Norton Hearing Wed. on Commercial Credit Crunch that Could Hurt DC, National Economy, etc. (7/29/08)
Norton Hearing Wed.
on Commercial Credit Crunch
that Could Hurt D.C., the National Economy,
and Federal Leasing and Construction
July 29, 2008
Washington, D.C. - Congresswoman Eleanor Holmes Norton (D-DC), chair of the Subcommittee on Economic Development, Public Buildings and Emergency Management, will hold a hearing entitled "Credit Crunch: A Hearing on the Effects on Federal Leasing and Construction," to determine whether the residential mortgage crisis will metastasize to the commercial sector and effect federal construction and leasing on Wednesday, July 30, 10 a.m. in Rm. 2167 of the Rayburn House Office Building. A group of witnesses that include economic and financial experts, representatives of lenders, owners, developers, and GSA will help the Subcommittee determine what strategies the federal government should pursue to continue to house federal agencies in the current economic climate.
GSA is perhaps the largest customer of office space in the U.S. real estate market and leases as much space as it owns. However, the agency's rapidly increasing shift towards leasing increases the Subcommittee's concerns as large banks, whose customers include the commercial real estate sector, report record profit losses, and as lending goes flat, down from record highs. One analyst reports that "commercial lending may be "a ticking bomb."
As an indication of her concern given the close tie between GSA's work and the commercial market, Norton cited the Subcommittee's approval of 23 long term leases for one agency alone, the FBI, over the past three years. Most will be build-to-suit leases. The Congresswoman said she believes that a developer, builder, or building owner with a federal lease or contract has the best chance of securing the necessary credit, but GSA has already seen a reduction in competitors for design-build structures. "If the commercial lending market tightens and the terms and cost of borrowing increases" she said, "there could be adverse consequences to the federal government, including fewer competitors and added costs for taxpayers."
The witnesses will be David Winstead, commissioner, GSA Public Building Service; James Chessen, chief economist, American Bankers Association; Raymond DiPrinzio, managing director, Head of Project Finance, CIFG Assurance North America, Inc., Steven A. Grigg, president and chief executive officer, Republic Properties Corporation, representative, DCBIA; Richard D. Purrell, chair and chief elected officer, Building Owners and Managers Association (BOMA) International; and Kenneth Rudy, international director, Corporate Capital Markers, Jones Lang LaSelle.