing policy. The result? Like Miami, we will
see hundreds of millions of dollars wasted on a new courthouse
while vacant space lingers for years, all paid for by the
taxpayer.
Last Congress, at the request of the subcommittee, the GAO
completed a review of the 33 courthouses constructed between
2000 and 2010. What the GAO found was incredible. GSA built
over 3.5 million square feet of courthouse space that we just
didn't need, at a cost of over $800 million. As a result, the
judiciary abandoned existing courthouses across the country and
severely underutilizes new courthouses.
In response to the committee's concerns, GSA issued a 1-
page fact sheet in June proposing disposing of the Spring
Street Courthouse by exchanging it for a $50 million new
Federal Building. While we have encouraged GSA to use its
existing authorities to address Federal space needs, questions
have been raised regarding the viability of GSA's proposal. In
sum, it is unclear how these numbers actually add up. The fact
that GSA has a history of selling prime real estate for pennies
on the dollar, such as the examples in Bethesda, Maryland, and
Jackson, Mississippi, makes us skeptical about this new
proposal and how it will work.
It is unclear why GSA spends $340 million on a new
courthouse if it has not taken any steps to verify the
viability of this new proposal. It is almost as if GSA cobbled
together its 1-page proposal to try and justify the $340
million spending on an unneeded courthouse. We expect to hear
from GSA today, giving more details on the latest proposal, and
I look forward to getting those answers from the witnesses with
us today.
At this time, I would like to recognize Chairman Shuster
for any opening statement he may have.
Mr. Shuster. Well, thank you, Chairman Denham. I appreciate
your leadership on this issue.
This is an extremely important issue. We have, as Chairman
Denham has been talking about, and Chairman Mica for the last
couple of years, about the overbuilding, not just in the
courtrooms but the vast square footage that we have available
not being used by the Federal Government. We need to do
something about it, either sell it off, we need to utilize it,
and again, as a former chairman of this subcommittee, 4 or 5
years ago I initially started to look at the overbuilding of
the courthouses, and with the help of the GAO, they have done a
study and have found that we have millions and millions of
square footage that has been built, and we are not utilizing
it.
The judiciary has consistently grossly overestimated its
10-year projection of future judges assigned to courthouses, as
Chairman Denham pointed out. New courthouses did not
incorporate courtroom sharing, which is outrageous that the
judges insist upon having their own courtrooms when they don't
use them, when they spend much of the time vacant. In fact, the
GAO study found that three district judges could share two
courtrooms, three senior judges could share one courtroom, two
magistrate judges could share one courtroom while still
providing approximately 20 percent of unused space not being
used.
Also, the GAO used conservative estimates in their
assumptions in making these judicial sharing models.
It is just outrageous, especially in the times we face
today, that the judiciary, along with the GSA, has not put
these kinds of practices in place to save the taxpayers money.
The GSA, again in conjunction with the judiciary, has
constructed courthouses above congressionally approved sizes
and beyond what we have appropriated, what we have authorized
them to build. That seems to me to be a violation of the law,
and the judiciary is going along with this, as GSA is, and they
are blatantly ignoring the will of Congress, and that is
something that we really need to look into.
Again, if Congress were to blatantly ignore a law we put in
on ourselves, you would have the media up in arms, you would
have everybody in this country up in arms.
So this is something that I appreciate that Chairman Denham
is taking a very strong and hard look at because we have got to
get to the bottom of this. We have got to call it like we see
it. Again, if the judiciary is pushing the GSA to just do
things over and above what Congress has put into law, then we
have got to take some serious, serious action here, and today
is one of those hearings where we have got to get some answers.
It has been very disappointing that we don't have one of
the judges here today to answer for this, as well as the head
of the GSA.
So again, I appreciate, Chairman Denham, your leadership on
these issues, and I look forward to an exchange of questions
and answers here today.
So, thank you. I yield back.
Mr. Denham. Thank you.
I would like to welcome our witnesses here today. We have
one panel and only one panel: Mr. Mark Goldstein, director of
physical infrastructure issues, Government Accountability
Office, the GAO; and Mr. Kevin Richards, acting regional
commissioner, Public Buildings Service, General Services
Administration.
I ask unanimous consent that our witnesses' full statements
be included in the record. Without objection, so ordered.
Since your written testimony has been made a part of the
record, the subcommittee would request that you limit your oral
testimony to 5 minutes.
Mr. Goldstein, you may proceed.

TESTIMONY OF MARK L. GOLDSTEIN, DIRECTOR, PHYSICAL
INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE;
KEVIN RICHARDS, ACTING REGIONAL COMMISSIONER, PACIFIC RIM
REGION, PUBLIC BUILDINGS SERVICE, U.S. GENERAL SERVICES
ADMINISTRATION

Mr. Goldstein. Thank you, Mr. Chairman. I am pleased to be
here to discuss our recent work on Federal courthouse
construction issues, and on the L.A. Courthouse in particular.
Since the early 1990s, GSA and the Federal Judiciary have
undertaken a multibillion-dollar courthouse construction
initiative. By July 2012, that initiative had resulted in 76
new courthouses or annexes, and 18 additional courthouses in
various stages of development. However, in 2010, as you
mentioned, both of you sirs, we reported that more than a
quarter of this new courthouse space, then costing $835 million
to construct and $51 million annually to operate, was unneeded.
We found that new extra courthouse space was the result of poor
oversight and planning. Meanwhile, construction has not yet
begun on the L.A. Courthouse project, ranked by the judiciary
as its top priority since fiscal year 2000.
In 2009, the judiciary began applying a new process for
prioritizing courthouse projects that will apply to future
plans. The judiciary says that the new process was developed in
part to address concerns about growing costs and incorporate
industry standards. However, this new process does not include
the L.A. Courthouse, which has been grandfathered under the old
process.
Regarding the L.A. project, in 1996 the judiciary concluded
that having the L.A. court split between two courthouses
created security and operational problems, that the judiciary
needed additional space in downtown L.A., and that the Spring
Street Courthouse had obsolete building systems and poor
security conditions. One of the security challenges created by
the split court is that prisoners must be transported from the
Metropolitan Detention Center along surface streets to the
Spring Street Courthouse, which was built in 1938. The Roybal
Courthouse, which we are in now, built in the 1990s, is
connected to the detention center by a secure tunnel.
In fiscal year 2000, the judiciary requested and GSA
proposed building a new courthouse in downtown L.A. As we
reported in 2008, GSA has spent $16.3 million designing a new
courthouse for L.A., and $16.9 million acquiring and preparing
the new site for development, which leaves about $366 million
available for the construction of a courthouse.
