Mr. Chairman, and Members of the Subcommittee, I am Paul Chistolini, the Deputy Commissioner of the Public Buildings Service. I want to thank you for this opportunity to discuss our efforts to provide the Department of Transportation with the best possible working environment for their headquarters staff, and our current plans for the development of the Southeast Federal Center in southeast Washington, D.C.

Plans for the development of the Southeast Federal Center property go back at least to the 1970's. The latest version is the 1990 Master Plan and we are now re-evaluating it. The 1990 Plan assumed that this large site would be developed for the single purpose of housing a number of large Federal agencies. In this era of government downsizing, that assumption is no longer valid. In addition, the Department of the Navy is moving five thousand employees to the adjacent Washington Navy Yard which is expected to spur private development in the adjacent area. Accordingly, GSA is reassessing the Master Plan, including tenant mix, private sector participation, and the potential for mixed uses of the site. We are doing this re-evaluation in coordination with the Navy.

At this time, therefore, we do not intend to develop infrastructure such as roads, parks, piers, etc., the locations of which would all depend on our having more specific and achievable plans for use of the Southeast Federal Center than we currently have. However, we do have an obligation to perform environmental remediation on this property. We will be demolishing contaminated structures, halting the flow of contamination into the Anacostia River and similar activities.

Irrespective of how we develop the Southeast Federal Center, these remediation actions and their associated costs are an unavoidable obligation of Government ownership of the property. The urgency of some form of these actions has been highlighted by a lawsuit filed by the Earth Justice Legal Defense Fund of behalf of local residents. We anticipate expending approximately $20 million dollars in previously appropriated funds on remedial work. In the future, when a proposal for occupancy at the SEFC and alternative sites is made for a Federal agency, GSA will consider the prorated costs of infrastructure investment and additional site-specific environmental cleanup in any comparison of site proposals.

As the plans for developing the SEFC continue to evolve we will keep this Committee fully informed.

The Department of Transportation is currently housed in the Nassif Building in Washington, D.C. This building is leased from a private owner and the current lease expires in March, 2000. The need for authorization of a new housing plan for DOT was first brought to the attention of Congress in 1991. At that time GSA submitted a prospectus to this committee for the authorization of a $780 million construction project, financed in part with DOT funds, over the air rights at Union Station as a solution to DOT's long-term needs. In 1996 DOT included a funding request in its budget for a headquarters facility. These proposals were not approved by Congress, and neither was a leasing prospectus submitted to the Congress in July 1996. In September 1996, the House Public Works and Transportation Committee directed GSA to prepare a Report of Building Project Survey on the "feasibility and need to construct or otherwise acquire a facility to house the headquarters of the Department of Transportation". This report was submitted to this Committee and the House Public Works and Transportation Committee on May 29, 1997. The House Public Works Committee authorized the recommendations of this report by Committee resolution on July 23, 1997.

The essence of the recommendation in our report is that while government ownership is the optimal solution, an operating lease may be necessary as a bridge to an ownership solution. In other words, our report recognized that government ownership of a headquarters building is the most cost effective solution over the long term. However, it recognized at the same time that we may not be able to obtain the up front funding necessary to acquire a building and so it laid out a strategy for obtaining a leased building with options to convert to government ownership should funding become available.

None the less, pursuant to the requirements of the September 1996 House Public Works Committee resolution, we believe it is premature to submit our proposed acquisition strategy for the DOT headquarters since various construction and leasing options are being evaluated in the preparation of the FY 1999 President's Budget.

Mr. Chairman, I would be happy to answer any questions which you and the Members of this Subcommittee may have.