District of Columbia:

Management Issues Concerning Two District Leases

GGD-00-87: Published: May 2, 2000. Publicly Released: May 2, 2000.

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Pursuant to a congressional request, GAO reviewed issues relating to the District of Columbia government's mismanagement of two building leases, focusing on: (1) whether the person or persons who approved the leases were authorized to do so; (2) the status of properties, leases, costs, and utilization; and (3) the steps the District has taken or is taking to ensure that leased properties, in general, are effectively managed and utilized.

GAO noted that: (1) authorized individuals approved both leases; (2) the then Mayor of the District signed the lease for the homeless shelters; (3) although District officials were unable to provide GAO with a signed copy of the lease for the multiple use facility, GAO concluded that it was also a properly authorized lease; (4) in that case, the Director of the Department of Administrative Services, also an authorized leasing official, signed an acknowledgement form, which is an integral part of the lease; (5) the homeless shelter buildings have been vacant since January 1992 and are boarded up; (6) the District has spent over $2 million in rent while the space has been vacant and is liable for over $1 million to restore the two buildings; (7) the Department of Human Services decided to cease using the buildings as homeless shelters because neglect of maintenance of the buildings had rendered them unfit as shelters; (8) the District had spent $3.4 million in rent from December 19, 1986, through fiscal year (FY) 1999, including about $2.3 million since the buildings have been vacant; (9) the lease calls for at least another $1.9 million, in current dollars, in rent over the 6 years remaining on the lease; (10) the terms of the lease require the District at the termination of the lease to restore the buildings to the condition they were in at the beginning of the lease term; (11) since it has been estimated that the costs to restore the buildings would exceed $1 million, District property management officials have concluded that it is advantageous to purchase the properties; (12) the multiuse facility is utilized by three District agencies, although half of the rented space remained vacant for more than 3 years; (13) from August 1990 through FY 1999, about $11.9 million was paid in rent for the space; (14) for the remaining 10 years of the lease, at least another $13 million is to be spent in additional rent for this space; (15) the District has taken some steps, and plans to take additional ones, to help it to more effectively manage and monitor its real property holdings; (16) Congress has passed legislation that requires the District to take additional steps, such as developing a comprehensive plan for the management of real property assets, to further strengthen its real property operations; and (17) on April 5, 2000, the District of Columbia Council passed an emergency and permanent version of the Omnibus Government Real Property Asset Management Reform Act of 2000 to improve management of real property assets, including fully centralizing asset management authority.

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