Office Department. In these 1,252 buildings, occupied by your Agency and other Federal agencies who are your tenants, the Federal Government will be in a position of tenants of the Post Office or the Postal Service. Approximately how much rent annually will the Government be paying to the Postal Corporation for the space it will occupy in these 1,252 buildings?

Mr. KREGER. On those buildings we do not know at the present time. These buildings had been under the complete control of the Post Office Department, and GSA is, at the present time, working with the Post Office Department to try and see how much space other agencies besides the Post Office Department had in those buildings.

Mr. WRIGHT. Do you have a ballpark figure?

Mr. KREGER. We have figures on 64 buildings which we had control of, and which we turned over to the Post Office Department. On the 64 buildings we will pay $7.5 million per year for 1.4 million square feet of space.

On 300_buildings, which GSA owns, and which the Post Office occupies, I believe 6 million square feet of space, the Postal Service will pay GSA approximately $24 million in rent.

Mr. WRIGHT. You have given us a partial-I would say very partialreply to the question I asked. I asked you about 1,252 buildings, and you responded with respect to 64 buildings.

Mr. BARTH. Mr. Chairman, if I could, I think, on the figures that Mr. Kreger gave you, which was the difference of $24-and-some million coming to us, versus $7 million we will pay to the Post Office, added to that $7 million figure will have to be the figure we determine, once we determine, how much space Federal agencies are occupying in 1,500 buildings, which were under the control of the Postal Service at the time of the transfer.

Mr. KREGER. Since these buildings were under the control of the Post Office Department, Mr. Chairman, we have no records of how much space other government agencies had in the buildings.

Mr. WRIGHT. Are you saying that the only record of space you have exists with respect to 64 of these buildings?

Mr. KREGER. No. We have space records on all GSA controlled buildings. The Post Office Department has taken 64 of the GSA controlled buildings.

Mr. WRIGHT. Taken 1,252, have they not?

Mr. BARTH. There again, the 1,252 were buildings on the inventory of GSA, but which were under the custody and control, as far as space within the buildings were concerned, by the Post Office, and the space that is occupied in those buildings was under the control of the Post Office, and our records do not show how much of that space is Post Office space versus how much of that space is occupied by other Federal agencies.

Mr. WRIGHT. We are talking, however, about 1,252 buildings in which the GSA and your tenant agencies will now be tenants of the Post Office.

Mr. BARTH. Right.

Mr. KREGER. And since we did not have any record of the space occupied by now tenant agencies, we are not taking the Post Office Department's figures as to the amount of space. We are conducting a building

by building survey to find out exactly how much space is occupied by the now tenants.

Mr. WRIGHT. I see. You are not taking the Post Office Department's figures. They have given you some figures?

Mr. KREGER. They have provided us with some preliminary figures. Mr. WRIGHT. Well, what do they say?

Mr. KREGER. I am informed they have not given us figures on the space totals.

Mr. WRIGHT. Is there a difference between the Post Office Department figures and the figures of GSA, Mr. Kreger? Do you, for example, consider loading docks and things of that type used by the Post Office as not being comparable with the space inside the building? And does the Post Office Department desire to consider that type of space in computing the percentage of total space that it uses?

Mr. KREGER. Well, GSA's classification system for space takes into account the difference between office space, warehouse space, and one other class of space. Special purpose space.

Mr. WRIGHT. Special purpose space would include loading docks and things of that kind?

Mr. KREGER. Right.

Mr. WRIGHT. GSA's accounting system takes into account a difference, and places each in a different category. This is what you are saying?

Mr. KREGER. Right. And our agreement with the Post Office Department also takes into account that difference.

Mr. WRIGHT. Does the Post Office in its accounting procedures take that difference into account?

Mr. KREGER. They will, under calculations made in accordance with the agreement; yes, sir.

Mr. WRIGHT. Therefore, I might presume that there would not be any basic difference in the determination as between your agency and the Post Office Department as to how much space you and your agencies occupy ?

Mr. KREGER. Right.

Mr. WRIGHT. Now, on the basis of their guess, which you have not yet validated to your satisfaction, approximately how much space does the Government occupy in Postal Service buildings, and approximately how much rent will you be expected to pay annually?

