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In addition to the Army activities listed above, non-Army Government agencies leased about 1,259,284 square feet of downtown office space at annual rentals of about $3,376,280, making totals of 1,578,474 square feet at $1,443,373. Of the space occupied by the above-listed activities, 1,161,074 square feet is office space and 417,400 square feet is warehouse space. The space available at CAC is as follows:
Possible savings through theoretical compression of present tenants.-Determination of the extent to which the space now occupied by CAC tenants could be compressed requires a full management-engineering study which we were unable to perform in the limited time available. If it be assumed that these tenants could be compressed into the same space as projected for the new locations, the present CAC support costs would not be reduced. However, if it be further assumed that the addition of space thus available could be used by the activities now renting downtown space, the following would result:
TABLE 4.—Comparison of downtown rental costs with theoretical costs for full
utilization by compression of present tenants I. Downtown rentals of potential additional tenants for CAC:
Computation of possible additional space:
CAC space presently occupied by military
----------square feet. 994. 300 Planned space at relocation sites --------------do---- -266, 695
Average downtown rental :
Warehouse space, 417,400 square feet at
Army tenants 319,190 square feet---.-- 1, 067, 093
-------- 1, 000, 951
potential new tenants---------------------- $2, 493, 792
$8, 773, 496 Convert to annual charge on 7-year amortization basis ($8,773,496-:-7)
1, 253, 357
Total CAC annual costs for potential new tenants.- 2,430, 735
III. Annual savings if compression is possible and it
is feasible to move the new tenants to CAC:
First 7 years (item I less II) per year---- ----------------
- 1, 177, 378
1, 316, 414 Further, although a preliminary analysis of the possible movement of nonArmy tenants from downtown leased commercial space to CAC in the event that the present Army tenants are relocated indicated that additional savings could be achieved, the considerations affecting the practicality of such moves are so varied as to require independent study with respect to each possible tenant, and we were unable to do this within the relatively limited time available. These considerations, which are equally applied to the hypothetical movement of such downtown tenants into CAC in the event of compression of the present tenants, as discussed above, also include plans which we understand are being made for the construction of additional Government-owned office space.
In our opinion, therefore, the possibilities of the most economical use of the CAC facility should be studied further by the General Services Administration in relation to all of these factors before a final decision is made regarding the ultimate use or disposal of this facility.
Possible savings through utilization of present vacant space at CAC.-The following portions of our analysis are directed at the possible economical usage of the CAC space which is now vacant and is limited to potential additional military department tenants at CAC since, as will be noted below, the present available vacant space at CAC would be fully occupied by possible additional military tenants, provided that they could all be moved to that location.
In this connection, we were unable to find evidence that active effort had been made by the Army to secure additional tenants for CAC since 1956. At that time the Corps of Engineers made inquiry of officials of military activities located in the Chicago area as to possible use of space in CAC. The responses evinced little interest, the reasons given being typified by the following:
1. Location at CAC would require undesirable separation of functions.
2. A central downtown location is necessary for easy access to transportation and hotels.
3. Such undesirable location would result in critical and unnecessarily costly recruiting problems.
4. Excessive travel time would be required.
5. Possible savings in rental or related costs would be offset by other costs, such as transportation, communications, and overtime. We also ascertained that the Army certified to GSA on October 11, 1957, the need for 276,193 square feet of space in new Government office buildings being designed for downtown Chicago to house its agencies presently leasing commercial space in Chicago. We have not evaluated the effect upon this need if these activities were moved to the CAC. We noted, however, that the Army did not include the military activities now occupying Government-owned facilities (including CAC) in the certification.
In order to show the full potential savings which could accrue, we have proceeded on the assumption that sufficient space could be found at CAC to accommodate all the possible additional Army tenants, if this were found to be advantageous, even though the present vacant space is somewhat less than would be required. We believe that this is justified in view of the continued adjustment of space in use which affects CAC and the probability that the activities presently housed there could be compressed to some degree if necessary.