The project stands in the following way today. In 2012,
with the judiciary's support, GSA issued a request for proposal
for contractors to design and build a 600,000-square-foot
courthouse with 24 courtrooms and 32 chambers, which would be
used in conjunction with 25 of the existing courtrooms in
Roybal. However, the new plan does not address several of the
principal justifications for the original project, that the
L.A. court be centralized into one site. Instead, it increases
the distance between Roybal and the planned second court
location, as well as the distance to the Metropolitan Detention
Center from where prisoners must be transported.
Briefly, as you also mentioned, I wish to address the
issues of overbuilding courthouses, the three causes of extra
space that we found in courthouses, and the associated cost
that we identified in 2010 also applied to the L.A. Courthouse
project.
These include exceeding the congressionally authorized
size, overestimating the number of judges a courthouse would
have, and not planning for courtroom sharing among judges. The
initial design of the L.A. courthouse exceeded the
congressionally authorized size by 13 courtrooms and more than
260,000 square feet. In addition, we found in 2010 that large
atriums, like the one in the L.A. courthouse design,
contributed to size overages in several courthouses completed
since 2000.
The judiciary overestimated how many judges the L.A. court
would need and therefore designed a courthouse with more
courtrooms than necessary. Specifically, we reported in 2004
that the proposed L.A. courthouse was designed to include
courtrooms for 61 judges, the 47 existing district and
magistrate judges and 14 additional judges expected or
authorized. However, in 2012, rather than having an additional
14 judges, the L.A. Courthouse has just 45 district and
magistrate judges, and none of the additional judges. This is
consistent with what we have found elsewhere and calls into
question the assumptions made in the original proposals.
Third, the judiciary did not fully take advantage of
courtroom sharing by judges, which led to building more
courtrooms than necessary. Our 2010 analysis indicated that the
judiciary could reduce the number of courtrooms it needs by
having judges share courtrooms.
Applying the courtroom-sharing model that we developed, the
45 current district judges would need 25 courtrooms to
adequately address all scheduled courtroom time, which is the
number the district court has planned for the Roybal
Courthouse. Even this model leaves the courtrooms unused much
of the time, since 60 percent of scheduled court events are
canceled or postponed within 1 week.
Finally, judiciary officials said they had not applied the
new process for prioritizing projects to the L.A. courthouse
because it has been grandfathered. If the L.A. courthouse
project were to be reevaluated, it is not clear that it would
retain the same priority status from when it was first
justified.
Mr. Denham. Mr. Goldstein, I will allow you another minute
to wrap up.
Mr. Goldstein. I am just finishing out, sir.
Judiciary's projected increase in judges has not occurred.
This suggests that the previous space projections are outdated
and flawed. The original security assessment did not include
the Roybal Courthouse, and the old prioritization process did
not consider the potential for reducing the number of needed
courtrooms by having judges share courtrooms.
This concludes my testimony, sir. Thank you for your time.
Mr. Denham. Thank you, Mr. Goldstein.
Mr. Richards, you may proceed.
Mr. Richards. Good morning, Chairman Denham, Congressman
Shuster. My name is Kevin Richards, and I am the acting
regional commissioner for the Public Buildings Service, General
Services Administration, Pacific Rim Region.
I appreciate the opportunity to join you here today at the
Los Angeles Courthouse complex where GSA, at Congress'
direction and with existing appropriations, is moving forward
to construct a courthouse to meet the courts' number-one
priority for new construction. The long-delayed project is
proceeding in an efficient manner, with a significantly reduced
scope from what was originally planned and at a size that meets
the courts' new sharing requirements for judges.
Due to security deficiencies in the existing building and
courtrooms that do not meet the courts' space needs or
functional requirements, the Los Angeles Courthouse is the
courts' number-one priority for new construction. Between
fiscal year 2001 and fiscal year 2005, the project received
appropriations and was fully authorized, but for a variety of
reasons, including scope and cost, was unable to move forward.
Congress made it clear on several occasions during the life
cycle of the Los Angeles Courthouse project that GSA should
work with the courts to develop a viable solution for the
project within the funding already appropriated. In November
2011, the courts and GSA announced a plan to deliver this
facility with the current appropriation and authorization,
eliminating future projected judgeships from the requirements
and incorporating courtroom sharing policies. Originally
planned for 41 courtrooms and nearly 1 million gross square
feet, the project has been downsized to 24 courtrooms and
between 600,000 and 650,000 gross square feet.
Since the announcement, GSA has been proceeding with a two-
phase solicitation to select a firm to design and construct the
new courthouse, with completion and occupancy planned for the
second quarter of fiscal year 2016.
The project will allow a more effective use of space,
consolidating the court functions currently housed in 312 North
Spring Street and the Roybal Building to the new courthouse.
The District Court will fully occupy the new courthouse, as
well as the District Clerk and the accompanying Marshals
Service. A number of senior district judges, the magistrate
judges, as well as Pretrial Services and Probation, will
consolidate in the Roybal Building with the Bankruptcy Court.
These two buildings will meet the security needs and functional
requirements of the courts, while satisfying the updated court
requirements.
This will allow the GSA to improve the security of the Los
Angeles Federal District Court and meet the functional needs of
the court, taking advantage of an unfortunate downturn in the
market to deliver the project within the current appropriation.
The consolidation of the judiciary in the new courthouse
and the Roybal Building, however, will result in a large
vacancy at the historic courthouse at 312 North Spring Street.
This circa-1930s building does not meet current seismic, fire
safety, or security requirements.
Given the administration's strong push to aggressively
dispose of unneeded property, on June 22, GSA announced we
would begin pursuing the exchange of the property. In return
for the historic courthouse, a private-sector partner will be
asked to provide a new, highly efficient Federal building to
accompany the new courthouse at the site bounded by 1st Street,
2nd Street, Hill and Broadway. This new building would allow
GSA to backfill Federal tenants out of costly leased space,
saving taxpayers over $10 million per year in lease costs.
Since the announcement of the exchange, GSA has been
conducting due diligence on the property and will begin the
Section 106 historic consultation process shortly. This process
will determine what a developer will be allowed to do with the
property, thus affecting its value. Once that process is
complete, we will begin developing a program of requirements
for the new Federal building and engage the private sector to
solicit proposals.
