Mixed-Use Development Likely for West Heating Plant Site

The West Heating Plant will most likely be zoned as W-2 to allow a mixed-use development on the surplus federal property once it is sold at auction later this year. Unfortunately for curious Georgetowners, that was one of only a few substantial tidbits gleaned Tuesday from a congressional subcommittee hearing on the the General Services Administration (GSA) sale of excess federal properties.

Monday the GSA hung giant banners on the side of the building announcing the impending sale of the property, which is expected to go to auction in late September. GSA is seeking a brokerage firm to help market the property and hopes to close on the sale before the year's end.

The subcommittee on Economic Development, Public Buildings and Emergency Management held the 90-minute hearing "Sitting on Our Assets: The Georgetown Heating Plant" on-site Tuesday in Georgetown. Four members of Congress, including D.C.'s own Eleanor Holmes Norton, grilled and questioned Flavio Peres, the deputy assistant commissioner for Real Property Utilization and Disposal at GSA.

The subcommittee used the West Heating Plant as an example of the GSA not moving quickly or efficiently enough to sell excess or under-utilized federal properties.

Since the plant was decommissioned in 2000, it has cost the government an estimated $3.5 million to maintain. The GSA declared the property surplus last November.

But subcommittee Chairman Jeff Denham (R-Calif.) wanted to know why it took 11 years to move toward a sale.

Peres explained that the site was considered necessary as a back-up to the Central Heating facility in the case of a failure at the facility, which supplies heat to 93 buildings in D.C. GSA has since identified an alternative way to ensure the main facility could be backed up through a private contract, and moved the West Heating Facility to surplus. 

Transportation and Infrastructure Committee Chairman John L. Mica (R-Fla.) rapidly fired questions at Peres, hardly waiting for responses.

"We don't know if it was turned on, we don't know if it [had] an operating license, we had other places to store what was stored here..." said Mica listing off the holes he had poked in GSA's explanation. 

"It just doesn't seem like anyone is minding the store or taking care of the assets. This is a pretty valuable piece of property," said Mica.

Denham pointed to the sale of a Bethesda property two years ago that yielded less than the estimated fair market value.

He asked Peres: "How is GSA going to ensure that this time we are going to get the highest value on this property that is the biggest piece of acreage in downtown Georgetown?"

Peres said the timing for the Bethesda sale was mostly to blame for the low return. But he said the market in Georgetown is "strong" and that there was already considerable "buzz" with several developers coming through for tours.

"By working with a leading broker in the field, we feel we can maximize value for this property," said Peres.

Norton asked Peres about zoning for the property and worried about putting the property to auction without some structure in place. Peres said his agency had consulted the District government during the National Environmental Policy Act process and both felt that W-2 zoning would probably be appropriate for the site's future development.

Advisory Neighborhood Commissioner Bill Starrels, in whose district the building is located, agreed with Norton that GSA shouldn't rush through the appropriate processes at this point. He said he wouldn't want haste and uncertainty about potential zoning and other local issues to lessen the potential value of the land.

Starrels said that contrary to congressional concerns, GSA has been working "aggressively" to promote the sale of the property.

"It's the worst-kept secret in Washington," said Starrels.