General Services Administrator Richard G. Austin voted to name BPT Properties L.P. the developer of a government building at Federal Triangle on the basis of a study that said BPT's proposal would cost less than the winning proposal by the Delta Partnership, a spokesman for Austin said. A July 20 article cited other documents that had ranked the projects differently. (Published 7/31/90)

The federal government put on hold yesterday its plans for a $738 million office building and trade pavilion near the White House after officials concluded that the project, which would be second in size only to the Pentagon among federal buildings, was too expensive.

Government officials had heralded the project on the Federal Triangle as a boon for business and tourism in downtown Washington and the grand finale to a 30-year effort to redevelop Pennsylvania Avenue NW between the White House and the Capitol.

But the General Services Administration, which procures buildings for the government, rejected a contract yesterday to lease the proposed building.

The office space would be too expensive and the international trade pavilion -- a collection of shops, theaters, exhibit halls, reception space and foreign missions intended to be financially self-sufficient -- would lose $18 million to $24 million annually, said Robert C. MacKichan, the GSA's general counsel.

The bill authorizing the project, which was conceived as a national landmark, passed the House unanimously and was signed by President Reagan in August 1987.

Rep. Douglas H. Bosco (D-Calif.), chairman of the House subcommittee on public buildings and grounds, said enthusiasm for an international trade center has waned since 1987 and the entire project could be scrapped.

"The idea of spending close to $1 billion on a trade center is just not one that excites people any more," Bosco said.

"This patient is listless and very near death and I think it would take some major surgery and somewhat of a minor miracle" to revive it.

As late as 1988, federal officials were estimating that the International Cultural and Trade Center would cost $362 million. But when the government invited developers to compete for the right to build the project, the official price guideline climbed to $461 million, and then to $500 million. In October, the Pennsylvania Avenue Development Corp., the agency charged with overseeing the development, chose a $738.3 million proposal by a team that includes Washington developer Robert H. Mendelsohn and the Zeckendorf Co. of New York.

The winning design was the third most expensive of the seven entries, which ranged in cost from $578.6 million to $819.2 million, according to government documents. At the time, GSA Administrator Richard Austin voted for a more expensive proposal by Bechtel and Park Tower Realty of New York.

Construction of the building, which would replace the 11-acre parking lot that surrounds the District Building, was scheduled to begin early next year, creating jobs in the beleaguered local building industry.

Government plans had called for about 8,000 workers, mainly from the Justice Department and the U.S. Information Agency, to move into the finished project. But without the GSA's commitment to lease it, the project cannot be financed, government officials said.

The project's advocates have touted it as a model of cost-effective financing for a government building. It would be built by a private development team and leased to the government for 30 years, after which ownership would revert to the government at no additional cost.

The bill that authorized the project required that the international center be financially self-supporting two years after its completion.

A GSA fact sheet released yesterday said the project "poses an unreasonable and unjustified burden" on U.S. taxpayers. The GSA general counsel said his agency might have to dip into a special building fund to pay the rent. "We're going to be holding the bag," MacKichan said.

While MacKichan said it is up to the Pennsylvania Avenue agency to take the next step, agency officials said they were surprised by the GSA's findings.

Agency Chairman Richard A. Hauser, a partner with the D.C. law firm Baker & Hostetler, said the office space would cost "considerably less" than the GSA's estimate of $60 a square foot annually.

Hauser said the project would be a good value for the government because the rental rate would remain fixed over 30 years while the government's ownership stake grew.

"It's my expectation that the project will continue to move forward and the reservations the {GSA} administrator has can be overcome," Hauser said.

Kenneth R. Sparks, president of a separate agency created to manage the international trade center, said the pavilion could be self-sufficient.

"It may need some fine tuning," Sparks said, but "we think this program can be made to work."

William Zeckendorf, a member of the private development team, said his group designed the project to meet government requirements but is willing to try to redesign the project to make it less costly.