The General Services Administration (GSA) announced on Wednesday (Feb. 15) that it will relocate about 1,000 employees from its Heartland Region headquarters at the Bannister Federal Complex—a 5.1 million-square-foot former defense plant in south Kansas City—to leased space in downtown Kansas City, Missouri (GSA’s Region 6 office manages more than 400 federally owned and leased buildings in Iowa, Kansas, Missouri, and Nebraska). An additional 400 employees at eight other federal agencies also will be leaving Bannister and seeking leased space at the same time, with downtown the preferred location for them as well. All moves are scheduled to take place by the close of 2014.
The decision to move GSA employees into leased space in downtown Kansas City comes after the agency spent more than six years attempting to convince the federal government to build a new 446,000-square-foot, $211 million office building there. Although GSA still supports the construction of a new downtown federal office building, the project was left out of the federal budget in 2010 and 2011, and its prospects now look increasingly bleak in light of the continuing budget crunch; the roughly $20 million in design expenditures needed to jump start the project were not included in President Obama’s 2012 budget. The proposed building, which was slated for completion in 2017, was projected to house 1,250 employees from several agencies, including GSA’s Public Buildings Service and Federal Acquisition Service, as well as the U.S. Department of Homeland Security’s Immigration and Customs Enforcement and U.S. Customs and Border Patrol.
The move is being timed to coincide with the relocation of the National Nuclear Security Administration’s (NNSA) Honeywell weapons parts plant from Bannister to a new facility seven miles to the south. Last fall, NNSA began seeking proposals for Bannister’s redevelopment and offered the entire 5.1-million-square foot complex—part of which is owned by GSA— for sale as a redevelopment opportunity. According to Jason Klumb, administrator for the GSA Heartland Region, NNSA has received several proposals, including some from entities interested in the entire complex, and that situation resulted in the decision to relocate all of the federal agencies now at Bannister. GSA plans to issue a solicitation for lease proposals next fall.
Bannister Federal Complex (photo: www.thepitch.com)
The Bannister Federal Complex, located at 1500 and 2000 E. Bannister Road in south Kansas City, Mo., 13 miles south of downtown, will be largely shut down within the next two years, according to a GSA announcement made last Wednesday, February 15.
The 5.1 million-square-foot, 300-acre complex was dedicated on July 4, 1942, by then-Senator Harry Truman and opened in 1943 as a factory that made engines for warplanes. Since 1949, the Department of Energy’s National Nuclear Security Administration (NNSA) has built nonnuclear components for nuclear weapons at its Kansas City plant (KCP) there. At its peak, in 1988, the plant employed 7,850 people; yet, as the plant’s role diminished with the end of the Cold War, other federal agencies moved into the complex.
Ownership of the Bannister Federal Complex is divided between GSA and NNSA. The NNSA portion of the property includes 122 acres with more than 3 million square feet of manufacturing, warehouse and office space in what has evolved into a high-tech research production facility. Honeywell Federal Manufacturing & Technologies, the prime contractor operating the plant for NNSA, currently employs more than 2,300 people there. Office and warehouse space not controlled by NNSA is owned and operated by GSA. The GSA portion includes 190 acres consisting of more than 2 million square feet of office and warehouse space. The nine federal agencies currently housed at Bannister are GSA’s Heartland Regional Office (with about 1,000 employees), the Department of Agriculture (250 employees), the Department of Commerce, the Department of Veterans Affairs (70 employees), the Federal Emergency Management Agency, the Federal Protective Service, the Marine Corps, the National Oceanic and Atmospheric Administration (60 employees), and the Forest Service (40 employees). A total of about 1,900 federal workers operate in the nonmanufacturing space.
In 2006, GSA and the NNSA announced plans to relocate the KCP to a new 1.5 million-square-foot campus-style facility at the former Richards Gebauer Air Force Base. That campus is currently under construction and should be completed by 2014; employees will begin to move in later this year. In total, 2,100 to 2,400 employees are expected to relocate from Bannister to the new facility. Last week, GSA announced that it will move most remaining federal employees from the Bannister complex by 2014, with more than 1,000 GSA employees relocating to as-yet-undetermined leased space in downtown Kansas City and another 400 federal employees moving to additional undetermined locations. The only operation scheduled to remain at Bannister after the end of 2014 is a 400-employee U.S. Marine Corps information technology center, which is committed to remaining there until at least 2017. GSA officials are seeking a buyer to redevelop the property, a task that may be complicated by the existence of multiple Superfund sites there.
