for the purpose of acquiring the site and entering into the design normally with an architect-engineer firm.

SITE ACQUISITION AND DESIGN

Mr. MILLER. A few moments ago it was mentioned that if you had the opportunity to be able to move in and acquire the property, it would be better when you have an authorized project if you somehow had the authority to do this. At this stage, have you acquired the site, the ground on which you will put this building?

Mr. GALUARDI. Presuming we have an authorized project and we have been appropriated the sites and expenses funds, that gives us the authority to go out and acquire the site.

Mr. MILLER. Have you designed before that point?

Mr. GALUARDI. NO.

Mr. MILLER. In other words, you need the design for the site? Mr. GALUARDI. We must design for the site. We must have the site so the architect can determine, based upon the requirements we have given him such as the number of square feet, number of people to be housed, number of parking spaces required. This information with the site then permits the architect-engineer to develop the plans for that building.

We seek the sites and expenses appropriation first. We acquire the site. We design the building. Then we request funds we will need for construction, in the construction appropriation.

ACQUISITION OF LEASES

Mr. MILLER. Now the leasing area. Do you have a given length of time you must lease for?

Mr. GALUARDI. We have statutory authority to acquire leases from the shortest time possible, 30 days perhaps, up to 20 years. Mr. MILLER. Maximum 20 years?

Mr. GALUARDI. Yes.

PURCHASE CONTRACT PROGRAM

Mr. MILLER. Then when we get into the purchase contract, if you could elaborate a little on that, as to who is truly responsible for all the expense. I recall in your testimony which you gave yesterday that the buildings would be taxed and some $22 million per year would be paid on buildings which were under the purchase contracts. You have many other expenses there, such as maintenance of the building. What part are you paying, is everything complete, and are other outside persons or associations involved in the purchase contract?

Mr. GALUARDI. Under the purchase contract program it is similar to acquiring the title to the building. The building is considered to be a Government-owned building. The purchase contract payments are for the principal, interest, taxes, and assessments. The operations and maintenance of the building may be performed either by Government employees or by contract. That would be funded under the appropriation heading "Operating expenses, public buildings services.

Mr. MILLER. During the first year of the operation, under a purchase contract arrangement, who would hold title to that building?

Mr. GALUARDI. Mr. Rice will answer that question.

Mr. RICE. During the first year, under what we call our package system, where one contractor both finances and constructs the building, that contractor holds title to the building and continues to hold it for the entire term until our obligations are paid off, at which time it comes to us. He is permitted to convey that title into a trust at his option if he so desires. Some of them have elected to do that for purposes of protecting the title. It is purely a title holding trust. Under our dual system of purchase contracting, which is the one we will use almost all the time in the ensuing projects we have, the title is held by a trustee under an indenture, entered into between the Government and a banking institution which is a trustee for both the Government and the holders of the securities that we sell in order to raise funds to build the building. The trustee holds the title to the building and an out-lease of the site. At the end of the term the title is conveyed to us and the out-lease terminated.

Mr. MILLER. What interest would the title holder have by having the title in his name?

Mr. RICE. He has what I think could fairly be called only a security title. His interest is very much the interest that a bank has in a property on which it holds a mortgage. We have full use and possession of the site at all times, and for all purposes these buildings are Federal buildings except for the fact that the bare legal title is being held in private hands, and except for the fact that, under the purchase contracting authority in the public buildings amendments of 1972 the improvements are subject to State and local taxes.

Mr. MILLER. A banker is involved or someone who is financing the building, the title holder is involved and the Federal Government is involved. Assume after 10 years' time that you would need to enlarge the building, or at that time you may need to make some change in the way of modernization. You have a contract for a number of years. What is the procedure for change?

Mr. RICE. Our contracts are so written that we have full authority to add to the improvements we have already built on the site to build other improvements on the site, to make repairs, renovations, and in effect, to do anything we want to do with the site and the improvements during the entire term.

