Note 5. Property and Equipment
A. Summary of Balances
In FY 2007, GSA recorded capitalized interest costs of $3.1 million in the Construction in Process account associated with debt provided by the U.S. Treasury’s Federal Financing Bank (FFB), as discussed in Note 6. Interest capitalized in FY 2006 amounted to $6.7 million. Balances in GSA’s Property and Equipment accounts subject to depreciation as of September 30, 2007 and 2006 are summarized below (dollars in millions):
| 2007 | 2006 | |||||
|---|---|---|---|---|---|---|
| COST | ACCUMULATED DEPRECIATION |
NET BOOK VALUE |
COST | ACCUMULATED DEPRECIATION |
NET BOOK VALUE |
|
| Buildings | $27,656 | $13,506 | $14,150 | $25,764 | $12,534 | $13,230 |
| Leasehold Improvements | 288 | 206 | 82 | 231 | 197 | 34 |
| Telecom and ADP Equipment | 100 | 92 | 8 | 104 | 88 | 16 |
| Motor Vehicles | 4,086 | 1,260 | 2,826 | 3,935 | 1,224 | 2,711 |
| Other Equipment | 334 | 195 | 139 | 313 | 178 | 135 |
| Total | $32,464 | $15,259 | $17,205 | $30,347 | $14,221 | $16,126 |
B. Cleanup Costs
In GSA’s FBF, certain properties contain environmental hazards that will ultimately need to be removed and/or require containment mechanisms to prevent health risks to the public. Cleanup of such hazards is governed by various Federal and state laws. The laws most applicable to GSA are the Comprehensive Environmental Response Compensation and Liability Act of 1980, the Clean Air Act, and the Resource Conservation and Recovery Act.
In accordance with FASAB SFFAS Nos. 5 and 6, Accounting for Liabilities of the Federal Government and Accounting for Property Plant and Equipment, respectively, and interpretive guidance in Federal Financial Accounting and Auditing Technical Release No. 2, Determining Probable and Reasonably Estimable for Environmental Liabilities in the Federal Government, issued by the Accounting and Auditing Policy Committee, if an agency is required by law to clean up such hazard, the estimated amount of cleanup cost must be reported in the financial statements. Accordingly, GSA recognized liabilities totaling $105 million and $94 million for Environmental and Disposal costs as of September 30, 2007 and 2006, respectively, for properties currently in GSA’s property inventory. In instances where no reasonable estimate of the cost to clean up a particular site could be made, GSA recognized the estimated costs for related environmental studies as is prescribed in the guidance noted above. Management has estimated an additional $15 million in both FYs 2007 and 2006 of potential cleanup costs where it is only possible that GSA could incur additional costs. In some instances, GSA has been named as a party in certain environmental cases where the subject property is no longer in the GSA or Federal property inventory. GSA’s liability for such cases is further discussed in Note 10.
C. Heritage Assets
With an average age of GSA’s buildings being over 44 years old, many buildings have historical, cultural, and/or architectural significance. While GSA uses these buildings to meet the office space and other needs of the Federal government, maintaining and preservation of historical elements is a significant priority.
In accordance with FASAB SSFAS No. 29, Heritage Assets and Stewardship Land, these buildings meet the definition of Multi-use Heritage Assets, and are reportable within general property, plant, and equipment on the Consolidating Balance Sheets.
GSA define its Historic Buildings as those buildings that are either listed on the National Register of Historic Places, have formally been determined eligible, or appear to meet eligibility criteria to be listed. GSA has 254 buildings on the National Register, of which 63 are designated as National Historical Landmarks. An additional 86 buildings are, or appear, eligible for listing on the National Register. Under the National Historic Preservation Act, GSA is required to give these buildings special consideration, including first preference for Federal use, and rehabilitation in accordance with standards established by DOI.