Mr. KREGER. We have no solid figures on the rent that we will be expected to pay for space that we now occupy in buildings occupied by the Posal Service. The survey building by building that I spoke of is underway, and it is probably going to take as much as 6 months.

Mr. WRIGHT. It is safe to say that there is going to be more than the $72 million figure that you quoted, is it not?

Mr. KREGER. It is going to be greater than the $72 million figure. However, in discussion with some of the people in the public building service, they tell me there is a good chance, and this again is an estimate, but they tell me that there is a good chance that the Post Office will owe GSÅ more money than GSA owes the Post Office Depart

ment.

We will have to await completion of the survey.

Mr. WRIGHT. When do you think that survey will be completed? Mr. KREGER. We are moving it along as fast as we can. Every time I say 6 months, it takes a year and a half. It is a matter that has priority.

Mr. WRIGHT. You think at this moment that within 6 months you will have a fairly close feel for how much money we are going to owe the Postal Service, and how much the Postal Service is going to owe us, is that right?

Mr. KREGER. Yes, sir.

Mr. WRIGHT. If you were to come back 6 months from now, you might feel that 6 months from that moment

Mr. KREGER. Six months from now, if I came back, I would have to point to my statement. If I said 6 months, I meant a year and a half. Mr. WRIGHT. I think it is important for the committee to get a feel for this. It is vital to the Government of the United States to know whether we are going to wind up paying a lot of rent in buildings that the Government already has built, whether we are going to come out even, or whether the taxpayer is going to wind up picking up the tab. I think this is one of the critical points of this entire inquiry, and I think it is very important to us to know.

Mr. GROVER. Mr. Chairman.

Mr. WRIGHT. Mr. Grover.

Mr. GROVER. Mr. Kreger admits being wrong by 200 percent on the 6 months; is it possible that you will be wrong on the plus side?

Mr. KREGER. I think I said, Mr. Grover, that there was a good chance, and from all my conversations with the people who have been working with this matter, that is the indication I have. I am sure that there is a possibility that it might go the other way.

However, any information that I have to date indicates that we may receive more money than we would have to pay to the Post Office Department.

Mr. GROVER. And in your working this out, you have written agreements now on the basis for working out these rentals, do you?

Mr. KREGER. We have an interim agreement, Mr. Grover, which sets the rents for varying classes of space in varying locations from, I believe, $2.50 a square foot, up to around $8 per square foot.

Mr. GROVER. Are these being determined by local values of the market price, or how do you determine this?

Mr. KREGER. Yes, sir. They are comparable to the commercial rates in the various areas, and include such things as maintenance, and normal things that go with the space, based on the quality, also, of the office spaces. Based on quality, and naturally, the location.

Mr. GROVER. Because it would appear to me that this should have some continuing oversight, because the U.S. Postal Service, with its very, very strong and unilateral powers, and I would say with its rather dominant chief officer, is in a pretty good bargaining position with you, vis-a-vis the GSA.

Mr. KREGER. Right. As the chairman indicated before, under the law he has a lot more authority than we have, and some of which we are hoping to get.

Mr. GROVER. I say because of that, the imbalance of the negotiating power, I think that this committee will be very interested to observe

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6 months or a year and a half from now, as you suggest it might be, just what does transpire.

Mr. SNYDER. Does this agreement between GSA and Postal Service include personal property as well as real property?

Mr. KREGER. Yes. The interim agreement includes personal property and real property, and also includes other services that we might provide to the Postal Service. Purchasing of supplies and communication service, and so forth.

Mr. SNYDER. And vice versa.

Mr. KREGER. Right.

Mr. SNYDER. The district office in Covington, Ky., is in a joint building. Quite frankly, I do not know what their status is in your switching them around here, but I know the Post Office furnishes the desks and the file cabinets and GSA is putting in the drapes, and painting the walls.

Now, will you be paying rent on the desks and the file cabinets to the Post Office Department?

Mr. KREGER. I believe that under the terms of the agreement GSA will take over all of the congressional offices. So instead of having two people to go to from now on, you will have only GSA to go to.

