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Empty federal office costs taxpayers

Saturday, June 21, 2014 7:34 PM
Last updated Sunday, June 22, 2014 2:25 AM
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The air conditioning is running and there’s a Social Se­curity Administration sign out front, but no one’s inside working.

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Social Security workers moved out of this office on Claussen Road in April after making renovations. The federal government is locked into the lease until 2021.  JON-MICHAEL SULLIVAN/STAFF
JON-MICHAEL SULLIVAN/STAFF
Social Security workers moved out of this office on Claussen Road in April after making renovations. The federal government is locked into the lease until 2021.

The nearly 19,000-square-foot office building at 1058 Claussen Road in west Au­gus­ta has been vacant since April, but it still costs taxpayers $39,679 a month in rent and will probably keep doing so for the next seven years.

Documents obtained by The Augusta Chronicle show that a 15-year federal lease on the facility has locked taxpayers into paying annual rent of more than $476,000.

According to a copy of the rental agreement requested under the Freedom of Infor­ma­tion Act, the government cannot terminate the lease in “whole or part” until after giving at least 120 days’ written notice on or after Jan. 1, 2021.

Federal watchdog groups say what’s happening at the commercial complex off River Watch Parkway and In­ter­state 20 is an example from a long list of problems the government has in mishandling property it leases and owns.

Since at least 2003, the General Services Adminis­tration, which brokers and manages much of the government’s property, has been flagged as “high-risk” for excess and underused real estate. In March, the Government Accountability Office reported that on many occasions the agency ends up spending more on renovations and rent over a long-term lease than it would if it bought the facility outright.

At the Claussen Road building, the government spent $644,851 to specially “upfit” it to house the Social Security Office of Disability Adjudication and Review.

Richmond County building permits show that service windows, separation walls, above-ceiling electrical and new plumbing were added to help the agency hold hearings, issue decisions and review appeals on benefits.

Those costs were added to the lease, and for the next seven years, the government must pay $92,866 annually above the cost of rent for the renovations.

“The taxpayers are on the hook for this,” said Da­vid Jordan, the principal broker of Federal Realty Ad­vi­sors, a consulting firm in Washington that specializes in federal capital planning and commercial leasing.

Troubles begin

The federal government’s troubles in west Augusta began in September 2012, when an inspection by the city planning department found a leaky roof had led to dampness and ceiling-tile water damage inside the disability review office.

The case was closed about a year later, on Aug. 26, 2013, after a second inspection found the leak was repaired and no mold was present. But a month later, Charles Wilkinson, an Augusta disability attorney whose business is next door,
said the Social Security agency began to move out employees.

Frank Viera, a spokesman for the Social Security Admin­is­tration in Atlanta, said the 47 employees who worked in the office were reassigned.

He would not comment on why employees were moved out and referred the question to the General Services Admin­istration, which referred the question back to him.

Saudia Muwwakkil, the regional public affairs officer for GSA office in Atlanta, said the Social Se­curity agency ended its lease and vacated the office by the end of April because it had consolidated its workforce into other offices.

The disability review office also leases about 1,500 square feet of space in downtown Augusta’s SunTrust Bank building for $42,112 annually. That 10-year contract is up April 14, 2018.

Muwwakkil said the GSA is “revising Augusta’s lease portfolio” and that it is too early to say what it will do to meet its real estate needs.

Hafeez Chaudhry, who owns the Claussen Road building, said the Social Se­cur­ity agency told him early this year that its “mission and space requirements” had changed.

Chaudhry, who signed the lease Oct. 25, 2010, as president of Capital Commercial Hol­dings, a limited-liability corporation based in Mar­ti­nez, said that the facility is ready and has working utilities and that he would welcome another federal agency.

Without knowing all the details behind the agency’s exit, he said it would be unfair to comment on whether he considers its short tenancy to be wasteful spending. He said he has not heard who might replace the Social Security agency as the facility’s tenant.

“I take it at this point neither positively or negatively,” he said. “I would love to have the building filled up and used every day, but I can certainly understand when missions change.”

The watchdog

Leslie Paige, the vice president of communications and policy for Citizens Against Government Waste, a national nonprofit, said the government’s reckless leasing practices are especially bad within the GSA, which she called the “poster child” for widespread mismanagement.

“There’s very little oversight on the ground level for federal leases. It’s a rampant problem,” she said of the agency. “Too often they’re entering into agreements not in the best interest of taxpayers.”