Since very little of the space available at CAC is office space, movement of the above-listed activities to that location would involve costs for suitably converting the present space, as well as the actual movement costs. Further, since the space available is scattered throughout the three six-story buildings, it would be necessary to make some relocations of present tenants. We have computed the costs of moving the potential new tenants into CAC exclusive of the costs of re
locating present tenants since it was impracticable to make any realistic advance allocations of space on the basis of the information available, and we do not believe that the cost of internal relocations at CAC would be material in terms of amortizing the overall costs.
In order to place the theoretical costs and savings of moving additional tenants into CAC on a comparable basis with those incident to removal of all CAC tenants as described on pages 7 to 19, however, we have included (1) $766,500 as necessary rehabilitation costs if the present tenants are to remain at Chicago, and (2) $823,000 for purchase of needed new equipment for F. & C.I., the latter amount being the same as that included in the cost of constructing and equipping the new F. & C.I. facility at Natick, Mass. On these bases, our computations are summarized as follows:
TABLE 5.—Summary comparison of rental costs and CAC costs for potential
additional military tenants
------ $1,067, 093 II. CAC annual costs for 319,190 square feet: 1. Recurrent-0. & M. of F., at $2.01 per square foot.--------- ---------
(a) Conversion costs, at $11.94 per square foot -------- $3, 811, 129
766, 500 1) New equipment for present tenants..-
5, 480, 427
1, 424, 489 III. Annual savings or loss (-): 1. 1st 7 years (item 1 minus item II).--..
- $357, 396
2. Next 6 years:
6, 402, 558
Annual O. & M. of F. costs ($641,571 X6)---------- $3,849, 426
2, 501, 779
6, 351, 205 Savings in 13th year.--
51, 353 3. Annual savings thereafter: Annual rental cost.
$1,067, 093 Less annual O. & M. of
425, 522 Estimated reductions in civilian personnel spaces in Chicago
The proposed moves from CAC would result in the job loss of approximately 389 civilian personnel in the Chicago area. Details of personnel spaces authorized and occupied in the CAC tenant activities are shown in schedule F attached.
As shown in schedule E attached, the Army plans indicate that the CAC Army tenant activities other than F. & C.I., and with the possible exception of the Military Subsistence Testing Laboratory, are to be relocated in the Chicago area. Therefore, these personnel losses have been confined to the elimina
tion of the CAC support activities and certain reductions in the F. & C.I. and 5th Army activities, as follows: CAC elimination... F. & C.I. reduction --5th Army reduction -
Total jobs affected in Chicago---------------------------------
389 At the time of our review 9 civilian positions in CAC were vacant, and Army experience indicated that about one third, or 75, of the F. & C.I. personnel to be offered jobs at Natick would not transfer. The actual job loss thus would be increased by 66 (75 minus 9) to a total of 389. We have not evaluated possible further reductions should the Military Subsistence Testing Laboratory, or other activities, be moved from the Chicago area.
While the civilian personnel reductions summarized above result in substantial reduction in Army expenditures at CAC, they do not represent an accurate measure of the savings incident to the relocation of the CAC activities. This is so because the support services now rendered by CAC will be performed for the transferred activities at the new locations by personnel now engaged in support activities at those locations, without a proportional increase in the support costs. Effect of sale of CAC on savings to Government
We have not considered the resale value of the three buildings and 10.59 acres of land comprising CAC, which was determined to be $4,870,000 by independent appraisal. This amount was omitted from our comparisons for two reasons. In the first place, it is not certain that CAC will be sold and any sale could be far in the future and would not necessarily have any relation to the present Army proposal. Secondly, our comparisons are in terms of operating costs whereas the sale of CAC, if ever effected, would not result in costs or savings of operating expenses although it would affect the Government's cash position.
The same would be generally true, of course, in respect to the additional investment in plant and equipment at Natick or in costs for conversion of the CAC facility, except that it is necessary to allocate those capital expenditures on an amortization basis in order to realistically compare the alternatives of removing tenants from CAC or using CAC space to the maximum degree. This has been done in the preceding sections. Consideration of other alternative locations in Chicago
Pertinent to its recommendation for inactivation of CAC and transfer of tenants, the Corps of Engineers considered all 13 Government-owned buildings in the Chicago area having adequate floorspace. The Corps of Engineers studies disclosed that only four locations-Studebaker Plant, 5555 Archer Avenue; Ford