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CITY OF READING v. AUSTIN

March 17, 1993

CITY OF READING, PENNSYLVANIA, Plaintiff,
v.
RICHARD G. AUSTIN, ADMINISTRATOR OF THE GENERAL SERVICES ADMINISTRATION, Defendant, HOUGH/LOEW ASSOCIATES, INC., Intervenor.



The opinion of the court was delivered by: BY THE COURT; FRANKLIN S. VAN ANTWERPEN

 VAN ANTWERPEN, J.

 MARCH 17, 1993

 I. INTRODUCTION

 The plaintiff, City of Reading ("Reading"), Pennsylvania, seeks judicial review of the decision of the defendant, Richard G. Austin, Administrator of the General Services Administration ("GSA"), to relocate five federal agencies from the central business area of Reading to the Boroughs of West Reading and Wyomissing, which are suburbs of Reading. Reading contends that GSA violated Presidential Executive Order 12072, 43 Fed. Reg. 36,869 (1978), reprinted in 40 U.S.C. § 490, as well as its own implementing regulations by failing to give "first consideration" to the central business areas of Reading as the site for relocation.

 This action was originally brought in the United States District Court for the District of Columbia. On July 31, 1992, the case was transferred to us for the convenience of the parties and witnesses, and in the interest of justice pursuant to 28 U.S.C. § 1404(a). With the consent of the parties, the present lessor of the five agencies, Hough/Loew Associates, Inc.'s, Motion to Intervene was granted on September 24, 1992.

 Before the Court are GSA's and Hough/Loew's Motion to Dismiss or, in the alternative, Motion for Summary Judgment, and Reading's Cross-Motion for Summary Judgment. For the reasons stated in this Opinion, Reading's Motion for Summary Judgment is granted in part and denied in part, and the Motions of GSA and Hough/Loew are denied.

 II. FACTUAL BACKGROUND

 As discussed later in part IV, section B of this Opinion, the focal point for our review is the Administrative Record. In December of 1990, along with the United States Bankruptcy Court and Probation Office, five federal agencies were located in leased space in the East Shore Office Building located at 45 South Front Street, Reading, Pennsylvania: 1) the Social Security Administration ("SSA"); 2) the Bureau of Alcohol, Tobacco, and Firearms ("BATF"); 3) the Defense Contract Management Area Office ("DCMAO"); 4) the Internal Revenue Service ("IRS"); and 5) the Department of Labor, Wage and Hour Division and its Bureau of Apprenticeship and Training. This building was owned by the Reading Area Community College ("RACC") and was located in Reading's central business area. The agencies had been in this location for approximately fifteen years.

 RACC wanted more space to accommodate its growing student body and on February 15, 1991, representatives of Reading, RACC, and GSA met to discuss how GSA could accommodate RACC's need to expand into space leased to five of the federal agencies (SSA, BATF, DCMAO, the IRS, and the Department of Labor). Administrative Record, No. 7. GSA had lease rights to occupancy, on behalf of its client agencies, for another five years at a very favorable rental rate. Administrative Record, Nos. 18, 19. GSA took the position that its duty to the public prohibited terminating the lease merely because RACC had found a more favorable use for the space. However, to assist RACC in its expansion effort, GSA agreed to relocate the agencies within the central business area of Reading if space could be provided at no cost to the government. Administrative Record, Nos. 18, 19.

 The Regional Administrator of GSA, George P. Cordes, explained that if GSA was required to use a formal procurement process, suburban locations might be considered as possible relocation sites. However, in explaining GSA's locational policy, he indicated that the client agencies would be required to justify their move to a suburban location and that Reading would have an opportunity to respond to these justifications before a decision was reached to relocate outside of Reading. See Administrative Record, Nos. 18, 20.

 On March 25, 1991, Meridian Properties, a local real estate broker, submitted three proposals to RACC for office space. Administrative Record, No. 20. All three buildings - the American House at 4th and Penn Street, the Madison at 400 Washington Street, and the former Aetna Building at 6th and Court Streets - are located within Reading's central business area. Id. The rental rate for the American was $ 11.90 per square foot and the Madison was $ 10.00 per square foot. These rates included standard improvements, all utilities, maintenance, and janitorial services. The former Aetna Building was available for sale and, possibly, for lease.

 On May 16, 1991, GSA again met with RACC and City officials to discuss the proposals for the three buildings. Administrative Record, No. 11. At this meeting, Mr. Cordes informed Reading that the proposed rates were too high. See Administrative Record, Nos. 11, 20. On July 22, 1991, RACC informed Mr. Cordes at GSA that the Madison Building was now available at a reduced price of $ 9.25 per square foot with a $ .50 per square foot increase in each subsequent year of the lease. Administrative Record, No. 9. GSA also rejected this revised proposal.

 GSA had determined that Meridian Properties' proposals did not satisfy its position concerning relocation at no cost to the taxpayer. The proposals were unacceptable because the new rental rates were significantly higher than the rates in its current lease with RACC, included no relocation costs, and covered only a part of the requisite alteration costs. Administrative Record, No. 11. Additionally, in July of 1991, GSA had ascertained that the United States Bankruptcy Court for the Eastern District of Pennsylvania would be expanding into a portion of the Madison Building office space included in the proposal. Administrative Record, No. 21. Thus, GSA determined that the Madison Building was no longer available as a possible site for relocation. Administrative Record, No. 11.

