agency, the U.S. Commission on Civil Rights, selected as tenant by the General Services Administration. In addition, subject to enactment of authorizing legislation, a portion of the building will be occupied by support staff offices of the Architect of the Capitol, which will vacate space in two House office buildings for this purpose. The AOC occupancy has been directed and approved by the House Office Building Commission and the Senate Committee on Rules and Administration. Authorizing legislation was prepared and transmitted to the House Committee on Public Works and Transportation and a hearing was held on the matter. Further action on the legislation has not yet been taken.

The project is being developed on Capitol Grounds without the use of appropriated funds, in accordance with the Judiciary Office Building Development Act, P.L. 100-480 (October 7, 1988). The Architect of the Capitol, on behalf of the Government, has leased the land to Boston Properties, the developer, for thirty years and has also agreed to master lease the completed building for the thirty year period. In turn, the agreement by the Architect of the Capitol to pay future rent, collected from appropriations to agencies that occupy the building, was "securitized" in 1989 into investment grade securities that will be retired by the payment of rent over the thirty year period, at which time the Government will own the building outright free and clear of the leases. In essence, the Government under this process pays off its own mortgage rather than somebody else's. The proceeds of the securities sold in 1989 have been used to finance the construction, and these securities will be retired by rent payments over the thirty year lease.

The cost of construction is significantly lower than initial estimates as a result of cost cutting value engineering policies during the design stage, and the slack in construction in the local economy. Timing on construction has proved to be fortuitous and significant cost savings from final budget estimates were realized on bids received by the Construction Manager.

At the end of the construction period there may be a significant construction saving, based on amounts not expended and the interest earned on unexpended funds during the period. This surplus will be in addition to the Operating Reserve Fund created at the outset of development to cover any extraordinary expenses for renovation or major repair. This Operating Reserve Fund will be kept intact so as to obviate any need for appropriated funds for this purpose over the 30 year lease period.

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 precise amount of rent that will need to be appropriated is still unknown because it will depend on how the construciton savings are employed to reduce rent. In addition, until the building is operational for at least a year it will not be possible to develop an accurate projection of operating costs firmly grounded in experience.

Nevertheless, for planning purposes some tentative and preliminary rounded estimates have been developed. Beginning with occupancy of the building by the Judiciary in October 1992, which is the beginning of fiscal year 1993, it is estimated the basic fixed rent to be charged to the Judiciary will | be approximately $23.26 per rentable square foot, which will reflect the application of the currently estimated surplus from construction and the fact that rent will be due somewhat in advance of the first required repayment of debt. This fixed rent payment will not change over 30 years. To this base rent it is now estimated that approximately $8.61 per rentable square foot will be added for operating costs, for a total occupancy cost of $31.87 per rentable square foot.

Were the base rent payments to be deferred until needed for debt amortization in mid-1994 to begin to repay indebtedness, it is estimated that the base rent due for 30 years would rise by approximately $3.30 per rentable square foot. (The operating expense reimbursement would be due and payable in FY 1993 without regard to the amortization schedule.) This rate compares very favorably with the rental rates anticipated by the Judiciary in its existing space for the same period.

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.

* Includes Obligations from Prior Year "No Year" Authority.

** Excludes actual reimbursements of $2,400,000 in FY 1991 and estimated reimbursements

of $3,200,000 in FY 1992 and $3,200,000 in FY 1993 for furnishing steam and chilled water. *** Includes $11,920,000 available for obligation in FY 1992, pursuant to section 312, P.L. 101-520.