GSA and the courts are well underway with the plan to
complete the new courthouse in Los Angeles within the current
appropriation to help the courts meet their mission needs, with
an award anticipated later this year. Los Angeles will have a
secure, state-of-the-art courthouse, helping improve court
functions and services, while keeping tenants and the visiting
public safe. Additionally, we look forward to the disposal
through exchange of the historic courthouse at 312 North Spring
Street, allowing for the backfill of costly leases and
avoidance of ongoing maintenance and renovation costs. Both
actions will result in a more efficient real estate footprint
in the Los Angeles area.
I welcome the opportunity to be here, and I'd be happy to
answer any questions.
Mr. Denham. Thank you.
While I can appreciate the fact that after several
different hearings and several different requests that GSA is
taking the position of disposal of Spring Street, it has taken
a number of hearings, and every time we have a hearing, a new
``For Sale'' sign goes up or a new proposal on disposal.
But I do want to discuss the current appropriation. But
before I do, this committee requested a copy of your bio and
testimony. GSA was unable to provide those to us. So let me
first start by asking you, do you have any real estate
experience?
Mr. Richards. Yes, sir. I do.
Mr. Denham. And can you briefly explain that to us?
Mr. Richards. Sure. I have worked for the General Services
Administration Public Buildings Service for over 20 years now,
sir.
Mr. Denham. And are you familiar with the real estate
market in this area?
Mr. Richards. Yes, I am becoming familiar with it, yes.
Mr. Denham. Do you believe that a developer would build a
$54 million office building and then exchange it for Spring
Street?
Mr. Richards. We are conducting our due diligence, sir, to
find out, to make sure that that is possible, yes.
Mr. Denham. So you haven't done your due diligence yet?
Mr. Richards. We have done some preliminary research to
determine if this is possible. We think that it is possible, so
that is why we are going to continue to do the due diligence,
to make sure that it is possible.
Mr. Denham. So how much money would it cost for a developer
to do a seismic retrofit of the Spring Street building?
Mr. Richards. I don't have that exact number. We do have a
total number of around $250 million to renovate Spring Street
for the courts' needs if that was to be the case.
Mr. Denham. What would it cost GSA to do the work?
Mr. Richards. It would be $250 million, sir. I'm sorry.
Mr. Denham. If GSA did it?
Mr. Richards. Yes. I am sorry. Yes.
Mr. Denham. Are you familiar with the current renovation of
the 85-year-old Hall of Justice building across the street?
Mr. Richards. I am not, sir.
Mr. Denham. You are the acting director.
Mr. Richards. Yes, I am, sir.
Mr. Denham. Of this region?
Mr. Richards. Yes, sir.
Mr. Denham. You are looking at the Spring Street building,
and this other one is also in your region, under your purview;
correct?
Mr. Richards. Yes.
Mr. Denham. I will just tell you, it is a similar vintage
and quality building as Spring Street. Do you know what the
construction cost per square foot is on that building?
Mr. Richards. I do not, sir.
Mr. Denham. Do you know what the construction cost per
square foot would be on this building, this proposal?
Mr. Richards. For Spring Street?
Mr. Denham. Yes.
Mr. Richards. I could get you that number, sir. I don't
know the cost per square foot.
Mr. Denham. Do you know the approximate cost to construct
new office space in the L.A. area?
Mr. Richards. Again, I could get that number. I was working
on testifying for the existing building, sir.
Mr. Denham. These are basic questions.
Mr. Richards. Sure.
Mr. Denham. This is the L.A. area. This is your region.
These are basic just real estate questions, cost per square
foot. I am not in the real estate business, but I can tell you
the cost per square foot in my district.
What is the rental rate that a developer would need to
cover the construction costs of a new office building?
Mr. Richards. It would depend upon the cost to construct
the building, sir.
Mr. Denham. Well, let me give you some answers. The cost to
construct the building is about $300 per square foot. For new
office space, it is anywhere from $250 to $300. So the rental
space would be about $50 per square foot. I would love to have
a GSA expert check those numbers, but you can see where I am
going with this.
Do you know what the market rent is for Class A office
space in the Civic Center market, where the courthouse is
located?
Mr. Richards. Between $35 and $40, I believe, sir.
Mr. Denham. $35 to $40?
Mr. Richards. Yes.
Mr. Denham. We checked just online the current market, and
we were getting $20 to $25. But hopefully we will find a
developer that is looking at that and willing to pay that much
more.
Do you know what the current vacancy rate is in downtown
L.A.?
Mr. Richards. I believe it is around 16 percent, sir.
Mr. Denham. Do you think the downtown L.A. market could
absorb a 700,000-square-foot redeveloped Spring Street
building?
Mr. Richards. We are trying to do our due diligence to
determine that, sir.
Mr. Denham. So we have 16 percent vacancy right now? Seven-
hundred-thousand square feet is a lot of space. If there is a
16 percent vacancy right now and you are adding 700,000 to the
market, do you not think that is going to affect the overall
vacancy rate?
Mr. Richards. We do. We believe this is a unique property,
though, sir, that could have some potential for developers.
Mr. Denham. Are there plans to move other agencies into
that building? Are you looking at co-leasing the building or
guaranteeing a lease to the new landlord?
Mr. Richards. All of those options would be available, sir.
Mr. Denham. Do you know when the last major highrise was
constructed in downtown L.A.?
Mr. Richards. I do not.
Mr. Denham. Twenty-two years ago. Do you know why it has
been so long?
Mr. Richards. The market has not supported it.
Mr. Denham. Given the cost to construct the new Federal
Building and to renovate the Spring Street Courthouse, what
kind of rental rate do you think a developer would have to
achieve to make the project economically viable?
Mr. Richards. Again, it would depend on what the investment
would be, sir.
Mr. Denham. But you testified that you thought the
investment was going to be $250 million.
Mr. Richards. That would be the cost for the GSA to
renovate that for the courts' needs, sir.
Mr. Denham. By your numbers, it would be $55 per square
foot. So looking it up online, if it is $20 per square foot,
the rental rate today, and even by your numbers, if it is $35
to $40, how are they going to cover their cost at $55 per
square foot?
Mr. Richards. A private developer may not have the same
restrictions that we do, and also renovating for the courts,
for courtrooms and prisoner circulation wouldn't be required in
a private development.
Mr. Denham. Let me tell you what some private developers
are saying. We pulled this up online as well, and some of the
local newspapers.
``I think it is an extremely speculative deal that is
fraught with problems in a difficult marketplace.''
Another quote: ``I just think it is a pretty farfetched
idea.''