Mr. SNYDER. Can I anticipate having my furniture repossed by the Post Office Department and you furnishing me new furniture? Mr. KREGER. No. I believe GSA gave that furniture to the Post Office without reimbursement.

Mr. SNYDER. You did not get much, but that is all right.

Mr. CONSTANDY. Mr. Kreger, you gave them 2,780 buildings, and they gave you back the furniture.

Mr. KREGER. We gave them 64 buildings, and Congress gave them

Mr. CONSTANDY. You gave them buildings-64 of these buildings you people managed, but because of the logic of their being in some cases a 100 percent tenant in the building in the past, they have managed their own building, is that correct?

Sometimes they occupy not 100 percent, but the majority of those buildings, and the same logic of them managing the building in which they are 100 percent tenant, they also managed this building in which they were the majority occupant.

We are talking about title to the property.

Mr. BARTH. Well, title to the property is with the United States. Mr. GRAY. Mr. Chairman, if counsel will yield, as you know, the new Postal Service will be able to sell assets. With these 1,200 buildings, if the Postal Service saw fit, as soon as they obtain title, they can sell property and use those assets any way they see fit, and I think it is very pertinent, if you do not have the information, Mr. Kreger, that it be supplied, as to what the total real estate value is for those 1,200 bulidings, because they are now held in title in the U.S. Government. They will soon be in the title of the Postal Service.

They can call a facility outmoded, and get other facilities, and I think we ought to have a ballpark figure of what these 1,200 buildings are worth.

Mr. KREGER. I think your point is well taken, but in order to get a value of these buildings we or the Postal Service would have to send

an appraiser to look over all 1,200 buildings and make an appraisal to give us a value of it.

Mr. GRAY. Would you not guess at what we are talking about?
Mr. CONSTANDY. I think, shortly, Mr. Gray, we will get this.

Mr. GROVER. Mr. Chairman, if I could have a followup question to Mr. Gray's question.

What were the criteria for turning over these buildings? Were all of these buildings turned over because they were at that time being used for postal facilities, irrespective of the fact that they might abandon them within the year?

Mr. KREGER. I believe the buildings were turned over, buildings that were under the control of the Post Office Department at the time of the postal

Mr. WRIGHT. Mr. Kreger, is it not true that all buildings were turned over to the Postal Service in which it was determined that at least 55 percent of the space was occupied for postal purposes?

Mr. BARTH. Excuse me, if I could, please. The criteria in the statute required that there be turned over to the Postal Service all real property, 55 percent or more of which is occupied or under the control of the former Post Office Department, immediately prior to the effective date of this section.

Mr. WRIGHT. Mr. Barth, how does that differ from what I just said? Mr. BARTH. I understood you to say occupied by.

Now, I can conceive of where one of these 1,200 buildings, which were under the control of the Post Office may have been occupied less than 55 percent by the Postal Service. I would include in this those situations. It is either under the control of the Postal Service, or occupied. Fifty-five percent of the buildings under the control of, or occupied. Mr. WRIGHT. You mean under the management of the Postal Service?

Mr. BARTH. Yes.

Mr. WRIGHT. All right. So every building in which the Postal Service is the manager of the building, irrespective of how much of the property is being occupied for postal purposes, and every building in which Postal Service personnel occupy as much as 55 percent of the space, has been given by the Government to the Postal Service? Mr. BARTH. Yes, sir.

Mr. WRIGHT. And that comes to a total of 2,783 buildings; does it not?

Mr. KREGER. It was 2,780, I believe.

Mr. WRIGHT. Now, of those 2,780 buildings, title had resided in the Government of the United States. As of July 1, and the confirmation of this transaction, title now resides in the postal corporation; is that correct?

Mr. BARTH. I believe there is a theory of the Attorney General that title remains in the United States, but under the Postal Service reorganization they have the right to secure them for any bonds they issue, and the right to dispose.

Mr. WRIGHT. If we regard these as two different entities, what good is title if the other entity may encumber them or may sell them, or may dispose of them, may borrow against them, or may do other things in that regard?