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Donald Trump's Postal Hotel Gets Stamp of Approval From John Mica

February 16, 2012 - 6:00pm

RELATED: Miami courthouse a case study in overbuilding.

Seeking to stop the hemorrhage at Uncle Sam's real estate holdings, Rep. John Mica says a Washington, D.C., deal with Donald Trump signals a healthy start.

Mica, chairman of the House Transportation and Infrastructure Committee, announced that Trump would bring a 250-room luxury hotel to the largely abandoned Old Post Office on Pennsylvania Avenue.

Just two blocks from the White House, the 113-year-old postal building has been a multimillion-dollar drain on the federal treasury.

Trump's hotel project -- winner of a competitive bid against Hilton Worldwide and Waldorf Astoria -- will put 1,000 people to work, Mica said.

The long-delayed decision to move forward with redeveloping the Old Post Office is a victory in our efforts to get the federal government to stop sitting on its assets, the Orlando-area Republican said.

The General Services Administration estimates that the 30-year net present value of leasing out the building for private development would yield an average of $21 million.

Under the agreement, Trump will install a 250-room luxury hotel at the D.C. landmark that sits within easy walking distance from the National Mall and Smithsonian museums.

The postal building's 315-foot-tall clock tower, operated by the National Park Service, will remain open to tourists.

Mica says the collaborative venture is just the beginning of what the U.S. government must do to repurpose or unload unneeded properties, and to generate revenue along the way.

The governments poor management of just this one property alone has cost taxpayers $6.5 million every year, he noted.

Unfortunately, there are other unused, underutilized and poorly managed federally owned properties in Washington and around the country. We must address waste across the full inventory of the governments assets to save taxpayers billions of dollars.

In 2008, the federal governments real property portfolio consisted of almost 896,000 buildings and structures with a total area of 3.29 billion square feet and more than 41 million acres of land.

According to the GSA's 2009 State of the Portfolio Report, nearly 40 percent of its assets are underperforming. A 2003 Government Accountability Office survey reported there were 236 vacant or underused properties owned by GSA. Properties highlighted in that GAO report seven years ago remain vacant or underutilized.

One federal agency, the Department of Transportation -- overseen by Mica's committee -- owns or leases 69,500 real property assets, including land, buildings and structures.

Amtrak, heavily subsidized by taxpayers, maintains more than $17 billion worth of infrastructure assets throughout its passenger rail system.

There are approximately 1,700 miles of levees, 650 dams and 383 major lakes and reservoirs, 12,000 miles of commercial inland channels, and 75 hydropower generating facilities -- all owned by the federal government. The U.S. government also operates and maintains waterways leading to 926 coastal, Great Lakes and inland harbors, and 241 individual lock chambers at 195 sites nationwide.

A report by the House Transportation and Infrastructure Committee -- "Sitting on Our Assets: The Federal Government's Misuse of Taxpayer-Owned Assets" -- outlines projected savings of hundreds of billions of dollars through improved management or privatization. Among them:

  • Reducing or eliminating spending on unneeded courthouses and excessive courthouse space: Estimated savings $1 billion.
  • Selling at least 20 percent of nonperforming real estate assets: Estimated savings $2 billion.
  • Better utilization and development of the Northeast Corridor and introduction of true high-speed passenger rail service financed, constructed and operated in conjunction with the private sector: Estimated savings of $20 billion.
  • Reprogramming funds that were awarded to states for slow-speed passenger rail projects to true high-speed projects that can attract private-sector participation and run at an operational profit: Estimated savings of up to $6 billion.
  • Encouraging additional investment in infrastructure from the private sector by providing a better definition of public-private partnerships for undertaking highway, transit, port, rail, airport and other infrastructure projects: Estimated savings up to $180 billion.
  • Enacting a 437-Day Plan that will streamline the approval of transportation projects resulting in lower project costs: Estimated savings of up to $50 billion.
  • Allowing the transfer of stalled or canceled project funds to more viable projects: Estimated savings of up to $1 billion.
  • Converting 30 million square feet of leased space to owned space: Estimated savings over $150 million per year.
  • Consolidating the Federal Trade Commission headquarters in Washington into a single facility: Estimated savings of $350 million.
  • Reinstating GSAs Building Opportunity Purchase Program for 10 office buildings: Estimated savings of $1 billion.
  • Redeveloping millions of square feet of idle or vacant federal buildings, such as the Old Post Office Building in Washington, through public-private partnerships: Estimated savings of $200 million.
  • Selling excess and unused Department of Veterans Affairs properties: Estimated savings of $175 million in avoided annual costs.
  • Renegotiating 60 percent of GSA leases within two years to take advantage of declining market rates: Estimated savings of $300 million per year.

In addition to clearing Uncle Sam's balance sheet of unneeded and unproductive properties, Mica said privatization ventures generate new tax revenue while reducing federal employee pension costs.

The Trump-Post Office deal is a microcosm of the promise and frustration built into the reform process.

In this case, Congress held multiple hearings and passed two laws requiring action, yet years and years passed before we could get to the point of announcing the Trump organization as the private-sector developer, said Rep. Jeff Denham, chairman of the House Committee on Economic Development, Public Buildings and Emergency Management.

The bottom line is, the system is broken and we need a new process to sell or redevelop these properties," said Denham, R-Calif.

To kick-start the bureaucracy, Denham has introduced the Civilian Property Realignment Act, HR 1734, to create a nine-member commission to review federal properties and recommend specific actions to reduce the federal building inventory and more efficiently house federal employees.

House Republicans say the redevelopment of the Old Post Office is a textbook example of the type of asset management improvement that could be implemented across the country.

"CPRA will literally shrink the size of government and help ensure savings by selling or redeveloping high-value properties, consolidating federal space, maximizing the utilization rates of space, and streamlining the disposal of unneeded assets," Denham said.

"The bill takes politics out of the process and will bring an independent process, outside of bureaucratic red tape, to improve the management of federal real property to eliminate government waste," he concluded.

Contact Kenric Ward at or at (772) 801-5341.

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