``I think that in today's economy, speculative office
building development is out of the question.''
I can appreciate the GSA is finally taking the position
that they want to dispose of the property. But when it is just
a made-up proposal--I mean, these are just some basic numbers.
These are some basic, just get online, check the real estate
market, see the availability, see when the last highrise was
built, talk to any developer down here. It seems like it is a
sham. These are made-up numbers.
Correct me if I am wrong. I mean, show me how this pencils
out, just in the broadest terms, in the best market.
Mr. Richards. When we get done with our due diligence, we
will share those numbers with you.
Mr. Denham. When will the due diligence be done?
Mr. Richards. We are thinking anywhere from 6 to 8 months.
We are getting ready to start the Section 106 historic
preservation requirement, and that does take a number of months
to go through that, and that will greatly affect the value of
the building. So that is our next step.
Mr. Denham. So when we start construction on the new
courthouse.
Mr. Richards. We are hoping to award in late October.
Mr. Denham. So you are going to go out and do your due
diligence in the next 6 to 8 months, but you are going to begin
construction in 2 months?
Mr. Richards. Yes. We have the appropriation and
authorization and have been asked to move forward with the
project, and we think we can do that.
Mr. Denham. Isn't the current proposal to have a private
developer pay for that?
Mr. Richards. That would be the Federal Building, sir, not
the new courthouse. They would be separate projects.
Mr. Denham. Have you met with any of the private developers
in the local area to see if this even pencils out or to see if
there is any interest?
Mr. Richards. We have been working basically on the
existing project. We have not met with the private developers
on this project, no.
Mr. Denham. So you came up with an idea. You brought it to
Congress. You have now sold it to the public, but you have not
talked to one realtor? I mean, you haven't gotten online and
done the same thing that we have to see what the local market
is to see if this even pencils out? I mean, who is running the
shop over there?
Mr. Richards. We continue to----
Mr. Denham. You have been in real estate for 20 years. You
have been part of GSA. You were up in the Boston market doing
these same types of transactions. Knowing that we were holding
a hearing here today, these weren't basic questions that you
thought you would look into?
Mr. Richards. We will continue to do that due diligence to
make sure that we have those answers for you, and we will share
that with you when we do have it.
Mr. Denham. I yield to Chairman Shuster.
Mr. Shuster. What I want to get to is along the same lines
as what Mr. Denham is pointing out here. Again, some of the
local folks here in the market that know this market think
that--one quote is, ``I think it is an extremely speculative
deal that is fraught with problems in a difficult
marketplace.''
``I just think it is a pretty farfetched idea.''
``I think in today's economy, speculative office building
development is out of the question.''
So you said you have been asked to move forward. Who is
pushing this? Is it the judiciary that is pushing you to do
this?
Mr. Richards. No. This is GSA's proposal.
Mr. Shuster. So what is the judiciary saying? Are they
saying stop? Are they saying hold it? Are they asking the same
kind of questions that Congressman Denham and the Congress is
asking? Because if they are not, they should be, because this
does--I mean, from experts in this market, and as Mr. Denham
has pointed out, this really seems like it is a sham.
So the GSA in Washington, they are telling you to move
forward with this?
Mr. Richards. No. We have made the decision to move forward
to try to do the due diligence to see if it makes sense.
Mr. Shuster. But then you said you are going to start the
due diligence in 6 to 8 months, right?
Mr. Richards. Yes.
Mr. Shuster. But you are going to start construction in 2
to 3 months?
Mr. Richards. On the new courthouse, yes.
Mr. Shuster. And again, you are dealing with the judiciary
on this. What are they saying to you about it?
Mr. Richards. Again, working with the judiciary, trying to
consolidate their requirements in the new courthouse, and
working with the existing appropriation and authorization to
get that building moving, just to get that project completed.
Mr. Shuster. And this building we are in, the Roybal
Federal Building, what is the occupancy rate here? Is it full?
Mr. Richards. I think there is about 10,000 square feet of
vacant space. Most of that is either under construction or will
be occupied soon.
Mr. Shuster. Mr. Goldstein, what are your thoughts on the
building of these new Federal buildings, the new courthouse?
What are your thoughts at the GAO on the plan that Mr. Richards
is talking about moving forward with?
Mr. Goldstein. Mr. Shuster, we haven't looked at,
obviously, this new proposal with the exchange. But I have read
the same articles that you have, and it is clear that the
market is not thinking it is a very good idea at this point in
time. So our greater concern, as the chairman has pointed out,
is that this does seem to be a situation that could be set up
very much like what we have in Miami today where we have a lot
of extra space, and without a successful exchange that the GSA
is trying to propose, the GSA and the courts will be left with
85 courtrooms for an existing 59 judges, which is obviously a
pretty serious case of overbuilding.
Mr. Shuster. And can you talk some more about the findings,
the $800 million to build and then $50 million a year to
operate? So over a 10-year period, we are talking $1.3, $1.4
billion, and I am sure those numbers are going to climb. Can
you talk about some of the specifics of those findings?
Mr. Goldstein. Sure. This was from a report we issued in
2010 at the request of the committee, and there were three
basic findings from it.
One was that--and it was all having to do with building too
much space over the years, since 2000 and 33 courthouses that
had been built, and it occurred for three reasons.
One is because GSA did not adhere to the authorized amount
of space that they had said they would build in the
prospectuses that they had given to the Congress. In some
cases, they built courthouses that were 50 percent larger in
square footage than Congress had authorized, 50 percent.
The second reason was because the judges, the judiciary
over the years had vastly overestimated the number of judges
that would be coming into the system. And so, therefore, space
was built for them as well.
And then thirdly was courtroom sharing, that the judges
over the years have refused to share. They have put in some new
policies for a minimal amount of sharing in future courthouses
for bankruptcy and magistrate and senior judges, but not for
active district judges. And what we found was that you could do
an extensive amount of sharing without having an impact on any
of the courtrooms, without having to move any trials.
Mr. Shuster. You mentioned 60 percent of the scheduled time
in courtrooms is postponed or canceled.
Mr. Goldstein. Yes, sir.
Mr. Shuster. Within a week.
Mr. Goldstein. That is correct, and the assumptions were
extremely conservative because when we did this, we took into
account, including in the existing time, all time that
courtrooms were being used for things that the judges and the
judiciary weren't even doing, such as mock trials or tours and
things like that. So in reality, it is even more.
Mr. Shuster. And what do you think about their new sharing
policies for senior magistrates and bankruptcy judges?
