Republicans press GSA to put Old Post Office Pavilion up for private development

By Jonathan O'Connell
Monday, February 14, 2011

They had already tried gruff questioning at subcommittee hearings, loud admonishing at public forums and passing legislation aimed at cutting red tape.

This time members of Congress employed a new tactic to persuade leaders of the General Services Administration to put the Old Post Office Pavilion up for private development: freezing them.

Last Thursday -- with temperatures hovering around 30 degrees -- Republicans with new oversight of federal real estate hauled Robert A. Peck, commissioner of the Public Buildings Service, into the annex behind the Old Post Office, a space that has no tenants and no heat, for a hearing about the properties he manages. The message was clear: Do something with this.

"Unfortunately the mess that we're sitting in is only the tip of the iceberg," in terms of underutilized federal property, said Rep. John L. Mica (R-Fla.), the new chairman of the Transportation and Infrastructure Committee.

Built in the 1890s, the Old Post Office is a national historic landmark and one of the tallest buildings in the city. The property underwent a makeover in the 1980s that failed to revive its fortunes. Now home to a smattering of federal offices and tourist-oriented retail and restaurants, the building loses more than $6 million annually and the annex is empty and in disrepair, with broken tiles, exposed beams and unfinished storefronts prevalent despite its enjoying one of Washington's most prestigious locations, on Pennsylvania Avenue between the White House and the Capitol.

In today's tough budget times, the Old Post Office Pavilion has become a symbol of federal real estate waste. "Are there other Old Post Office sites languishing in full view around the nation?" asked D.C. Del. Eleanor Holmes Norton (D).

In past years, developers have suggested the Old Post Office be converted into a stately hotel, much the way the International Tariff Building successfully morphed into the Hotel Monaco, or possibly a high-end housing project. The GSA previously sought developers interested in the project in the boom year of 2005, and says it received responses from 20 companies, including many top local developers.

But that development process was canceled amid the real estate collapse and the list of respondents today would likely be much different. Peck, formerly of the brokerage firm Jones Lang LaSalle, said at the hearing that although a team of Urban Land Institute experts he convened in 2009 had told him that the market was not strong enough to provide an adequate response, he believed conditions had improved enough during the past six to eight months that the GSA ought to put the Old Post Office up for bids again.

He said a new solicitation for development partners was in its "final stages" and that he thought the market was ready to welcome it. "We have been approached by a number of development interests," he said.

Even if Peck can get the Old Post Office off the government's books, the government will have trouble meeting President Obama's request last June that the country shed $8 billion in federal real estate costs by the end of 2012, according to a Feb. 10 report by the Government Accountability Office. Using data from the 2009 fiscal year, the GAO found that the government had 45,190 underutilized buildings, an increase of 1,830 from the previous year and accounting for $1.66 billion in annual operating costs. But the president's goal is not likely to be met, researchers said, writing, "GSA officials said they are unlikely to have enough time to identify additional properties for disposal, complete the disposals, and achieve the cost savings by the 2012 deadline."

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