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COMMONWEALTH OF PENNSYLVANIAHOUSE OF REPRESENTATIVES

APPROPRIATIONS COMMITTEEBUDGET HEARING

DEPARTMENT OF GENERAL SERVICES

STATE CAPITOLHARRISBURG, PENNSYLVANIA

ROOM 140, MAJORITY CAUCUS ROOM

WEDNESDAY, MARCH 1, 20173:00 P.M.

BEFORE:HONORABLE STANLEY SAYLOR, MAJORITY CHAIRMANHONORABLE JOSEPH MARKOSEK, MINORITY CHAIRMANHONORABLE KAREN BOBACKHONORABLE JIM CHRISTIANAHONORABLE SHERYL DELOZIERHONORABLE GEORGE DUNBARHONORABLE GARTH EVERETTHONORABLE KEITH GREINERHONORABLE SETH GROVEHONORABLE MARCIA HAHNHONORABLE SUE HELMHONORABLE WARREN KAMPFHONORABLE FRED KELLERHONORABLE JERRY KNOWLESHONORABLE NICK MICCARELLIHONORABLE DUANE MILNEHONORABLE JASON ORTITAYHONORABLE MIKE PEIFERHONORABLE JEFF PYLEHONORABLE BRAD ROAEHONORABLE JAMIE SANTORAHONORABLE CURT SONNEYHONORABLE KEVIN BOYLEHONORABLE TIM BRIGGSHONORABLE DONNA BULLOCKHONORABLE MARY JO DALEYHONORABLE MADELEINE DEANHONORABLE MARIA DONATUCCIHONORABLE MARTY FLYNN

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BEFORE (continued):

HONORABLE EDWARD GAINEYHONORABLE PATTY KIMHONORABLE STEPHEN KINSEYHONORABLE LEANNE KRUEGER-BRANEKYHONORABLE MIKE O'BRIENHONORABLE PETER SCHWEYER

NON-COMMITTEE MEMBERS:HONORABLE DAVE MILLARDHONORABLE DAVE ZIMMERMANHONORABLE MARK KELLERHONORABLE DAN MOULHONORABLE WILL TALLMANHONORABLE RUSS DIAMONDHONORABLE MARTY CAUSERHONORABLE KRISTIN PHILLIPS-HILLHONORABLE ERIC ROEHONORABLE BOB GODSHALLHONORABLE CRIS DUSHHONORABLE DARYL METCALFEHONORABLE EDDIE DAY PASHINSKIHONORABLE MARK LONGIETTIHONORABLE PAUL COSTAHONORABLE THOMAS CALTAGIRONEHONORABLE MORGAN CEPHAS

COMMITTEE STAFF PRESENT:DAVID DONLEY

MAJORITY EXECUTIVE DIRECTORRITCHIE LaFAVER

MAJORITY DEPUTY EXECUTIVE DIRECTOR

MIRIAM FOXDEMOCRATIC EXECUTIVE DIRECTOR

TARA TREESDEMOCRATIC CHIEF COUNSEL

T i f f a n y L . Ma s t Ma s t Re p o r t i n gma s t r e p o r t i n g @g ma i l . c o m

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I N D E X

TESTIFIERS

* * *

NAME PAGE

CURT TOPPERSECRETARY,DEPARTMENT OF GENERAL SERVICES..............4

BEVERLY A. HUDSONDEPUTY SECRETARY FOR ADMINISTRATION,DEPARTMENT OF GENERAL SERVICES.............55

SUBMITTED WRITTEN TESTIMONY

* * *

(See submitted written testimony and handouts online.)

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P R O C E E D I N G S

* * *

MAJORITY CHAIRMAN SAYLOR: Mr.

Secretary, would you and Bev rise to be sworn

in?

(All testifiers were duly sworn by

Majority Chairman Saylor.)

MAJORITY CHAIRMAN SAYLOR: Thank you.

You may start with any opening comments

that you may have, Mr. Secretary.

SECRETARY TOPPER: Thank you, Mr.

Chairman.

I have submitted testimony for the

record, and I think that will suffice today.