Mr. Goldstein. Well, it is mainly for future courtrooms,
unfortunately. I mean, as I indicated in my opening statement,
you could house the entire District Court in this building if
Federal judges would share, and you would not need to build a
new courthouse.
Mr. Shuster. Mr. Richards, your view on that sharing, just
what Mr. Goldstein said, the entire Federal Court could be
housed here if judges would be willing to share courtrooms,
your thoughts on that?
Mr. Richards. That is an issue that I would have to defer
to the courts on. I do know that we do have sharing in the new
courthouse proposal.
Mr. Shuster. Was that an issue that was ever brought up
when you were overbuilding these courthouses? Does the GSA,
being a good steward of taxpayer dollars, push back on the
judiciary and say, ``Hold it a second, we are going to
overbuild this thing''? And more importantly than we are going
to overbuild it, we are violating the law that Congress laid
out to say that you can only build X amount of square feet, and
you are overbuilding by 50 percent in some cases.
So what happens when the judges come in to talk to you
about this at the GSA? Is there any push-back at all?
Mr. Richards. Yes. We worked on this project here to work
with the courts to both reduce--not only reduce the size of the
courthouse itself, but we have also worked with them to
institute the courtroom sharing, as well as eliminating
projected judgeships from this building as well.
Mr. Shuster. And even though it is a very flawed courtroom
sharing system?
Mr. Richards. I can't comment on that. That is not----
Mr. Shuster. So in the project here, when you are doing
this project, you wouldn't push back on them and say you really
have to utilize these buildings much more efficiently?
Mr. Richards. We work with the courts to institute the
courtroom sharing in the new courthouse, and there will be some
courtroom sharing, I believe, in the Roybal.
Mr. Shuster. But not in the present building? There is very
little here.
Mr. Richards. In this building?
Mr. Shuster. Yes, since this is an old building, so it is--
--
Mr. Richards. I don't know if there is. I could find out if
there is sharing here right now. I don't believe there is.
Mr. Shuster. So again, the overbuilding, when you go over
your authorization, you go over your appropriations, or
authorization I guess it would be, to overbuild a courthouse,
how does that happen? Do you get in there and the judges say,
now make it bigger, and you guys say, the GSA says sure, if
that is what you want, that is what we will do?
Mr. Richards. I have read the testimony before on the
overbuilding of the courthouses, and there was some discussion
on counting of atrium space and that type of thing and if that
contributes to the overbuilding, and then whether there is
actual construction cost associated with building that atrium
space, and also the maintenance and operations of that space as
well.
Mr. Shuster. Have you built other courthouses before in
your region? You have been involved in over 20 years of
building them?
Mr. Richards. I had a supporting role in one courthouse
project, yes.
Mr. Shuster. So once again, I just keep coming back to this
because when the GSA goes in and talks to the judiciary about
building these, who says overbuild? Who says build 50 percent,
20 percent bigger? Is that the judges telling you that? Is that
the judges' staff telling you that, to ignore the authorization
from the United States Congress, to build these things bigger?
Mr. Richards. Speaking to this project here, again, we are
going to keep it below the authorization. We have employed with
the judiciary to have courtroom sharing, and also eliminating
the projected judgeships as well so it is not overbuilt.
Mr. Shuster. And do you think that if they--well, they are
going to use their courtroom sharing system, which is minor
compared to what they really need to be doing. Do you think you
could even make this courthouse smaller if you went back, if
Congress insisted that they employ the courtroom sharing that
the GAO came up with?
Mr. Richards. I don't know that right now. All I can tell
you is that we are staying within the authorization we have
currently and employing the courtroom sharing in that building.
Mr. Shuster. Mr. Goldstein, I know you said you haven't
looked at this current project in-depth, but just based upon
the analysis you did and what you projected, this court-sharing
versus what the judiciary is going to use, just off the cuff,
do you think you could save significant space if you went with
what you proposed in your study?
Mr. Goldstein. Absolutely, Congressman.
Mr. Shuster. Do you have a percentage?
Mr. Goldstein. The point is you have--there are 16 district
courtrooms in this building alone, OK? And based on the sharing
model--and there are certain kinds. We did both a centralized
sharing model where you would need 22 courtrooms for district
judges, 15 district and 7 magistrate, or fully centralized,
where you would only need 21 courtrooms. And in all these
cases, you still never hit a period in which you have complete
utilization of the courtrooms. So you need--they have 16
district courtrooms here now. Under a fully centralized sharing
model, they would only need 21.
There are four courtrooms on the fourth floor which you
would need only minor changes to in terms of extending the
elevator shafts, and then you would simply have to take one
bankruptcy courtroom and convert it. I mean, it is really minor
in terms of what you would have to do. You are essentially
being asked to spend hundreds of millions of dollars so that
Federal judges don't have to share courtrooms.
Mr. Shuster. Right. So again, just so I am clear about what
you said in there, you said you believe that you don't have
to--you could house the entire Federal Court in this building
using time sharing, minor changes.
Mr. Goldstein. Yes. And the beauty of it, sir, is this is a
very secure courthouse with respect to the circulation patterns
and the prisoner exchange.
Mr. Shuster. So in your expert analysis, they don't need to
build another courthouse.
Mr. Goldstein. No, sir.
Mr. Shuster. OK. Thank you very much.
Mr. Goldstein. I would add one other point, sir, if I may.
Mr. Shuster. Absolutely.
Mr. Goldstein. The initial justifications that made L.A.
their number-one priority are not supported by the facts. The
major reason was that they did not want a split court because
they felt that it created operational inefficiencies. Well, the
proposal on the table, the split court is even larger. The
distance between Roybal and the proposed new space is even
larger than what exists today. So it is very perplexing how the
justification can be made in those instances.
Mr. Shuster. Mr. Chairman, if I could have another minute?
They also talked about security being one of the big issues
with the tunnel here. So if you don't have the Spring Street
Courthouse--well, first of all, we have heard from rank and
file marshals, the staff talking to them, one of the complaints
was that it is not secure, you don't have the tunnel, you have
to take them on the street, they have to be shackled. But
talking to some of the rank and file marshals, they said it is
not really a problem because if there is a problem prisoner, we
will use the Roybal Courthouse, we won't take them across the
street. So there are different degrees, I guess, of criminals,
people that they are putting in these courtrooms. Some have a
lower risk. Some with a higher one, they would be here anyway.