In March, the Government Ac­coun­tability Office published a report that reviewed property management practices within the GSA, one of four agencies that rank in the top 10 in federal real estate holdings.

The report revealed that, as with the Claussen Road building, which has a taxable value of $468,699, the federal government often spends more money on renovations and multiyear leases than on outright property purchases.

For example, the report found that the GSA could have bought a State Depart­ment building in Washington for $100 million in 1992, but instead rented it for 20 years, renovated it and then purchased it in 2012 for $258 million.

Other examples of waste cited by the GAO since 2003 include a Commerce Depart­ment building in Alexandria, Va., that costs $60 million annually to rent and a Consumer Financial Protection Bureau facility in Washington where $95 million will be spent for renovations.

To stop the waste, Paige said, the government needs to cap federal lease payments, freeze all new acquisitions, create a more thorough inventory of its property and divvy up property management rights to individual agencies.

“Monthly leases look better on the budget than a large outlay of capital, but there does not seem to be any overarching thought given to shorter leases,” she said. “Property management is one of (the GSA’s) biggest weaknesses.”

The options

Generally, experts say leasing properties rather than purchasing allows agencies the flexibility to hire employees, shrink staff or move locations entirely.

Jordan said that since most federal offices are retrofitted to the government’s standards, leases are usually designed to last at least 10 years, or five years with a five-year option to take advantage of more favorable economic rates.

A review of Augusta’s 13 active federal leases by The Chron­icle supports that claim.

Among them, the Claussen Road office building has the second-highest annual rent, second-most rentable square feet (18,928) and second-longest required notice for termination.

The highest annual rent is $851,263 for the Federal Justice Center at 600 James Brown Blvd. The two-story building, which was donated by the city for $1, has no listed termination notice date.

Contract inflexibility there likely stems from the extensive renovations required by the government, based on Jordan’s assessment.

Alterations included a wrought-iron security fence, an access gate monitored by a pole-mounted camera, a white brick exterior, granite flooring, divided-light windows, overscaled light fixtures and a “monumental stair entranceway,” according to the lease.

By contrast, the government can terminate a lease it has on the seventh floor of the Augusta Riverfront Center, where restoration was waived, 150 days
after notice in writing, the longest termination notice citywide.

The office, which houses Federal Bureau of Investi­gation staff, is one of nine Augusta leases where there’s no deadline for the government to give notice that it wants to terminate.

In his 15 years in federal real estate, Jordan said, the government has kept the lease every time. He said the GSA could find a backfill tenant to buy out the lease but that such a maneuver rarely occurs.

The more likely bet, he said, is to encourage another federal agency to move into the building.

ACTIVE FEDERAL OFFICE LEASES IN AUGUSTA
ADDRESSSQUARE FEETEFFECTIVE DATEEXPIRATION DATEANNUAL RENTEND NOTICE
115 Robert C. Daniel Parkway15,120Nov. 2, 2005Nov. 1, 2015$312,48360 days
3154 Perimeter Parkway8,194Jan. 9, 2012Jan. 8, 2022$216,29460 days
1501 Aviation Way1,178July 14, 2008April 30, 2014$44,12730 days
1501 Aviation Way1,753Oct. 14, 2013Oct. 13, 2023$74,50090 days
600 James Brown Blvd.3,302April 16, 2009April 15, 2019$58,70990 days
1 10th St.5,979Dec. 1, 2003Aug. 31, 2014$135,093150 days
600 James Brown Blvd.29,021July, 7 2006July 6, 2026$851,263None
801 Broad St.1,761April 1, 2007March 31, 2017$28,03160 days
801 Broad St.1,436Sept. 1, 2008Aug. 31, 2018$42,11260 days
801 Broad St.670May 3, 2011May 2, 2021$23,82990 days
801 Broad St.1,933Sept. 1, 2011Aug. 31, 2021$58,48160 days
2743 Perimeter Parkway1,151Oct. 1, 2013Sept. 30, 2023$23,84630 days
1058 Claussen Road18,027Sept. 26, 2011Sept. 25, 2026$476,148120 days

Note: The Claussen Road building is the only one confirmed as vacant.Source: General Services Administration

Comments (16) Add comment
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dichotomy
31677
Points
dichotomy 06/21/14 - 08:27 pm
14
1
Your government at work. The

Your government at work. The same people are going to be managing your health care soon. The GSA is a "single payer" procurer of government services and health care will soon be just another government service.

