Time to Get Real with Federal Property
The federal government has many addictions, including profligate spending, wasting money, and regulating the private lives of citizens. In such an environment, certain excesses are to be expected. But when they develop, it is important that they be quickly reined in. In the case of real property acquisition, the federal government’s addiction has gone on for far too long.
In March 2011, CAGW’s WasteWatcher included an article which noted that Uncle Sam owned more real property than any other entity in America: 900,000 buildings and structures covering 3.38 billion square feet. At that time, the Office of Management and Budget’s (OMB) 2010 estimates pegged the number of underutilized or entirely vacant federally owned properties at 55,000, and their annual maintenance cost to taxpayers at $1.66 billion. The General Services Administration’s (GSA) fiscal year 2010 Federal Real Property Report guessed that there were 77,700 underutilized properties, 6,700 of which it classified as “not utilized.” The 41 percent discrepancy between the two estimates is indicative of just how little the federal government understands about its property holdings.
CAGW’s March 2011 article on federal real property was designed to coincide with then-U.S. Chief Performance Officer (and current OMB Director) Jeffrey Zients’ announcement that the Obama administration planned to sell $15 billion worth of federally-owned property over the following three years. Zients’ statement came 10 months after President Obama issued a memorandum to the heads of executive departments and agencies calling for $3 billion in real property cost savings by the end of fiscal year (FY) 2012. Neither goal is close to being reached.
In June 2012, the Government Accountability Office (GAO) reported that the GSA had achieved $118 million in “lease cost savings” from new construction that would make some buildings habitable again, but GSA “has yet to occupy any of these buildings and the agency’s cost savings analysis projected these savings would occur over a 30-year time period.” So the feds will miss their target by $2.88 billion and 28 years, an effort that takes an awful lot of squinting to distinguish from nothing at all.
Understandably, the GAO renewed its designation of federal real property management as a “High Risk” area in February 2013 after it examined the GSA’s Federal Real Property Profile (FRPP) and found it to be woefully inaccurate. To test the FRPP, which purports to keep track of the maintenance costs, condition, utilization, and value of all government-owned property, GAO checked in on 26 federally-owned buildings across the GSA, Department of Energy, Department of the Interior, Veterans Affairs, and the Department of Agriculture, which are the five largest non-defense holders of real property. The FRPP had inaccurately described the condition of 23 of those buildings.
In several cases, it was clear that no one had bothered to check up on the building in question for a long time. Several buildings listed as being in “excellent” condition were entirely vacant and had collapsed roofs, radiological contamination, caved ceilings, or, in the case of one USDA holding, a large tree through the roof. In a landmark of understatement, the report concluded that the FRPP cannot demonstrate that its information is “sufficiently reliable to support sound management and decision making.”
The heart of this difficult matter is the way the federal government handles property sales. Under current law, when the GSA’s Public Buildings Service reports a property as excess, that property must first be screened for use by other federal agencies. If another agency wants it, they get it. If the property goes unclaimed, according to the McKinney-Vento Homeless Assistance Act it must then be screened for use by providers of homeless shelters, which can have the property for free. If no homeless shelter providers want the property, it gets screened for other public uses and sold for up to a 100 percent discount of market value. Finally, if no public use can be identified, the property is auctioned and sold to the highest bidder.
This process is backwards. Providing homeless shelters and buildings for public use may be worthy efforts, but placing them in the way of the government’s ability to sell properties worth billions of dollars is inexcusable. Reforming the steps for the sale of government property would create a potentially significant source of revenue that would have none of the economic disincentives to work or savings that tax hikes present, and would allow government to come to grips with the scope of its hoarding addiction. Then, and only then, will the federal government even begin to downsize its real property holdings. To paraphrase an old proverb: How do you sell tens of thousands of unused federal facilities? One building at a time.
— Luke Gelber
