STATEMENT OF MECHELLE SCHULTZ, DOWNTOWN BILLINGS ASSOCIATION, INC.

February 13, 1998

The Honorable Max Baucus
United States Senate
Senate Committee on Environment and Public Works
Hart Senate Office Building
Washington, DC 20510-2602

Re: Testimony of Mechelle Schultz, Director of the Downtown Billings Association

Dear Senator Baucus and Members of the Committee: I am pleased to represent the Downtown Billings Association and other downtown business interests in providing testimony regarding the procurement process for federal office space in Montana. As director of the Downtown Billings Association, I represent more than 183 member businesses. The association supports plans to reverse the decline in the profitability and viability of businesses within the downtown area. Our members include most of the retail shops, financial institutions, hotels, restaurants, museums and cultural services, professional offices, and service businesses in downtown Billings. These members have joined with the community to raise funds for downtown revitalization and planning. A copy of our membership directory is attached, and I ask that this exhibit be submitted for the record along with my testimony.

Downtown Billings will lose 225 of its highest paying jobs if the Bureau of Land Management (BLM) relocates from the community core. The economic vitality of the downtown area depends upon the patronage of downtown workers. Downtown Billings was devastated by the loss of its last remaining department store two years ago and cannot bear the future loss of federal employees. Area restaurants, service businesses, and retail shops will suffer declines in their business attributable to the loss of the BLM employees. Similarly, hotels, restaurants, and other retail establishment will be affected by the loss of business from customers who currently travel to downtown Billings to transact business with federal employees.

Billings has experienced a 40 percent decline in taxable value in the downtown area since 1987. Downtown employees, including federal workers, have been the mainstay of the downtown community, especially given the decline in retail trade and the oil and gas industry. At this time, the federal government employs approximately 950 full time equivalent (FTE) workers, including the BLM employees, in the downtown area.

In addition to the potential loss of downtown employees, downtown property owners will lose their federal tenants. The vacancy rate for office space in downtown Billings is estimated to be 15 percent to 20 percent at this time.

Our greatest frustration in our efforts to preserve these high-paying jobs has been our inability to communicate with the General Services Administration (GSA) regarding its location decisions for federal office space in the community. For example, we sent numerous communications to the GSA regarding the BLM bidding process, but received no response from the GSA. The only correspondence I received throughout the bidding process was a notice dated February 4, 1998 from Ms. Polly Baca, Regional Administrator for the GSA, who informed me that the lease contract for the building had been awarded. A copy of this letter is attached to my testimony. Due to this lack of communication, we have been unable to offer our input in the bidding process or to demonstrate the negative impact of this decision on our community.

At this time, the Downtown Billings Association requests a six-month moratorium on decisions relating to federal building projects in Montana. This moratorium would allow time for communities to offer solutions to the federal government on their building needs and appropriate locations. We would like to work with the GSA and other federal agencies in the manner outlined in President Carter's Executive Order 12072.

We appreciate your consideration of our request.

Respectfully submitted,
Mechelle Schultz
Director