Federal Courthouses:

Rent Increases Due to New Space and Growing Energy and Security Costs Require Better Tracking and Management

GAO-06-613: Published: Jun 20, 2006. Publicly Released: Jun 22, 2006.

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The judiciary pays over $900 million in rent annually to GSA for court-related space, and this amount represents a growing proportion of the judiciary's budget. The judiciary's rent payments are deposited into GSA's Federal Buildings Fund (FBF), a revolving fund used to finance GSA's real property services, including the construction and repair of federal facilities under GSA control. In December 2004, the judiciary requested a $483 million dollar permanent, annual rent exemption, which GSA denied, saying that it undermined the intent of FBF and that GSA was unlikely to obtain appropriations to replace lost FBF income. GAO identified (1) recent trends in the judiciary's rent and space occupied and (2) challenges that the judiciary faces in managing its rent costs.

The federal judiciary's rental obligations to GSA for courthouses have increased from $780 million to $990 million--or 27 percent from fiscal years 2000 through 2005, after controlling for inflation--primarily due to a simultaneous net increase in space from 33.6 million to 39.8 million rentable square feet, a 19 percent increase nationwide. Much of the net increase in space was the result of new courthouses that the judiciary has taken occupancy of since 2000. According to the Administrative Office of the U.S. Courts (AOUSC), the judiciary's workload has grown and the number of court staff has doubled since 1985. Shell rent (the building with basic infrastructure) increased proportionately with net square footage growth, but operational (utilities and general maintenance) and security costs grew disproportionately higher than square footage due to external factors, such as increasing energy costs and security requirements. Neither GSA nor the judiciary had routinely and comprehensively analyzed the factors causing rent increases, making it more difficult for the judiciary to manage increases. The federal judiciary faces several challenges to managing its rental obligations, including costly new construction requirements, a lack of incentives for efficient space use, and a lack of space allocation criteria for appeals and senior judges. First, building requirements, such as three separate circulation patterns for judges, prisoners, and the public and other structural and architectural elements make courthouses among the most expensive federal facilities to construct, often leading to higher rent payments. Second, the judiciary has begun a rent validation effort intended to monitor GSA rent charges, but it does not address the lack of incentives for efficient space management that we found at the circuit and district levels. An example of the inefficiencies that may result is in the Eastern District of Virginia, where the judiciary paid about $272,000 in 2005 to rent space for an appeals judge in McLean, Virginia, in addition to paying for space designated for that judge in a nearby federal courthouse that the judiciary later used for alternative purposes. Finally, the lack of criteria for assigning courtrooms for appeals and senior judges can contribute to inefficiencies in the amount of space provided, which can result in higher rent payments.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: We found that neither the judiciary nor GSA had routinely and comprehensively analyzed rent trends to fully understand that the judiciary's growing rent costs were primarily due to increases in the amount of space the judiciary occupies, together with rising operating and security costs. Without accurate data on the costs of rent components (e.g., shell rent, operations, and tenant improvements) maintained over time, the judiciary cannot identify, monitor, and respond to trends in rent costs. We recommended that the judiciary track rent and square footage trend data on an annual basis by rent component (shell rent, operations, tenant improvements, and other costs). As of March 2010, based on data from GSA's Rent on the Web system, the judiciary has developed an information system named JRent that enables users in the courts and the judiciary's administrative arm to track monthly rent billings, projected annual rent, rentable and usable square feet by court component for each building in each judicial district. This system can also generate graphs showing trends in monthly rent cost, usable and rentable square feet over the most recent year. Graphs can be generated for each building that show trends in the rent cost, and usable and rentable square feet annually. As a result, the judiciary will be better able to identify, monitor, and respond to trends in rent costs.

    Recommendation: To help the federal judiciary better understand and manage rent costs, the judiciary should work with GSA to track rent and square footage trend data on an annual basis for rent component (shell rent, operations, tenant improvements, and other costs) and security (paid to the Department of Homeland Security).

