Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The courthouse building boom of the 1990s has produced a landlord-tenant rent dispute of billion-dollar proportions, prompting desperate federal judges to seek rent relief from a less than sympathetic Congress. The General Services Administration (GSA) takes one dollar of every five that Congress gives the judiciary for a federal fund to build, maintain and repair courthouses. The judges share the fund with 60 noncourt agencies around the country, all competing for the same dollars. Judges want rent relief to devote more to staff salaries and expenses. On June 21, representatives of the judiciary told Congress they have asked GSA for a permanent waiver of half their $940 million annual rent bill — $483 million. That represents the collection above the actual cost to operate, maintain and lease federal court facilities. The high rent has exacerbated staffing cutbacks for court clerks and personnel, forced judges to share courtrooms and juggle schedules, and has even led to using jury rooms for hearings in civil cases, according to judges and lawyers. “The fees are so high it is crippling the operation of the courts,” said Jane Roth, a judge on the Third Circuit U.S. Court of Appeals and chair of the Judicial Conference of the United States’ committee on security and facilities. A skeptical chairman of the House subcommittee on infrastructure issues, Bill Shuster, R-Pa., questioned the seriousness of the problem. “To me a fiscal crisis is a situation where you can’t pay your bills. That does not seem to be the case here,” he told Roth during the hearing. Frustrated judges say the rental rates they pay GSA are almost double rates charged tenants for comparable space and include charges for space unfit for occupation. And they complain rents continue to rise on buildings even though the cost of the original construction has been paid off –sometimes four or five times over. Many judges don’t like the way GSA spends the rent for courthouse construction. The Brooklyn federal courthouse is a prime example. Construction is four years behind schedule and the original plan for an 18-story complex in 1998 was scaled down to 14 stories because the larger plan ran $7 million over budget, according to Chief Judge Edward Korman of the Eastern District of New York in Brooklyn. Despite protests, GSA opted for the scaled-back version adding $2.7 million in redesign costs. The final bid for the smaller building one year later was $21 million over budget, Korman said. During construction the contractor went bankrupt, extending the delay. The smaller courthouse will have barely enough courtrooms and chambers for the current complement of Brooklyn judges and magistrates, yet GSA tore down an adjoining office building that contained four courtrooms. “We estimate that at least 100 million of taxpayer dollars have been squandered by GSA,” Korman said. Meanwhile the Brooklyn judges ran out of space in their old courthouse, built when John F. Kennedy was president. In some instances, three judges must share one courtroom. Each judge is allotted four months a year for trials. Fridays they each juggle criminal sentencings in the shared courtrooms. At the back of the pack, civil litigators sometimes end up having their cases heard in jury rooms, according to Korman. Korman said he fears “GSA will attempt to recoup money they wasted by jacking up our rent” in the new building. His rent fears echo around the country. Rents have risen 600 percent in 20 years, from roughly $133 million in 1986 to almost $1 billion by fiscal year 2006, according to the Administrative Office of the Courts. This coincided with a building boom in courthouses. Chief Judge John Walker of the Second Circuit said the renovation of the historic Foley Square courthouse in New York cost more than $200 million and the rent will go up from $19 million a year to $28 million for the same building. The Ninth Circuit’s chief judge, Mary Schroeder of Phoenix, said judges opposed GSA’s plan for a huge atrium in the new Phoenix courthouse. The atrium space is included in the rent charged to the judges, despite a deal struck with GSA to exclude it, according to L. Ralph Mecham, director of the Administrative Office of the Courts. Schroeder, an avid baseball fan, said she once practiced pitching in the atrium, the only good use she’s found for the space. Aging buildings without sufficient upkeep are another problem. In Los Angeles, a federal judge was trapped in an elevator for 20 hours when the doors and emergency alarm both malfunctioned. The court will be split between two buildings when the controversial plan for the new courthouse finally breaks ground. In Providence, R.I., the court negotiated for the city to donate a parking lot behind the court for $1, but GSA began charging the courts $11,000 a year in rent even though it spent nothing on improvements. In Utica, N.Y., the court is charged rent on 14,000 square feet of unusable attic space accessible only through a ceiling ladder. While many judges complain that the rent payments amount to tax dollars going from one federal pocket to another, the creation of the Federal Building Fund in 1972 allowed GSA to use rent charges to accumulate funds for future building projects and pay for continuing repair and operation. The building fund “has stood the test of time and served the federal government for over 30 years,” according