September 2012

1. Draft resolution “Sale of the Casa del Soldado and Amendment of the Inter-American Defense Board Statutes” CP/CAAP-3170/12 September 2012

2. Background • The Board of External Auditors recommended in their reports for 2009, 2010, and 2011 that the GS/OAS sell the Casa del Soldado and use the proceeds to address long-deferred building maintenance issues • CAAP has considered the sale of the Casa del Soldado in the context of the OAS Real Estate Strategy for 5 years (2007-2012) • In 2011-2012, the GS/OAS implemented a short-term plan to marginally expand funds available outside the Regular Fund for urgent deferred building maintenance projects • A General Assembly resolution is required to authorize sale of the Casa del Soldado and restrict use of the proceeds to defray deferred building maintenance costs.

3. Chronology of CAAP Considerationof the Real Estate State since 2008 • 2008 • GS/OAS presented the OAS Real Property Existing Conditions and Structural Survey Reports and the CAAP took note of the presentation. • 2009 • GS/OAS presented a Strategy to enhance energy efficiency at OAS Headquarter buildings, and a proposal to undertake urgent structural repairs in the main building and the General Secretariat building. The CAAP approved the use of $1.2 million from the Capital Building Fund for urgent repairs. • 2010 • GS/OAS presented OAS Infrastructure Improvement Project Status Reports. The CAAP took note of the reports.

4. Chronology of CAAP Considerationof the Real Estate State since 2008 • 2011 • GS/OAS presented a Real Property Strategy and Investment Plan to maximize the potential of OAS Real Estate and supplementary information at the request of CAAP. The CAAP concluded that the sale of the Casa del Soldado was not a feasible option and decided to continue the discussion of the Plan in the future. • Chair of the CAAP presented a Draft resolution to amend the Inter-American Defense Board Statutes to enable sale of the Casa del Soldado. At the request of CAAP the GS/OAS coordinated a presentation to the IADB. • Chair of the CAAP presented a draft resolution on Modification of facilities usage guidelines to facilitate expansion of rental income for special events. The CAAP decided that OAS buildings should not be used for private events and the resolution was not approved.

5. Chronology of CAAP Considerationof the Real Estate State since 2008 • 2012 • GS/OAS and the IADB presented “The OAS and IADB Understanding on Administrative Matters” on sharing of space and operating costs. The CAAP took note of the presentation. • At the request of CAAP the GS/OAS presented information on the Real Estate Strategy a revised format: • Options that require Member States approval • Options the GS/OAS can implement and inform the CAAP (e.g. use of space) • Options that required additional funding from Member States • Other financial mechanisms • Chronology of CAAP Consideration of the Real Estate Strategy since 2008. • Answers to Member State’s questions submitted in writing. • List of previously considered options. • Updated Existing Conditions Assessment Report. • Chair of CAAP presented a Real Estate Strategy with Short Term and Long Term options, and a Draft Resolution: Sale of the “Casa del Soldado” and Amendment of the Inter-American Defense Board Statutes.

6. Action taken to date In 2011 and 2012, the GS/OAS expanded the resources for building maintenance by expanding non-Regular Fund income: • Moved the Trust of the Americas to the Casa del Soldado, thereby freeing rentable space in F Street building • Generated rental Income of $126,000 a year by renting freed space • Doubled rental income of the Hall of the Americas through improved cost recovery policies • Adjusted parking rates for OAS parking facilities to reflect market conditions

7. Future Action Proposed • Former CAAP Chair Beale proposed to authorize the SG to sell the Casa del Soldado (CP/CAAP-3170-12). • The proposal would also provide: • Accommodation for the IADB in other OAS buildings. • Deposit of the proceeds of the sale in a special account exclusively reserved to fund the major deferred maintenance at the Main Building and Administration Building.

8. Essential Elements for Resolution onSale of the “Casa del Soldado” • Reiterate the commitment of the GS/OAS to make available office and meeting space for the IADB in its premises in Washington, DC • Amend the Statute of the IADB to remove the specific requirement that this space be located in the Casa del Soldado

9. Essential Elements for ResolutionSale of the “Casa del Soldado” • Recall that the GS/OAS is the owner of the Casa del Soldado • Recall that three successive Board of External Auditors reports strongly emphasized the need for implementation of deferred maintenance in the historic OAS buildings and the sale of the Casa del Soldado • Authorize the Secretary General to sell or lease on a long-term basis the Casa del Soldado

10. Essential Elements for ResolutionSale of the “Casa del Soldado” • Recall that deferred maintenance remaining to be implemented was estimated in 2007 to cost $36.5 million • Of $40.4 million in deferred maintenance identified in 2007, $4 million has been completed • Provide that the proceeds of the sale or lease of the Casa del Soldado will be used exclusively for the most urgent portions of this deferred maintenance

11. Essential Elements for ResolutionSale of the “Casa del Soldado” • Identify the mechanism to ensure that the proceeds of the lease or sale are used exclusively for deferred building maintenance • OPTIONS: • Deposit the fund in the Building Improvement and Maintenenance Services (BIMS) fund established in 2005 OR • Establish a new sub-fund with rules limiting expenditures to deferred building maintenance • Allow use of principal and earnings, OR • Restrict use to earnings only