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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

    ( 7 1 7 ) 3 4 8 - 1 2 7 5

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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

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