The entire south Kansas City area, including the now empty site of the former Bannister Mall, is badly in need of redevelopment. Last year, NNSA announced that it “is committed to exploring all potential avenues to transition the building to a subsequent owner who will use the facility in support of economic re-development of the KCP.” Mark Holocek, the NNSA executive in charge of the KCP, told the Kansas City Star last week that his office has received “a wide range” of proposals for the Bannister complex, but declined to discuss details, adding that a general description of the proposals should be available within two or three months but that no specific proposal would be identified before the end of this year.
The U.S. Green Building Council (USGBC) is updating its LEED (Leadership in Energy and Environmental Design) program in response to concerns that the existing program rewards individual green features without ensuring that a building as a whole is environmentally sustainable, and that it considers initial construction at the expense of long-term performance. This third draft of the rating system is focused on providing a simple-to-use, technically advanced and more robust system. It includes performance-based management features and tools that will enable project managers to better measure and manage site and building material selection as well as long-term energy and water use and indoor environmental quality—tools that also will provide opportunities for ongoing engagement between project teams and USGBC, both before and after certification.
“LEED’s strength comes from its continuous evolution,” said Scot Horst, senior vice president of LEED at USBGC, in a recent press release. “This continuous improvement is the outcome of thousands of technical volunteers working to develop the program and the adaptability of the program to technological and market changes.” The new draft standards also take a more global perspective, with modified language, new requirements and options that increase flexibility aimed at making it easier for the international community to engage with LEED.
The following are among the proposed new features of LEED 2012:
- New prerequisites that will create a basic level of performance among LEED projects;
- Compliance paths for additional market sectors, including new and existing data centers and new warehouses and distribution centers; and
- An updated point system that includes three new credit categories (“integrative process,” “location and transportation” and “performance”) and weights credits and categories according to their overall contribution to a building’s green goals.
The third public comment period for the proposed updates will begin on Mar. 1 and close on Mar. 20; all relevant resources will be available at on the USGBC LEED 2012 webpage beginning Mar. 1, and members of the public may comment on any substantive changes made since the second public comment period, which ran from Aug. 1 through Sept. 14, 2011. USGBC members then will vote on LEED 2012 in June and the updated program is expected to launch in November.
Why do we care? Because GSA facilities standards require that all newly constructed leased projects of 10,000 square feet or more must be at least LEED Silver certified (LEED Gold is the standard if the government is building the project itself). For leases in existing buildings, federal tenants may, at their discretion, require that LEED for Commercial Interiors is achieved. Under pressure to demonstrate that they are achieving federal sustainability metrics, agencies are increasingly opting to insert the LEED-CI requirement into lease procurements.
On February 13th GSA submitted its FY 2013 Congressional Justification, an outline of GSA’s planned programs and budget. At 243 pages it’s not an easy read, but there are some notable discoveries. The following is our summary of some of the more interesting features of this year’s Congressional Justification. Our focus, of course, is on programs centered primarily on the Public Buildings Service and not the other elements of the General Services Administration.
Leased Inventory Reduction: GSA’s estimates are that its leased inventory will decline from 200.7 MSF to 199.4 MSF in FY 2013. If this actually occurs it would be a rare event. Despite this, GSA has forecast its budget line for Rental of Space to increase almost $340 million from the enacted FY 2012 figure to $5.55 billion in FY 2013.
Building Purchases: GSA proposes to exercise purchase options totaling $56 million for two buildings it currently leases: an IRS data center/office facility in Martinsburg, WV and an FDA lab in Riverdale, MD. In both cases the justification is that the GSA views the properties as long-term assets yet expects rent to increase substantially upon the upcoming renewals. It’s worth noting that the Martinsburg purchase has been submitted in GSA’s budget request each of the past two years as well, but never funded.