I'll be happy to move to questions.

MAJORITY CHAIRMAN SAYLOR: Very good.

We'll start with Representative Santora.

REPRESENTATIVE SANTORA: Thank you,

Mr. Chairman. Thank you, Mr. Secretary.

SECRETARY TOPPER: Thanks.

REPRESENTATIVE SANTORA: Welcome. I

want to focus on real estate. Let's start with

the five prison closures.

When the Governor recently announced the

closing of Pittsburgh, some issues have come to

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light. One of them was, for the final

disposition of Greensburg, it involved a $7

million buyout required in connection with the

sale of the property.

Are we going to face that same type of

thing here with the Pittsburgh closure and sale?

SECRETARY TOPPER: No, Representative.

I don't believe there are any outstanding

liabilities of that sort.

REPRESENTATIVE SANTORA: Excellent. So

were you involved in the recommendations on how

to dispose -- are you involved in the

recommendations on how to dispose of these

properties?

SECRETARY TOPPER: The Department of

General Services provided some information to

the Department of Corrections having to do with

outstanding capital debt, so pre-existing

capital projects that had been performed at the

property. And we also, I believe -- hang on.

That's right. And we provided a survey

of utility costs associated with all of the

properties that were under consideration by the

Department, but that was the extent of our

involvement prior to the decision.

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REPRESENTATIVE SANTORA: Now, once the

decision is made, are you going to handle the

disposition?

SECRETARY TOPPER: We will. That's the

role that DGS has under current statute. We did

take a relatively extraordinary step, though,

this year in an effort to try to accelerate the

sale and try to accelerate the disposition.

So where, typically, the Department

would wait until the property had been vacated

and would wait until the property was formally

declared surplus, this year, as soon as the

announcement was made, we got together with the

Department of Community and Economic Development

and with the Department of Corrections, and

we've already begun the pre-sale survey work

that has to be done, the appraisal. And you

know, we intend to do everything we can to get

it -- to get the property off the books as

quickly as possible.

REPRESENTATIVE SANTORA: That's where I

want to go. That's one of the things that

concerns me, get the property off the books as

soon as possible. And I understand that, from

DGS, it would be $3 million a year to mothball

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it and keep it during that process.

Has there been any thought given to

being a real estate seller in the sense of

bringing developers to the table, let them come

to you with what the value is post-development

and maximize the revenue coming in to the

Commonwealth on a per unit basis or what the

overall property is worth?

I believe we have waterfront property

there in Pittsburgh. For example -- I'm told

it's 24 acres -- I just did some quick math on

10 acres with the DGS, 500 units at $100,000 a

door, I've got $60 million or so.

It's just, there is some great potential

to sell it as an apartment complex, as

residential condos, whatever it is. I'm told it

is in a very good area. And you know, I said it

yesterday, except for that there's a prison

there. That problem is being solved. There's

very low demo costs with the amount of steel in

that property.

So are we looking at those opportunities

to maximize revenue for the Commonwealth?

SECRETARY TOPPER: Yes, Representative,

we do intend to look at those opportunities.

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Current statute is really quite

prescriptive, though, in terms of what we're

allowed to do when it comes to disposition of

real property. It's likely that the best path

to get to a scenario like the one you've

described would be to work through local

redevelopment authority and use the authority to

engage local developers, members of the

community, in order to do some planning.

It may be that the entire facility

doesn't have to be razed in order to turn the

property into something that's productive and

valuable. I think that study has to be done.

REPRESENTATIVE SANTORA: Okay. But you

say there's legislative work that would need to

be done for you to do a direct sale?

SECRETARY TOPPER: Well, any time we

make a direct sale, the statute is really pretty

prescriptive, we're required to get an appraisal

of the property, and we're required to sell it

to the highest bidder --

REPRESENTATIVE SANTORA: Okay.

SECRETARY TOPPER: -- without really

taking into consideration what the highest and

best use for the property might be. We would

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certainly love to have greater flexibility to be

able to approach the marketplace in a more

commercial fashion.

REPRESENTATIVE SANTORA: I know I'm out

of time. Th