Mr. MILLER. It means you could have one building where a title would be held by the third person and then the Government could add to that building and not in any way change the title or ownership document of the building?

Mr. RICE. That is right.

Mr. MILLER. It is possible to have one-half of a building where the title would be held by someone other than the Government and the Government could, by adding on during that period of time, hold ownership to the other half of the same building?

Mr. RICE. That is right.

PROTECTION AGAINST LIENS

Mr. MYERS. How does the Government protect itself against possible mechanics liens against new construction, as far as payment on real estate mortgages? Do you have assignment of your rent?

Mr. RICE. In every case the sites are owned by the Federal Government. We have taken a position that these are Miller Act projects.

Therefore, all of these construction contractors furnish both performance and Miller Act payment bonds to take care of the mechanics lien problem. As you probably know, the Miller Act was passed because Federal property may not be liened-may not be subjected to a mechanics lien.

ASSIGNMENT OF PURCHASE CONTRACT PAYMENTS

Mr. MYERS. How about the case where there is a real estate mortgage by the owner of the property? What happens if he does not make his mortgage payment? Do you have an assignment on your payment to the lending institution?

Mr. RICE. It depends on which system we are talking about. There is no real estate mortgage under the dual system.

Mr. MYERS. In lease purchase there could be.

Mr. RICE. This really is not a lease-purchase program. It is a purchase contract program. Our position is that of an owner in possession of the property paying to a mortgagee. Essentially that is our position. It is not a tenant under a long-term lease-purchase contract. Therefore. under the dual system, there is no mortgage. Under what we call the package system, ordinarily the contractor does two things he takes out a construction loan and he will assign his right to payment as security for his construction lender. When he has completed his construction contract he has a permanent lender who supplies him with the money to take out his interim lender. At that time, the interim lender is paid off and the assignment of the purchase contract payments is made to the permanent lender.

Mr. MYERS. In every case?

Mr. RICE. Yes. He may mortgage his interest in that property, but our ownership rights are not subordinated to that mortgage interest, so in reality the security that his lender has is the assignment of the Government's promise to pay, and not his interest in the real estate. We do not anticipate title or foreclosure problems.

Mr. MYERS. Actually, then, the contractor does not take a real estate mortgage, but takes only an interest in the contract with you?

Mr. RICE. That is right.

Mr. MYERS. You make a direct assignment?

Mr. RICE. That is correct. They have in some instances constructed what looks like a mortgage loan for purposes of certain limitations. They can lend more on a loan secured by a real estate interest than otherwise.

Mr. MYERS. Loans are longer?

Mr. RICE. Yes. Therefore, some look like real estate loans. They are private transactions. We have nothing to do with them. They look like real estate loans. They are really not. The only real security is the asignment of the purchase contract payment.

Mr. MYERS. It would depend on the laws of the State. You would have to have a security interest on file.

Mr. RICE. When they make the assignment they give notice to us and under the Assignment of Claims Act that is permitted. We recog nize it and pay directly to the assignee.

SIZE OF FEDERAL COURTROOMS

Mr. MILLER. Some time ago there was quite a discussion as to what size the Federal courtrooms should be. Was this resolved? If So, how? Mr. GALUARDI. It was resolved by the Judicial Conference of the United States. The size which has been approved is 34 by 44, which is a reduction from the earlier size of 40 by 60, or from approximately 2,500 square feet per courtroom to 1,500. Therefore, the judiciary has accepted the reduction in the size of the courtroom.

Mr. SWEENEY. I am Assistant Director of the Administrative Office of the U.S. Courts. I would like, if I may, to expand a little on what Mr. Galuardi had to say on this.

The Judicial Conference really approved three sizes of courtrooms. One is 28 by 40; the other is the middle size which Mr. Galuardi menioned; the other is a large ceremonial courtroom 40 to 60. Those are he three sizes.