to F. Joseph Moravec, commissioner of the Public Buildings Service for GSA. He called the fund a “remarkably effective piece of public policy” that “provides an honest accounting of the occupancy in federal budgets [and] an effective incentive for federal agencies to hold down the costs of space they request.” The agency estimates the fair market value of rents in a geographic location and assesses rents on that basis. This includes a charge for local property tax, although federal buildings are exempt, and insurance costs, even though the government is self-insured. A portion of the rent is set aside for future construction, while the remainder is used for building operation and future repairs. Moravec didn’t mince words in his frustration with the judiciary. “We think it is grossly unfair for them to blame GSA for their expenses outstripping Congress’s willingness to spend,” he said. “We are a little annoyed with them. We’re talking about reducing rent but they are not engaged with the vigor we had hoped and they are throwing high hard balls,” he said of the judicial criticisms. To be sure, the judiciary had a hand in its own rent problems. Congress supplied $4.5 billion for 78 courthouse construction projects between 1993 and 2005, giving wide latitude to GSA and the judges on design, construction and land acquisition. That led to expensive features, according to the Government Accountability Office (GAO). In 1993, long-term space planning by the courts was more geared to favoritism than a reflection of staff needs and caseloads, according to the GAO, and judges balked at courtroom sharing. “The use of a courtroom is not like waiting for the next window at the post office,” said Roth. The threat of an available court can play a role in settlements, she said. The judiciary’s dilemma: Judges say they can use their $5 billion annual budget to pay staff or to pay rising rents but they can’t afford both, and so far it is the staff that has taken the hit. Chief Judge William Wilkins of the Fourth Circuit said the court had to lay off 23 Probation Office employees in South Carolina, simply because there was not sufficient money to pay salaries. In fiscal year 2003, courts cut 1,350 jobs, a 6 percent national reduction, from clerks offices to probation and pretrial services, and another 450 jobs were cut in 2004, according to Mecham. Half of the 2004 job cuts were restored this year with a congressional budget increase for salaries. James Figliulo, president of the Seventh Circuit Bar Association in Chicago, said rents for law firms range closer to 5 percent to 7 percent of the budget. From the perspective of lawyers, the staff cuts directly affect the administration of justice. There may be fewer law clerks to work on big cases and fewer probation officers to keep an eye on criminal defendants, said Figliulo of Figliulo & Silverman. “On the surface it looks like there is an increase in funding when in fact it is decreasing [due to rising rents] at a time when caseloads are increasing,” said Sharon O’Grady at Pillsbury Winthrop Shaw Pittman’s San Francisco office, and president of California’s Northern District Federal Bar Association. “Courts have done a pretty good job of stretching resources … but pretty soon the rubber will meet the road,” she said. Moravec said just 15 percent of the judiciary’s rent goes into the building fund, but it received 40 percent for new construction and building alterations, a claim hotly contested by the judges. Roth pointed out that many courthouse construction projects are funded through direct appropriations from Congress, not from the building fund, yet courts continue to pay rent. Moravec also rejected assertions that GSA uses the money for its own benefit. Of the $7.8 billion collected in rent from all the agencies, about 4 percent — or $312 million — goes for GSA overhead and salaries, he said. But when judges in New York tried to find out how GSA establishes rental rates they were rebuffed. GSA said it did not have to respond to a Freedom of Information Act request for documentation. The judiciary has gone against GSA’s advice “and is attempting to blow up the [building] fund,” Moravec said. “It is not flawed and has worked well,” he said. Mecham pointed out in his testimony before the House that other segments of the federal government do not pay rent to GSA. The Pentagon and its military bases control their own buildings; the Treasury and Interior departments do not pay rent on mints or national forest facilities. There is no rent paid to GSA for federal prisons, embassies, veterans’ hospitals and even Congress pays no rent on its Capitol Hill buildings, Mecham said. And the agency has issued rent exemptions to others. The GAO report listed 100 percent rent exemptions, worth $52 million, on three Agriculture Department headquarters buildings. The Social Security Administration got a partial rent exemption to pay only actual costs of operating its buildings until 2013, a rent cut worth $72 million. Eleven senators sent a letter in May to the head of GSA, Stephen Perry, asking him to exempt the judiciary from all rent except that which is needed for operations. But the battle over rent appears unlikely to end soon although both sides continue to talk. Pamela A. MacLean is a reporter with The National Law Journal, a Recorder affiliate based in New York City.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.