Mr. Goldstein. During the course of our audit, sir, we
talked to the marshals on numerous occasions, and they provided
the same kind of testimony to us, that there is no reason that
they cannot bring a prisoner to Roybal and hold that hearing.
This is a multidefendant and secure room right here that is
used for large trials with a lot of prisoners. There is no
reason for that to be an issue.
Mr. Shuster. Mr. Richards, just based upon what Mr.
Goldstein said there, he doesn't believe there is a need to
build another courthouse here. Does the GSA have any
responsibility to look at what he is saying and push back and
say to the Congress, to the judiciary, that we don't need to do
this, we can save $300 million?
Mr. Richards. When we talk about consolidating court
functions, currently right now, the District Court is split
between the two buildings. So the new courthouse would solve
that problem, have all the District Courts in one building.
Mr. Shuster. But based on what Mr. Goldstein said, he
believes you don't need to do that. You can just utilize this
building more efficiently, utilize the taxpayer dollars more
efficiently, and you could have it all right here and not need
to build a new courthouse.
Mr. Richards. If you come in through the lobby today, you
will notice there are three different elevator banks that only
go to a certain number of floors. So those--you wouldn't be
able to then have all those floors connect. If you want to go
to a different elevator bank, you have to come back down to the
first floor, go over to a different elevator bank. In
addition----
Mr. Shuster. That is a justification for spending $300
million?
Mr. Richards. No. In addition----
Mr. Shuster. We have to do that in the Cannon Building. I
can't go to the fifth floor. I have to go to a different
elevator. But we make due.
Mr. Richards. That is just part of the problem. The other
part of it is all of the bankruptcy courts don't have prisoner
circulation because we are not dealing with prisoners. So you
would have to create new prisoner circulation and elevator
circulation to go with those prisoners to keep a secure
facility like we currently have.
So there are additional things that need to be done, and it
is not as easy as just saying that you could convert a
bankruptcy courtroom into a district courtroom without adding
prisoner holding cells, prisoner transportation, secure
circulation, that type of thing.
Mr. Shuster. It seems to me, for $300 million, to save $300
million and spend whatever it takes, far less than that, we
ought to be able to utilize this. So again, it is very, very
frustrating to me over the past several years when I have seen
this happen.
Again, the judiciary is not serious about utilizing these
courthouses effectively, and it is sad to say the GSA is not--I
believe part of your responsibility as stewards of the taxpayer
dollars is to push back and push back hard and say we can do
this in a much better way. You are supposed to be the stewards
of our buildings, the real estate, and it doesn't seem to me
that that is being handled in an appropriate way.
I yield back.
Mr. Denham. Thank you.
Let me start where I finished off. Mr. Richards, assuming
my numbers are anywhere close, and all of these quotes in the
newspapers from all of the real estate experts in the local
area are in fact right and this thing doesn't pencil out, what
are you going to do with the Spring Street Building?
Mr. Richards. Right now, as part of the due diligence, we
think we have a unique property. We will try and see what that
comes up with. We do have over 1 million square feet of lease
space in the Los Angeles market. But right now our plan is to
dispose of, through exchange, that Federal Building.
Mr. Denham. OK. But if it doesn't pencil out, which clearly
there are a lot of questions since you haven't done your due
diligence and won't do it for the next 8 months, even though
there is a proposal out there in front of the taxpayers, if it
doesn't pencil out, you are going to utilize that to offset
some of the million-plus square feet of lease space. So you
will move other Government tenants into that building.
Mr. Richards. That would be a possibility. Yes, sir.
Mr. Denham. How do you renovate it?
Mr. Richards. We would have to get money to renovate it,
sir.
Mr. Denham. How do you get money?
Mr. Richards. We would have to go through the prospectus
process.
Mr. Denham. So you would follow the actual prospectus
process, not go around Congress like you did with the World
Trade Center.
Mr. Richards. That isn't something that I have been
involved in. I can't answer to the World Trade Center, sir.
Mr. Denham. How about the Roybal Building? What is the
future of the Roybal Building?
Mr. Richards. Under our proposal, it would be still used by
the courts. Bankruptcy, magistrate, some senior district judges
will be here, along with the Federal agencies that are
currently housed here as well.
Mr. Denham. Is there any need for renovation here?
Mr. Richards. There would be a need to realign some of the
space for the courts. Yes, sir.
Mr. Denham. And how would you pay for the renovation?
Mr. Richards. We would have to get prospectus authority, as
well.
Mr. Denham. And under the current proposal that was
approved around a decade ago, was the renovation of the Roybal
Building not part of that?
Mr. Richards. It was not.
Mr. Denham. My staff has been telling me for the last year-
and-a-half that it was. Are you familiar with it?
Mr. Richards. I am familiar, sir.
Mr. Denham. There is not going to be any money left over
after this construction. Do you have a contingency in the
current construction plan?
Mr. Richards. Yes, we do, sir.
Mr. Denham. And what is that contingency?
Mr. Richards. I would prefer to talk about that in a
separate session if we could, just because we don't want to
divulge that information in public at this point.
Mr. Denham. It is usually a standard rate for a real estate
transaction. Are we doing a special rate? You can at least----
Mr. Richards. Yes.
Mr. Denham. OK.
You know, a question that I had for somebody from the
judiciary side would have been on ignoring the President's
Executive order on a couple of different items, but including
the conference that they had today, or had this week. But
obviously, the President has issued a number of different
Executive orders promoting efficiency spending to support
agency operations. That one was earlier this year, in May; a
memorandum in 2010, two Executive orders; the Presidential
memorandum disposing of unneeded Federal real estate, June
10th, 2010.
The President sure seems like he is issuing a lot of
Executive orders and memorandums to all of his various
department heads. I understand that you are in a new position,
but I would assume that you would follow the President's
Executive order. The Commander in Chief issues an Executive
order, you follow it; correct?
Mr. Richards. We are aware of it, sir, yes.
Mr. Denham. So why in this case are you ignoring the
President's directive on Federal buildings and moving forward
with a project that is going to create 700,000 square feet of
empty office space?
Mr. Richards. We believe, sir, that we have the
authorization, the appropriation to build a new courthouse. As
part of that project, after we build the courthouse, we are
going to dispose through exchange the building at 312 North
Spring Street. The result of that would be a new office
building that we could collapse cost of leases, and ultimately
that would reduce our Federal footprint here in Los Angeles.
Mr. Denham. Is the President aware of this construction
project? Is the administration involved?
Mr. Richards. I don't know that answer, sir. I would have
to find out.