Portfolio Plans: GSA is systematically implementing portfolio plans for its largest agency customers. These plans are meant to establish “strategic portfolio requirements” and we can be sure there will be a heavy emphasis on cost reduction, including consolidation, telework and disposal of underutilized assets. We can’t help but notice that the budget also includes a $16.1 million line item for alterations to accommodate consolidations into federally-owned space. Last year, GSA completed plans for the State Department, HHS and SSA. GSA plans to complete three more plans each year through FY2014, for a total of 12 plans.
High Performance Green Buildings: GSA is deadly serious in its efforts to lead government into green leasing and there are a host of objectives throughout the Congressional Justification referencing the legislation and executive orders that are driving this initiative. Among them, is an increasing emphasis on tracking aggressive metrics toward achieving a “zero environmental footprint”. This Congressional Justification hints casually at increased reporting requirements for greenhouse gas emissions and we know already that GSA recently began requiring private-sector landlords to report quarterly utility usage.
Delineated Areas: This issue is perhaps a bit pedantic but we find it interesting. GSA has proposed a change to its administrative provisions to no longer require it to ensure that the delineated search area in its lease procurements matches the search area in the congressionally approved prospectus. This will give GSA considerable latitude to better adapt its procurements to rapidly changing policy requirements and market conditions. Yet, there is also a greater likelihood that GSA can game procurements with delineated areas that look like a Chicago ward map.
When faced with thousands of pages of budget submissions and hundreds of megabytes of data, there is nothing so wonderful as a good infographic to make sense of it all. We’ve searched the web to find the best sites and included them here. Continue to check back because as we find others we’ll add them to this post.
Washington Post
Of course we had to include our hometown newspaper. The attached infographic shows how spending has changed by presidential administration over the past 30 years. Its interesting to note the inexorable climb of Social Security and Medicare entitlement costs.
Click here to interact with this infographic.
New York Times
The venerable New York Times has long been the infographic king of the journalism industry. Their analysis underscores the frightening fact that the much of our federal budget is devoted to servicing entitlements and interest on the public debt. Discretionary spending is less than 1/3 of the federal budget and, despite cuts, it cannot counterbalance growth in entitlement and interest spending.
Click here to interact with this infographic.
Wall Street Journal
The Wall Street Journal’s analysis illustrates the budget five ways: receipts & outlays, deficit forecasts, cash flow, Defense and Medicare, and discretionary spending by agency. This last graph highlights an issue that we have often discussed with federal landlords: Department of Defense discretionary spending is greater than all other cabinet level departments combined. This is why DoD is so critical to certain local economies – especially Northern Virginia. A legion of federal contractors are sustained by defense spending.
Click here to interact with this infographic.
Yesterday, President Obama submitted his FY 2013 budget to Congress. What was perhaps most surprising was that the budget, on the top line, actually grew slightly to $3.803 trillion. As the Brookings Institute’s William Gallston noted in a brief opinion piece published today, the budget largely reflects Obama’s political strategy going into this election year. His summary notes three key points: 1) Spending will increase in an effort to boost job growth; 2) The deficit will be restrained primarily through tax increases on the wealthy and on corporations – not be spending cuts, and; 3) entitlement programs will continue to grow causing mitigating cuts to occur in the discretionary budget.
This last item, in particular, raises challenges for government sector real estate. The planned 4.4% cut to the discretionary budget portends increasing government austerity. Further, the discretionary budget forecast over the following two years (through FY 2015) anticipates a discretionary budget reduction of an additional 10%. In response, we expect to see much more of what we’ve already noted: increased space utilization through office redesign, hoteling and telework programs. Agencies will continue to search for ways to do more with less and the government will maintain its pressure to reduce the cost of leased space. Funding will be scarce for large scale consolidations or relocations due to the high one-time costs to implement. Congress will also continue to push CPRA as the tool by which to dispose of unneeded and underutilized real estate.
Current NGA Bethesda Campus
At its monthly meeting last week, Thursday, February 2, the National Capital Planning Commission (NCPC) unanimously approved a final master plan for the proposed $300 million Intelligence Community Campus-Bethesda, a federal facility to be located on the site of the former National Geospatial-Intelligence Agency (NGA) headquarters on Sangamore Road, off MacArthur Boulevard, in Bethesda, Maryland.