Pops
7507
Points
Pops 06/21/14 - 08:34 pm
10
0
Great research

and article young man........

deestafford
25342
Points
deestafford 06/21/14 - 08:48 pm
12
0
Excellent leg work and diligence...

Excellent leg work and diligence. Now, this is just for Augusta. Multiply that around the country and maybe around the world and it would be staggering. It just shows what happens when you have unlimited use of other people's money (OPM).

What's really sad is all the new construction in DC by the feds and the number of vacant buildings that could be used just in DC.

Why can't some of these unneeded doufusses be moved out of DC to other areas of the country where there are vacant buildings? Everything does not have to be in DC so everyone can go to Georgetown cocktail parties and kiss each others...well you know... and talk about how important they are.

The US government needs to have a fire sale of property and land...not to mention a RIF of personnel.

itsanotherday1
41367
Points
itsanotherday1 06/21/14 - 08:56 pm
10
1
"Your Government"

After reading the first paragraph, I was thinking the same thing dichot. How government loving Democrats can read stuff like this and still cheer for more government is beyond me.

Little Lamb
44871
Points
Little Lamb 06/21/14 - 08:57 pm
7
4
Blame

From the story:

Since at least 2003, the General Services Adminis­tration, which brokers and manages much of the government’s property, has been flagged as “high-risk” for excess and underused real estate.

The date makes everything okay. It is all George Bush’s fault. No action necessary.

geecheeriverman
1886
Points
geecheeriverman 06/22/14 - 07:29 am
4
2
who owns the property

I would like to see a follow-up story on who owns these properties. I bet a few eyes would be opened. Is this the Chaudhry that ran for office in Columbia County? Wonder what his intentions were if he had been elected?

seenitB4
84100
Points
seenitB4 06/22/14 - 07:37 am
6
0
Other Peoples Money

EXACTLY...dee..that is the problem across the USA..

How foolish can we be when most middle income folks are feeling the pain of higher prices in everything..
Half of a million dollars til 2021...where is the STUPID SIGN...wear it please!

avidreader
3069
Points
avidreader 06/22/14 - 07:52 am
6
0
Excellent Reporting

Mr. Brown,
This news story is well written, and it's apparent that you spent a lot of time piecing it together. Also, very interesting.

Good job!

justthefacts
21089
Points
justthefacts 06/22/14 - 09:01 am
3
0
Feds

And you folks are worried about them running your healthcare.........

Mcycleman1
47
Points
Mcycleman1 06/22/14 - 10:42 am
4
0
Inepts

These same inepts who makes these decisions get paid 6 digit salaries with liberal retirements and benefits... If you are going to be in a property for 15 years, the only logical answer is to buy it! These are super premium rates if you compute the price per sqft...... Have any heads rolled??? Wonder why our national debt is $17 trillion and growing??

Little Lamb
44871
Points
Little Lamb 06/22/14 - 12:50 pm
1
2
Thumbs Down

I notice that my 8:57 p.m. comment has the most thumbs down at this particular time.

JRC2024
8271
Points
JRC2024 06/22/14 - 01:09 pm
3
0
I wonder if he used a no or

I wonder if he used a no or low interest government loan to buy the building.

IBeDogGone
2934
Points
IBeDogGone 06/22/14 - 04:08 pm
3
0
Sub Lease

Could none of this property be sub-leased or used for another government agency?

Riverman1
81368
Points
Riverman1 06/22/14 - 05:45 pm
4
0
Pot Call Kettle...

What's the Chronicle doing complaining about an underused building paid for with taxpayer money when the TEE Center sits empty most of the time?

AFjoe
2014
Points
AFjoe 06/23/14 - 11:01 am
0
0
Nothing new

I go so sick of reading the long article, I didn't even finish it.
Brevity young man.

BamaMan
2242
Points
BamaMan 06/23/14 - 11:31 am
1
0
itsanotherday

I'll tell you why. Because 99% of them don't pay taxes, so they don't give a rat's behind about taxes, they only have their hand up saying "gimmie, gimmie, gimmie". What's so disgusting, the government, or shall I say the WHITE HOUSE, encourages it so he can have them under government(his)control. Simple. He bypasses Congress with all his "executive orders". That's called dictator. People say he isn't doing his job. No, not the job the office of President calls him to do, but he IS doing the job he INTENDED on doing. It has nothing to do with his color or party, although we all know how and why he got elected in the first place.

AFjoe, I didn't finish it either. Same old crap.

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