Mr. Denham. I have a lot more questions. This is just
extremely frustrating.
You are the Federal Government's real estate expert for
California. That is your job. That is your position. Agreed?
Mr. Richards. Yes.
Mr. Denham. Yet you don't know what the size of the
retrofit work would be on the proposal that is out there in
front of the taxpayers and the proposal that is out there in
front of Congress. You are not aware of the 85-year-old
building that is under your purview that is being renovated
currently and the construction cost per square foot in this
market. You are not aware of the cost to construct new office
space in the L.A. area. You are not aware of the rental rates a
developer would need to cover the construction costs. You are
not aware of the market rent for Class A office space in the
Civic Center market, this local market, as well as the Class A
office space in the central business district. That does not
sound like much of a real estate expert in this market.
I am coming to the conclusion that you are either not an
expert in this area or you are just lying to the taxpayers.
There is a proposal out there that you have given to Congress,
a proposal that you put out on the street, a proposal that you
have taken back to the taxpayers, one that you have taken to
the administration because apparently the administration is
signing off on it even though there is an Executive order out
there. So if you are not going against the President's own
Executive order, I assume that they are supporting this idea
that has no justification, that has no idea of what the rental
rates and everything are.
Let me ask you one last question. What is the Government
Accountability Office? What is their mission?
Mr. Richards. To oversee everything that goes on, to make
sure that we are spending the money wisely.
Mr. Denham. Is it a partisan group?
Mr. Richards. No.
Mr. Denham. It is a nonpartisan office? I mean, do you
dispute Mr. Goldstein's numbers? Is he off base?
Mr. Richards. All I can tell you--I can testify to what I
believe, and that is----
Mr. Denham. Do you work with the GAO?
Mr. Richards. I don't, no.
Mr. Denham. So it is an independent body that comes up with
its own research. I assume--Mr. Goldstein has testified before
this committee before. I have never seen anybody question the
validity of his numbers.
These are two different agencies under this administration.
One agency is coming up with numbers, and one is supposed to be
the real estate expert. How are the numbers nowhere close? Do
you just ignore the GAO?
Mr. Richards. No. We are trying to do our due diligence on
the disposal of the property----
Mr. Denham. Are they just quicker? I mean, they are doing
the same due diligence. They did a study. They have done
several studies now.
Mr. Goldstein, does GSA have enough money to build a new
courthouse as it is currently planned?
Mr. Goldstein. They have the $366 million, the remaining
appropriations. But a really important point that both of you
have begun to work with here is that that is the tip of the
iceberg of what is going to be required for this entire
project, because it is not just building a new courthouse. Is
it renovating Spring Street. It is making changes to Roybal. It
is activation costs on the new courthouse. It is moving various
agencies into other space. All of that will cost at least as
much as the existing $366 million that we are talking about.
Mr. Denham. And just assuming their plan moves forward and
the new building is built, does the current plan of building
this new 24-courtroom courthouse, does it actually correct the
problems that they list as their justification for building a
new courthouse?
Mr. Goldstein. No, sir, it does not fix any of them. And
with all respect to our witness from GSA, there still will be a
split court here. That is the biggest problem, because the
District Court does include the active Federal judges, the
senior judges, and the magistrate judges, and the magistrate
judges and their staff and part of the Federal District will
still be in this building even if they do build the other
courthouse.
Mr. Denham. Let me ask you a very straightforward question.
Should GSA build a new courthouse?
Mr. Goldstein. Sir, that is a policy decision, but the
facts do not support the justification.
Mr. Denham. Could the existing buildings house the L.A.
court in a safe and efficient way?
Mr. Goldstein. Yes, sir, they can. As I discussed earlier,
Roybal could fit the Federal District Court with sharing.
Mr. Denham. So if they instituted the courtroom sharing
policy--courtrooms right now currently get used about 2.5 hours
a day?
Mr. Goldstein. That is correct.
Mr. Denham. So if they went to a courtroom sharing model,
you could fit the entire court into the Roybal Building?
Mr. Goldstein. Yes, sir, you could. Now, you would be
moving some bankruptcy probably elsewhere, back into Spring and
things like that, perhaps. You could spend a lot less than you
are going to have to spend for the building----
Mr. Denham. Could you move everybody into the Roybal
Building and still get rid of Spring Street?
Mr. Goldstein. That I would have to look at.
Mr. Denham. Are there any vacancies in the Roybal Building?
Mr. Goldstein. I don't know.
Mr. Denham. There were last year. I know there was at least
a whole floor that was vacant.
Mr. Goldstein. When I last toured this building about 2
years ago, there was quite a bit of it, and there were also
courtrooms that were literally being used to store furniture.
Mr. Denham. One of the questions that comes up is the need
for Government or for Federal office space in the area. I don't
dispute that we have a huge amount of leases in the L.A. area,
well over 1 million square feet. Could we utilize the money to
build office space and get out of a lot of the expensive lease
space that we are in?
Mr. Goldstein. I am sure you could. I haven't looked at the
market here specifically for those kinds of things, but I think
that it is certainly a viable option.
Mr. Denham. Thank you.
Mr. Shuster.
Mr. Shuster. Thank you. I think you covered my questions. I
appreciate that.
Mr. Denham. Mr. Goldstein, do you work with GSA? I mean, I
understand you are an independent body, but----
Mr. Goldstein. We are the investigative arm of Congress,
sir. So we are a congressional agency. We are not an agency of
the executive branch. But we work routinely with GSA. I
probably meet with someone from GSA on a weekly basis. We do a
lot of work in the construction facilities and courthouses, all
of the work with regard to security and the Federal Protective
Service of all Federal property. I probably have about 10 jobs
going at any one time that involve GSA.
Mr. Denham. Is it cooperation? Do you work well with them?
Mr. Goldstein. Yes, sir, we do. We have differences of
opinion, but we do work very well with them.
Mr. Denham. But your job is not to evaluate policy. You are
just strictly looking at the numbers.
Mr. Goldstein. That is correct. We are the investigators
and auditors of the Congress. We bring information to the
Congress for their determination of what to do with it. Yes,
sir.
Mr. Denham. I guess what I--you know, we have had these
hearings over and over again, in many different vacant
buildings around the Nation. We are going to continue to hold
these hearings. But the thing that continues to fascinate me,
when we have the IG come in and the IG does an investigation,
the Inspector General does an investigation, GSA seems to
follow every detail of what the investigation comes up with.
And in some cases, with the conferences in Las Vegas, some
things were even referred to the DOJ. There was criminal action
taken.