The Defense Intelligence Agency, working with the Army Corps of Engineers, is leading efforts to repurpose the 39-acre site as a campus for multiple intelligence agencies, including employees of the Central Intelligence Agency (CIA) and the National Security Agency (NSA). Plans call for the retention of three existing buildings, which will get new facade treatments, and the demolition of two other buildings, which will be replaced by new ones. An 1,825-space parking garage and new landscaping will replace existing surface parking lots, decreasing impervious surfaces by 50 percent.
In its approval, the commission commended the Corps for its efforts in reusing and modernizing an existing federal facility while simultaneously acknowledging its historic significance. It also commended the Corps and the local community for working together to resolve numerous issues. Community members had responded to an earlier version of the master plan by expressing concerns about tree loss, stormwater management, traffic, and parking. In December 2011, the NCPC deferred action on the plan and required the Corps to analyze alternatives to the proposed garage. The Corps, community members, and NCPC staff then worked together extensively on revisions to the plan that resulted in an improved overall site design; a smaller, reoriented parking garage; less on-site parking; and a substantial decrease in the number of trees that will be removed.
The campus will house a maximum of 3,000 employees—approximately the same number as it did before NGA employees were transferred to a new headquarters complex on Fort Belvoir, Virginia, in September 2011 as part of the 2005 BRAC process. Specific components of the new intelligence campus, including Phase I/North Campus (the parking garage as well as entry and visitor control facilities) and Phase II/South Campus (the six office buildings) will come before NCPC for review later this year. The first phase of the project, which includes the demolition, is expected to begin in mid-2012 and to cost $40 million; the total project cost is estimated at $300 million.
The mission of the U.S. Securities and Exchange Commission (SEC) is to “protect investors, maintain fair, orderly and efficient markets and facilitate capital formation.” It was created by the Securities Exchange Act of 1934 to restore investor confidence in U.S. capital markets during the Great Depression by “providing investors and the markets with more reliable information and clear rules of honest dealing,” as well as to promote stability in the markets and to protect investors. President Franklin Delano Roosevelt appointed Joseph P. Kennedy—whose son later became President John F. Kennedy—to be the first chairman of the SEC. The agency’s functional responsibilities are organized into five divisions and 18 offices, each of which is headquartered at Station Place near Union Station in Washington, D.C. About 60% of the SEC’s approximately 3,900 staff are located in Washington; the rest work in 11 regional offices, in Atlanta, Boston, Chicago, Denver, Fort Worth, Los Angeles, Miami, New York City, Philadelphia, Salt Lake City and San Francisco.
Congress’s passage of the Dodd-Frank Act in 2010 significantly expanded the SEC’s mission and duties. The commission now is responsible for examining more than 11,000 investment advisers managing more than $43 trillion in assets, more than 5,000 broker-dealers with more than 160,000 branch offices and 7,500 mutual funds. It is going through a significant restructuring process.
The commission’s leasing and space management programs have had a troubled history since 1990, when Congress granted the SEC independent leasing authority (making it exempt from GSA regulations and directives), including several “expensive missteps” associated with the leasing and buildout of its current headquarters, which it moved into in 2006, as well as with subsequent decisions to expand the headquarters into additional buildings at Station Place. As of 2011, the SEC maintained about 2.5 million square feet of leased space nationwide and paid about $100 million in rent, roughly 8 percent of the agency’s annual budget.
The SEC found itself in hot water again in July 2010, when—because it expected to hire as many as 800 new employees over the next two years and double its budget by 2015 as it anticipated new duties specified by the Dodd-Frank Act—it entered into a $556 million lease for 900,000 square feet at Constitution Center (400 Seventh Street, S.W.) in Washington, D.C. , the renovated former headquarters of the U.S. Department of Transportation. Congress had, in fact, authorized a doubling of the Commission’s budget, but did not appropriate the money. The agency subsequently assigned 2/3 of its leased space to other federal agencies and it is still negotiating its exit from the remaining space.