    Agency Affected: Judicial Conference of the United States: Federal Judiciary

  2. Status: Closed - Implemented

    Comments: We found that neither the Judiciary nor GSA had routinely and comprehensively analyzed rent trends to fully understand that the Judiciary's growing rent costs were primarily due to increases in the amount of space the judiciary occupies, together with rising operating and security costs. Without tracking its use of space over time by function (district, appeals, and bankruptcy), the Judiciary cannot identify and address trends affecting its rent costs. We recommended that the Judiciary track rent and square footage trend data on an annual basis by judicial function. As of March 2010, based on data from GSA's Rent on the Web system, the Judiciary has developed an information system named JRent that enables users in the courts and the Judiciary's administrative arm to track monthly rent billings, projected annual rent, rentable and usable square feet by judicial function for each building in each judicial district. Graphs can be generated for each building that show trends in the rent cost, and usable and rentable square feet over the most recent 12 months. As a result, the Judiciary will be better able to identify and address trends affecting its rent costs

    Recommendation: To help the federal judiciary better understand and manage rent costs, the judiciary should work with GSA to track rent and square footage trend data on an annual basis for judicial function (district, appeals, and bankruptcy).

    Agency Affected: Judicial Conference of the United States: Federal Judiciary

  3. Status: Closed - Implemented

    Comments: We found that neither the Judiciary nor GSA had routinely and comprehensively analyzed rent trends to fully understand that the judiciary's growing rent costs were primarily due to increases in the amount of space the judiciary occupies, together with rising operating and security costs. Without tracking its use of space over time, the judiciary cannot identify and address trends affecting its rent costs. We recommended the Judiciary track rent and square footage trend data on an annual basis for rentable square footage. The Judiciary indicated that it is performing much of the analysis recommended by GAO related to tracking rent trends. As of March 2010, based on data from GSA's Rent on the Web system, the Administrative Office of the U.S. Courts has developed an information system named JRent that enables users in the courts and the Administrative Office to track monthly rent billings, projected annual rent, and rentable and usable square feet by court unit for each building in each judicial district. This system can also generate graphs showing trends in monthly rent cost, and usable and rentable square feet over the most recent 12 month period. Graphs can be generated for each building that show trends in the rent cost, and usable and rentable square feet over the most recent 12 months. As a result, the Judiciary will be able to identify and address trends affecting its rent costs

    Recommendation: To help the federal judiciary better understand and manage rent costs, the judiciary should work with GSA to track rent and square footage trend data on an annual basis for rentable square footage.

    Agency Affected: Judicial Conference of the United States: Federal Judiciary

  4. Status: Closed - Implemented

    Comments: The Judicial Conference approved the Circuit Rent Budget (CRB) initiative in 2007, which pairs fiscal responsibility for rent at the same organizational level at which space decisions are made. CRB translates the overall rent budget cap into individual budget caps for each circuit. This creates incentives for the circuits to manage space more efficiently by creating budget incentives to limit space use.

    Recommendation: To help the federal judiciary better understand and manage rent costs, the judiciary should work with GSA to track rent and square footage trend data on an annual basis for geographic location (circuit and district levels).

    Agency Affected: Judicial Conference of the United States: Federal Judiciary

  5. Status: Closed - Implemented

    Comments: In 2006, we recommended that the federal judiciary improve space allocation standards related to technological improvements and decrease requirements where appropriate. In September 2007, the federal judiciary had improved its space standards to reduce its space requirements, including moving to electronic case filing and reducing space for clerks, storage, copying, chambers, and libraries.

    Recommendation: To help the federal judiciary better understand and manage rent costs, the judiciary should work with the Judicial Conference of the United States to improve the way it manages its space and associated rent costs. Specifically, the federal judiciary should create incentives for districts/circuits to manage space more efficiently. These incentives could take several forms, such as a pilot project that that charges rent to circuits and/or districts to encourage more efficient space use. Also, the federal judiciary should revise the Design Guide to (1) establish criteria for the number of appeals courtrooms and chambers, (2) establish criteria for the space allocated for senior district judges, and (3) make additional improvements to space allocation standards related to technological advancements (e.g., libraries, court reporter space, and staff efficiency due to technology) and decrease requirements where appropriate.

    Agency Affected: Judicial Conference of the United States: Federal Judiciary

 

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