So if GSA follows all the information from the IG, and you
are the Government Accountability Office under the President,
under the administration, why do they not follow any of your
numbers?
Mr. Goldstein. I don't have a good answer for that, sir. I
wish I did.
Mr. Denham. Before I turn it over to Mr. Shuster, Mr.
Richards, San Diego just built a new courthouse, did they not?
Mr. Richards. Yes.
Mr. Denham. Are they in the final construction phases?
Mr. Richards. Yes.
Mr. Denham. Any reason why my staff would not be able to
take a tour of that this afternoon?
Mr. Richards. Sure.
Mr. Denham. You can arrange that for us?
Mr. Richards. Sure.
Mr. Denham. Thank you.
Mr. Shuster. Mr. Richards, you brought up, when we talked
about Mr. Goldstein believes we can house the entire Federal
Court here in the Roybal Building, you don't believe so, and
you talked about prisoner circulation, security concerns.
Despite the fact that the U.S. marshals have reported there are
no major incidents occurring in the recent years, do you agree
with that, concur with that? The marshals say it is not a big
problem.
A security concern raised by the court is again prisoner
circulation at Spring Street, yet the GSA currently is
renovating the Thurgood Marshall Courthouse in New York City
and they are not going to have separate prisoner circulation
when the courts move back there. Why couldn't--why does the GSA
in New York view it differently than the GSA in Los Angeles? Is
there that much of a difference in those two cities? Why
couldn't you do the same thing here and save millions and
millions of dollars?
Mr. Richards. I am not familiar with the situation or the
security issues with the Thurgood Marshall. I do know that they
have been--the issues of security have been raised here to a
level that we feel that we should continue to move ahead with
the courthouse that is----
Mr. Shuster. Although there are no reports of any
incidents. Again, I think it would be wise to call your
counterpart up in New York City and say why are you doing what
you are doing, explain it to me, because they are doing it for
far less. I think it is about $200 million. They are saving $60
to $100 million on that project. So I would encourage you to
call your counterpart in New York and find out why they are
able to do it and live with it and Los Angeles is not.
I yield back.
Mr. Denham. Thank you.
When I get back to Washington, DC, I plan on sitting down
with Mr. Tangherlini again and asking him about the GAO's
numbers and understanding why it appears the two agencies
aren't working better together, or at least utilizing some of
the same information. If GAO has done several studies and they
can tell us exactly what square footage costs are, what
construction costs are, space availability, I find it
unbelievable that GSA can't tell us that same information.
So I would certainly like to see the two agencies working
together. Again, you don't have to agree on policy. He doesn't
have to agree on whether or not courtroom sharing should be a
policy matter or whether or not GSA--you are in charge of the
buildings, and certainly he may have a difference of opinion on
whether a courtroom is needed or gets built. But you ought to
all agree on the numbers. The numbers are what they are. You
can look at any real estate market and see what the going rate
is and see what the construction costs are and see if things
pencil out.
So I have a hard time understanding how a proposal can be
out there and how you are going to move forward on spending
$360 million of taxpayer dollars without having justification
for the proposal.
I have a long list of questions here that certainly would
take much more than the time we have allotted here. I am going
to submit those to GSA for clarification.
Let me follow back on one thing you said, Mr. Richards.
Certainly there has been a lot of concern about the World Trade
Center lease. I understand that is not in your region. But
certainly with the World Trade Center lease, they have gone
around Congress, gone against GSA's own policy, gone against
the President's Executive order.
But in this case here, are you fully prepared to come back
to Congress for a prospectus?
Mr. Richards. We feel that we have the authorization and
appropriation to go ahead with this project.
Mr. Denham. To go ahead with the--to spend the $360 million
to build?
Mr. Richards. Right.
Mr. Denham. But the prospectus as far as renovation on
Spring Street prospectus?
Mr. Richards. The Spring Street proposal now is to exchange
it through disposal.
Mr. Denham. It still requires a prospectus?
Mr. Richards. I don't believe so. I think we have the
authority, the exchange authority, to do that.
Mr. Denham. If you have to do a renovation on Spring Street
and this proposal doesn't pencil out, there is no developer
that is willing to do the exchange, you would be coming back to
Congress for a prospectus?
Mr. Richards. Correct, yes.
Mr. Denham. If you needed a new appropriation or allocation
for renovation of Roybal, you would be coming back for a
prospectus?
Mr. Richards. Yes.
Mr. Denham. So in sum, you fully plan on following your own
guideline and following the law in coming back to Congress,
back to this committee for a prospectus on any new building, on
any new renovation that would be outside of what you feel we
have a difference of opinion certainly on the construction of
this building that was proposed over a decade ago? But anything
new, anything else that comes, new leases, new renovations, new
appropriations, you fully expect to comply with the law?
Mr. Richards. Yes, we do, sir.
Mr. Denham. Thank you.
I think you can sense the frustration. I mean, certainly I
am frustrated that Mr. Tangherlini is not here himself. I mean,
he and I have had a very open relationship. I was somewhat
intrigued by the new proposal because we were looking at
disposing of a property. I thought that was a first good step.
While we may disagree, I do believe in the GAO's numbers. So I
find it hard to justify the new building being constructed at
all. I would prefer to see, if new construction was going to
move forward, that you would actually move out of the million-
plus lease square footage that we have around here. My personal
belief is you can't justify the new courthouse, but we can have
disagreements on policy. I find it hard to understand why the
numbers can be so different, or not have numbers at all.
Mr. Tangherlini should be here. He was invited several
months ago, and we have been trying to be open about this
process. Again, we may disagree on the policy, but the numbers
should speak for themselves. So we will be submitting a number
of different questions to you.
With that, I would like to thank both of you for your
testimony today. Mr. Richards, as you move forward in this new
position and no longer are acting director but before you
actually take the full responsibility of the new position, I
would expect you to have these answers.
So we will submit them for the record. Again, I thank each
of you for your testimony today.
And if there are no further questions, Mr. Shuster, I would
ask unanimous consent that the record of today's hearing remain
open until such time as our witnesses have provided answers to
all of our questions that are going to be submitted in writing,
and unanimous consent that the record remain open for 15 days
for any additional comments and information submitted by
Members or witnesses to be included in the record of today's
hearing.
Without objection, so ordered.
I would like to thank our witnesses again for their
testimony.
If no Members have anything to add, the subcommittee stands
adjourned.
[Whereupon, at 11:02 a.m., the subcommittee was adjourned.]