A May 16, 2011 report by the SEC’s attorney general said the leasing decision was based on a “deeply flawed and unsound analysis” and “grossly overestimated the amount of space needed at SEC headquarters.” The report also noted that the leasing decision was made without competitive bids and involved the use of falsified and backdated approval forms. Last July, SEC Chair Mary Schapiro apologized to a House panel and agreed to relinquish authority for SEC leasing to GSA, saying “the SEC now recognizes the benefits of having the General Services Administration manage its future leasing, [which] is not our core mission.” The entire affair has put the leasing authority of other independent agencies in danger.
This week the House of Representatives passed H.R. 1734, known as the Civilian Property Realignment Act (CPRA), with voting carried by the Republican-led House, largely along party lines. The legislation describes its purpose as “To decrease the deficit by realigning, consolidating, selling, disposing, and improving the efficiency of Federal buildings and other civilian real property, and for other purposes.” If you read a bit deeper, you get a sense of what one of those “other purposes” is. There is a single sentence buried twenty sections into the bill that would dramatically impact federal leasing – and it has little to do with BRAC. That sentence begins: “Notwithstanding any other provision of law, no executive agency may lease space for the purposes of a public building…” And, with that, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission, the Pension Benefit Guaranty Corporation and a host of other agencies with independent leasing authority stand to lose the authority to lease space on their own. The law (if passed) will now require that these agencies utilize and pay for GSA’s services.
This prohibition is in direct retribution for the SEC’s poorly-conceived 900,000 SF lease at Washington, DC’s Constitution Center project in the Summer of 2010. Yet, most independent agencies feel that Congress is throwing out the baby with the bathwater. These agencies have fought this provision because most have effectively managed their own real estate affairs for years. In their view, GSA is focused on process and not results. The independent agencies feel they can do the job faster and better than GSA.
However, there is another issue which is the simple problem of capacity. GSA is already struggling under the load of its current responsibilities. The President made exactly this observation in a Statement of Administration Policy dated February 6th. In it, the Obama Administration noted that “Mandating that GSA alone exercise leasing authority in an abrupt and unplanned fashion could create capacity issues for GSA, as well as unintended consequences for agencies that currently exercise independent leasing authority responsibly.”
CPRA has not yet been voted on in the Senate, though the Senate version of the legislation is nearly identical to that passed by the House, and it includes the same restriction on leasing authority.
The House of Representatives passed a bill yesterday designed to speed up the sale of large amounts of excess federal properties. The Civilian Property Alignment Act (H.R. 1734), commonly referred to as the “Civilian BRAC” bill), which passed 259 to 164, would create a process similar to the Defense Department’s BRAC, with a nine-member commission of private and public sector specialists that would review the federal real estate inventory and make recommendations to Congress about selling or redeveloping high-value properties, consolidating space and disposing of unneeded assets. The bill would require the commission to select at least five properties worth $500 million or more for sale within its first 180 days. According to the Office of Management and Budget (OMB), such a commission could generate $15 billion in revenue from property sales within the next ten years; additional savings would come from reduced federal spending on leases, energy and maintenance.
“One thing that we should all agree on is that the sale, redevelopment and consolidation of vacant and unneeded federal property is a common-sense way to eliminate waste and save taxpayer dollars,” said Rep. Jeff Denham, R-Calif., who first introduced the bill last May, in a statement this week. An earlier version passed by the House Transportation and Infrastructure Committee in October contained several controversial provisions that were deleted from the version passed by the full House, including one that would have transferred the Federal Trade Commission’s headquarters to the National Gallery of Art.
The bill—which would offer private developers unprecedented opportunities to buy and/or redevelop some prime properties in the Washington, D.C., area and elsewhere—now heads to the Senate, where Sen. Scott Brown, R-Mass. introduced a companion bill (S. 1503) last August. The Obama administration, which proposed a similar plan last year, issued a statement of administration policy on Monday that opposed the House bill because it requires Congress to adopt the commission’s recommendations by joint resolution and because it bypasses some environmental reporting mechanisms currently required by the National Environmental Policy Act; it also disagreed with the bill’s zeroing out of GSA’s construction budget and said that it exempts too many properties (including U.S. Postal Service buildings, agriculture-related buildings, military installations and structures related to flood control) from consideration by the commission.