Mr. MILLER. As I understand it, there were buildings under construction at the time this was being decided, that is the size of the courtrooms. Were there many change orders? Was it an expensive operation for you to make changes and then continue the construction? Mr. ROUSH. The testimony last year, by Mr. Sampson, indicated that we would be making the changes only in those projects where it was economically feasible to do so. In other words, only where the construction had not progressed beyond the point at which the change would be costly, and then it would be made only where it was to the advantage of the Government. There was some room for reason in the way we evaluated those buildings under construction as contrasted with those which were under design at the time these decisions were being made.

VALUE OF BUILDINGS

Mr. MILLER. Do you have the value of the buildings under your jurisdiction?

Mr. GALUARDI. What we have is a General Services Administration Property Inventory for the entire U.S. Government. We do not conduct reappraisals for all of our properties in order to obtain the value of our real estate holdings. We take only the initial acquisition cost, which is included in the real property inventory. We have no reason to reappraise the properties. It is only an expense which provides us with nothing we can use.

Mr. MILLER. You do have information as to what the total acquisition cost is to date?

Mr. GALUARDI. It can be supplied.

[The information requested follows:]

ACQUISITION COST OF FACILITIES UNDER THE JURISDICTION OF GSA AS OF JUNE 30, 1972 (GOVERNMENT-OWNED)

Number of facilities: 3,190.

Acquisition cost of land, buildings, structures, and facilities: $2,950,739,000.

EXPENSES, U.S. COURT FACILITIES

Mr. STEED. We will turn now to "Expenses, U.S. Court Facilities." The appropriation for fiscal year 1973 was $5,344,000 and the

budget request for fiscal year 1974 is $7,512,000, an increase of $2,168,000.

We have some representatives from the Administrative Office of the U.S. Courts present.

Mr. SWEENEY. Mr. Chairman, I could do no more than add to the justification which is already before you. I would not want to take the committee's time to reiterate what is in the statement.

Mr. STEED. What information can you give as to why you need this increase? What brings this about?

Mr. SWEENEY. It is caused because of the increase in personnel we have requested of the appropriations subcommittee which handles our appropriations, sir. This is a net of 867 personnel.

Mr. STEED. You will need furniture and other facilities which this increase in personnel requires?

Mr. SWEENEY. That is correct.

Mr. STEED. Is there any request for additional courtroom space or construction? What is the picture with regard to acquisition of new space in the coming year?

Mr. SWEENEY. On new construction?

Mr. STEED. Yes.

Mr. SWEENEY. I will have to defer to GSA with regard to this. Mr. GALUARDI. This appropriation request does not include any funds, and never has, for the conversion of space into court facilities or the construction of new court facilities. That is normally handled under our repair and improvement appropriation for the conversion. and the construction appropriation for the new buildings for court facilities. There is a third appropriation, which is not represented here today, which we have requested at times. When there is the creation by the Congress of additional judgeships, we come in on a onetime basis asking for the necessary funds in order to be able to provide facilities for those judges.

Mr. STEED. What is the situation generally with regard to climate control of Federal courtrooms and judges quarters? Are all courtroom facilities air-conditioned now?

Mr. GALUARDI. We are about 100 percent complete with the program of providing air-conditioning for court facilities. There are some which require repairs.

FEDERAL COURT IN SOUTHERN DISTRICT OF FLORIDA

Mr. STEED. I have had some correspondence from Congressman Bafalis, of Florida. He is interested in the Fort Pierce division of the Southern District of the Florida Federal Court. He has had some contact with Mr. Kirks.

Are you familiar with that project, Mr. Sweeney?

Mr. SWEENEY. I am generally familiar with it, yes, sir.

Mr. STEED. What is the status of this? Is it one of those situations where the facilities are not available, where the need has not been determined?

Mr. SWEENEY. The situation there, sir, is that for many years the Federal court in the southern district of Florida held court in the State court at Fort Piece. The State court found they could no longer accommodate the Federal judges on a regular basis. I understand they