Legislative Branch Appropriations for 1996: Justification of the budget estimates

In that regard it should be remembered that unlike the lease of other private sector or GSA administered buildings, the base rent in the Judiciary Office Building that is, the amount actually needed to amortize the indebtedness will remain stable over the entire 30 years of the lease and will not escalate. Operating expenses will, however, be subject to change because of inflation and other factors that may affect building operations over 30 years. Each tenant will be obligated to pay its pro rata share of operating expenses over and above the stable base rent.

The first repayment of indebtedness is due in August 1994 and equals $8,614,000, one half of the annual level payment of $17,230,000. It appears likely that savings from construction will be able to defray the August 1994 payment, which means that appropriated funds for base rent (as distinguished from operating expenses) will not be required until the amortization payment due February 15, 1995, which occurs in fiscal year 1995. Thus there will be a considerable period of "rent free" occupancy. rent needed at that time would be $28.00 per rentable square foot (although because of the rent free period the base rent over the 30-year term is "effectively" reduced to $26.67 per rentable square foot). This base rent charge will be fixed for the 30-year term.

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The annual operating expense for fiscal year 1993 is estimated to be approximately $6.65 per rentable square foot; it should be noted that a more accurate projection of operating expenses will not be possible without two years of operational experience. The operating expense for fiscal year 1994 is estimated to be $7.22 per rentable square foot, for which $475,000 in appropriated funds are required for AOC occupancy of 63,168 rentable square feet.

In that regard it should be noted further that the cost of the land for the building is not regarded as a project cost and is not being amortized by rental payments. Accordingly, the land has in effect been contributed to the project by the Legislative Branch of government, which has owned it for many decades. An independent recent appraisal of the land by a consultant to GSA appraised its value at $57,000,000, which is believed to be quite conservative. Of course, the Legislative Branch will retain the benefits of the parking that was on site prior to construction and that will be replaced by parking for Legislative Branch employees in the garage of the building.

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