Ground was broken Dec. 13 for a new federal building in Lynchburg, Va.--six years after the General Services Administration first decided to build it.

Empire Development Co. of Denver will build the three-story structure and, under the arrangement, will lease it back to the federal government for 20 years, with two 10-year options.

The $1.6 million building--set to be completed in October--will house the U.S. District Court, the U.S. Bankruptcy Court, the U.S. Marshal's Office, and local offices of the Labor Department, the Internal Revenue Service and the Small Business Administration.

The GSA ordered the lease-back arrangement after determining it would cost the federal government $3.41 million to build the facility but only $2.16 million to have it built and leased back to the government, said Maryanne Bernhardt, a realty specialist in the GSA's Philadelphia regional office, which is responsible for construction. The lease-back figure includes tax payments and other long-term costs above the $1.6 million actual construction cost.

Under the lease-back arrangement, the building's owner will have to pay local taxes--estimated at $30,000 a year--whereas federal ownership would remove the land from Lynchburg's tax base. The GSA is constructing a federal building in Charlottesville, Va., under a similar lease-back arrangement.