 During various periods in 1990 and 1991, GSA conducted a review of the requirements for each of the five agencies which would be affected by the relocation. Administrative Record, Nos. 1-6. In these reviews, each of the agencies identified its space requirements and indicated a delineated geographical area within which the agencies desired to locate. Administrative Record, Nos. 1-6. In March of 1990, the Department of Labor expressed a preference for locating both its Wage and Hour Division and Bureau of Apprenticeship and Training in the central business district of Reading. Administrative Record, No. 2.

 In June of 1990, SSA indicated a desire to locate northwest of Reading's central business area, near the major traffic arteries: Route 422, the Warren Street Bypass, or the West Shore Bypass. Administrative Record, No. 3. However, SSA's recommendation for a geographical area to relocate included Reading's central business area. Id. SSA justified *fn1" its recommendation to GSA by stating that:

 . . . .

 
[Thus,] access to ample parking and public transit is critical to enable us to provide service to the public.

 Id. In February of 1992, SSA revised its recommendation to GSA by eliminating the downtown area from its delineated area. Administrative Record, No. 16. SSA provided the same justifications but, additionally, concluded that relocation was necessary because Reading did not have adequate parking for its claimants. Id.

 In April of 1991, BATF expressed a general geographical preference to relocate to an area northwest of Reading, which included a portion of Reading's central business area. Administrative Record, No. 4. The Administrative Record does not reveal that BATF provided any justifications to GSA for its recommendation.

 In the April of 1990, DCMAO indicated a geographical preference for the Wyomissing area, but also asked GSA, in June of 1990, to consider rehabilitation of its current location before changing its location. Administrative Record, Nos. 5, 15. The Administrative Record does not indicate that DCMAO provided any justifications to GSA for its recommendations at this point. In a letter to GSA, dated January 10, 1992, DCMAO expressed its desire to remain at the RACC Building, but if relocation was necessary, DCMAO firmly objected to relocation deeper within Reading and again indicated a preference for the Wyomissing area. Administrative Record, No. 15. The letter also provided a thorough explanation in support of DCMAO's preference, based on its mission, employee safety, and associated support functions and activities. Id.

 In June of 1990, the IRS indicated a geographical preference to relocate to the West Reading/Wyomissing area. Administrative Record, No. 6. The IRS justified its recommendation to GSA by stating its intent in choosing this area was:

 
to provide a quality working environment that is convenient, pleasant and functional for both our employees and our taxpayer customers. We have found the current location and facilities not to be in accord with these desires and we therefore are interested in locating our office to an area that is more in tune with our agency mission.

 Id.

 By the end of August of 1991, GSA had reached a final decision to relocate the five agencies outside of Reading's central business area, to the West Reading/Wyomissing Boroughs and initiated the formal procurement process to seek space in this area. In a letter, dated July 15, 1991, GSA informed RACC and Reading that the majority of the agencies had determined that if relocation was necessary, their missions could best be performed from a locational base in the West Reading/Wyomissing area. Administrative Record, No. 8. GSA's purpose for this correspondence was to seek consideration from RACC, after the plan for a no-cost move had failed, for ceding its rights under the lease for the remaining five-year period. Id.

 On August 1, 1991, GSA placed an advertisement in the Reading Eagle Times newspaper requesting listings for 30,000 net usable square feet of space in the West Reading/Wyomissing area. Administrative Record, No 10. On August 28, 1991, GSA issued Solicitation No. MPA 91194 to lease 30,000 net usable square feet of office space in West Reading/Wyomissing, Pennsylvania. Administrative Record, No. 12. The location sought in the Solicitation is summarized as "outside City Center." Id. at P 1.3. There is no evidence in the Administrative Record that Reading was either informed about, or provided a copy of the Solicitation beyond the notice provided to the general public. On September 25, 1991, GSA conducted a market survey of available office space in Wyomissing, Pennsylvania. Administrative Record, No. 13. On March 11, 1992, GSA entered into a lease with Hough/Loew Associates, Inc., for 30,000 net usable square feet of office space on the first floor of Berkshire Knoll, located at 1125 Berkshire Boulevard in Wyomissing, Pennsylvania. Administrative Record, No. 17. The Administrative Record does not indicate that GSA notified Reading directly that it had signed a lease with Hough/Loew.

 On May 15, 1992, two months after GSA has entered into the new lease, Reading received, for the first time, written justifications from GSA in support of the geographical preferences of SSA, DCMAO, and the IRS. See Administrative Record, No. 20. The City forwarded its rebuttal to these justifications to GSA on June 1, 1992. Administrative Record, No. 20. Reading did not receive any justifications from the Department of Labor and BATF.

 Beginning in 1991 through the summer of 1992, Reading sought the assistance of its elected representatives: U.S. Senator Arlen Specter, U.S. Senator Harris Wofford, and U.S. Representative Gus Yatron, to encourage GSA to give the central business area of Reading preference in the relocation of the five agencies from RACC. See Administrative Record, Nos. 7, 11, 18, and 19. GSA had knowledge that Reading was seeking to resolve this issue through these channels. See Administrative Record, Nos. 7, 11, 18, and 19.

 In July of 1992, the five agencies: the Department of Labor, Wage and Hour Division and its Bureau of Apprenticeship and Training; SSA; BATF; DCMAO; and the IRS; moved their offices from the East Shore Office Building at RACC to Wyomissing, Pennsylvania. See Administrative Record, No. 18. Meanwhile, unable to resolve the dispute, Reading filed the instant action on July 9, 1992, seeking to require GSA to conduct a procurement that gives ...


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