At a time when budget cuts are already making agency managers wince, the federal landlord, the General Services Administration, is going to have to hit many of them with a dramatic increase in their rents next October.
Under a 1972 law, the GSA charges agencies for all federal office space, whether the building is leased or government-owned. The charge is meant to reflect an assessor's view of the fair-market value of the government office space and give GSA funds for construction, maintenance and security, as well as for rents charged by private landlords.
The rates are revised every three years. And now as GSA gets ready to raise the rates for many buildings in line with the rest of downtown Washington real estate, agencies will be forced to absorb a large increase in their fixed costs at a time many of their budgets are decreasing in real terms.
The rate for the headquarters buildings of eight of the largest federal agencies will more than double next year, while smaller agencies, whose rent is usually a bigger part of their budgets, are already complaining to Congress.
The GSA expects the rents, called standard level users charges (SLUCs), to increase by $300 million in fiscal 1983 to $2.1 billion. The charges apply to offices, warehouses, residences and parking lots.
The increased rents will undoubtedly force agency managers to reconsider their space needs and help the GSA achieve a separate goal of reducing federal office space by 20 percent over the next five years.
Robert R. Kane, director of the GSA's budget resources division, said, "Skyrocketing commercial values in Washington have shot up federal property values far beyond any previous level of increase."
The Veterans' Administration, located two blocks from the White House, faces one of the largest increases, from $9.27 per square foot to $22.94. The Justice, Agriculture, and Health and Human Services departments, the Federal Trade Commission, the Interstate Commerce Commission and the Office of Personnel Management will also face similar increases for their headquarters buildings here. And the GSA itself will have to begin paying $18.23 per square foot for its headquarters space, compared with $8.43 before.
Not even the White House will escape. Space in the East and West Wings will climb from $13.22 a foot to $30.51. The New Executive Office Building will experience a similar hike.
The Defense Department tops the list of contributors to the GSA building fund, paying an estimated $253 million in fiscal 1982 for office space (but not for military bases). DOD and five other agencies--HHS, Treasury, Interior, Justice and the GSA--put up about half the fund.
Most of the money is used to rent office space from the private sector (an estimated $770 million in fiscal 1983) and for maintenance and security on buildings ($676 million). The fund is also used to build new buildings ($68 million), make repairs and alterations ($257 million) and pay off mortgages ($160 million).
Smaller agencies will be hit the hardest, proportionately, by the rent increases. Judges from three federal courts, for instance, recently testified before Congress on the impact the increased fees will have on their operations.
Daniel M. Friedman, chief judge of the Court of Claims off Lafayette Square, said his court's rent would climb 121 percent and would represent 92 percent of the funding increase his court is seeking for fiscal 1983. The rental costs would represent 40.2 percent of the court's budget next year, compared with 23.8 percent now.
Edward D. Re, chief judge of the U.S. Court of International Trade in New York, said 77 percent of his requested budget increase would cover the increased rent. And Howard T. Markey, chief judge of the Court of Customs and Patent Appeals, also off Lafayette Square, said the new rental rate for his court would increase 113 percent and would account for 44 percent of its budget.
Friedman said GSA officials couldn't explain why "our rental charges should be increased an average of 40 percent per year for each of the past three years . . . and they did not indicate that similar increases had taken place in comparable private office space."
"The method of computing the rent hikes is in the law and in our regulations," responded Kane of GSA, adding that federal agencies, including the courts, often have little understanding of the laws governing the charges. "We have no choice," he said.
Starting in fiscal 1983, GSA will begin to adjust the rates annually to make it easier for agencies to plan.
Although waivers of the charges are rarely granted, GSA Administrator Gerald P. Carmen says he's ready listen to a request from his agency's own National Archives and Records Service.
The archives, which is coping with a 16 percent budget cut, faces a 12.6 percent rent hike next year. Carmen has indicated that the archives and the related presidential libraries won't have to pay the increased rents because they are not "regular" office space. Instead, they would pay only for maintenance, security and support.
Kane says a major complainer has been the Pentagon, which pays GSA about double what its costs of building maintenance and security actually are. Its fees will be reassessed in fiscal 1984.
"We have no intention of holding back," said Kane. "They're going to have to pay the higher bill."