Uncle Sam, government slumlord

Vacant Federal Building

It is no secret that the federal government has too much real property.  Plainly put, Uncle Sam is one extremely disorganized landlord that likes purchase, lease, and hoard large amounts of costly real estate.  And as with most operations left to languish at the hands of bureaucrats, the business is terribly wrought with mismanagement and a serious lack of transparency.

Citizens Against Government Waste (CAGW) has supported the sale of excess government property since the organization’s inception in 1984. After the Bush administration created the Federal Real Property Profile (FRPP) database to help federal agencies manage and dispose of the surfeit property, CAGW has been following its progress and publishing numerous reports on the federal government’s real problems with real property.

Costly government leasing practices have been included on the Government Accountability Office’s (GAO) high-risk list since 2003. A March 12, 2014 GAO report called on the federal government’s landlord, the General Services Administration (GSA), to improve both the FRPP’s budget structure and streamline the process of disposing of excess “surplus” property to benefit both tenant agencies and taxpayers.

At the time of the release of the May 2014 GAO report, the Office of Management and Budget (OMB) had neglected to release any new data regarding the handling of vacant and outmoded federal property since 2011. House Oversight and Government Reform Committee Chairman Darrel Issa (R-Calif.) and Subcommittee on Government Operations Chairman John Mica (R-Fla.) quickly pressured OMB to provide Congress with updated FRPP data on the government’s property holdings.

On July 29, 2014, OMB Controller David Mader testified before Chairman Mica’s Subcommittee and presented the agency’s updated findings on excess property. He said that the administration had “developed a government-wide real property strategy that is laying the groundwork to help agencies achieve a greater space reduction and to recognize greater savings.”

Mr. Mader mentioned that by utilizing the FRPP data, the federal government could effectively document the status of assets, identify underutilized buildings, and quickly and appropriately dispose of unusable property in order to meet administrative cost objectives.

While everyone in Washington agrees on the need to downsize and sell off properties that agencies no longer need (GSA successfully disposed of 213 federal properties worth $97 million in 2013, which reduced its warehouse portfolio by 10 million square feet), both members of Congress and government watchdogs agree there is still much progress to be made.

A November 12, 2014 GAO report audited GSA, the Department of Energy, and the Department of Interior, the three agencies that manage the largest amount of held or leased civilian warehouse space, which are used for the storage of items such as ammunition, government documents, vehicles, and other materials. The report determined that the data in the FRPP is not transparent enough for decision makers, such as Congress and the OMB, and that the GSA is not effectively fulfilling its role as the government’s landlord.

The GSA classified 90 percent of its 29 million square foot warehouse portfolio as utilized and active; yet the GAO found that among these warehouses were buildings that had been vacant for extended periods of time. While GSA has taken steps to help reduce agencies’ warehouse real property footprint, and has tried to reduce costs by moving tenants from leased warehouses into government-owned spaces, GAO said that the agency lacks long-term planning capitol principles that could further encourage agencies to weigh and balance the need to maintain existing capital assets against the demand for new ones.

Currently, the federal government is in the process of relocating three of its agencies to new, luxurious headquarters within the Washington beltway. The Federal Bureau of Investigations (FBI) will move from its current location in downtown D.C. to a swanky new office location in either Prince Georges County in Maryland or Fairfax County in Virginia.

The Fish and Wildlife Service is set to leave its 220,000 square foot headquarters for a new space in Falls Church, Virginia, (which the GSA claims will consolidate three expiring leases in the region and save taxpayers more than $3.8 million dollars annually for the next fifteen years), while the National Science Foundation is also emptying its current home at Stafford Place in Ballston, Virginia to relocate to Hoffman Town Center in Alexandria, which the NSF claims will save taxpayers $65 million in lease payments.

Until the relocation of the NSF’s 11,000 employees at a later date, the NSF’s relocation represents the largest transfers of federal workers in the past decade.

While some federal agencies continue to frolic from costly properties to even more costly properties, a growing number of underutilized and vacant buildings that would be perfect for the construction of residential spaces, parks, and historic monuments sit and wait, slowly deteriorating.

A few of underutilized or vacant agency buildings are currently under renovations after being purchased by private bidders, including the Old Post Office, which was purchased for $200 million by real estate mogul Donald Trump, and the West Heating Plant, purchased for $19.5 million by the Levy Group and Georgetown Co. to develop luxury condominiums, far too many inhabitable properties continue to sit vacant while the GSA grapples with what steps to take next.

Many of the federal government’s vacant but usable buildings and warehouses could be transformed from eyesores into successful businesses, hotels, museums, and even popular memorials and recreational parks. In fact, the GSA’s Office of Property Disposal is required to notify state and local agencies of the availability of any surplus federal real property they may be eligible to acquire under certain laws.

According to the GSA website, properties can be purchased for public health or education issues, public parks and recreational areas, historic monuments, homeless assistance, self-help housing, wildlife conservation, and correctional facilities among others. While the possibilities seem abundant, the process is backwards.

Under Title 40 of the United States Code and the McKinney-Vento Homeless Assistance Act, once a building is reported as “excess,” it is automatically screened for use by providers of homeless shelters, who get the property for free if requested. If no homeless shelter providers want the property, the property is then screened for other public uses at discounts up to 100 percent of fair market value before it is finally approved for auctioned and sold to the highest bidder.

What seems like a worthy effort is instead an intentionally wasteful process that places a barrier in the way of the government’s ability to make a profit on vacant properties that can be worth billions of dollars.

Environmental regulations also create expensive and time-consuming road blocks in regards to the disposal of excess property and warehouses.

Under the National Environmental Policy Act, agencies are required to consider the impact that their proposed actions will have on the environment, including the disposal of property, and “consider alternatives less damaging to the environment” as a whole.

These regulations are extremely expensive and time-consuming. GSA officials have told GAO that 40 government-owned warehouses remain in excess status due to ongoing environmental remediation because they are considered “contaminated.” Until a property is cleared and cleanup is completed, the GSA remains responsible for its condition.

Although it appears all may be lost due to the federal government’s backwards and disorganized management of its property, there is some hope for the future.

In 2012, the GSA notified state and local governments and real estate developers that it was interested in redeveloping five buildings located next to the National Mall, including a 118,000-square-foot building called the Cotton Annex, which would dramatically transform a 22-acre stretch of Southwest Washington.

In another example, the Armed Forces Retirement Home (AFRH), a 320-acre plot of land that remains home to more than 1,000 veterans, put its 33,372-square-foot brick steam heating plant up for lease in March, 2014. While some local D.C. residents have claimed that not enough of the land will be used for park space, the AFRH is currently working with GSA to convert 77 acres of the plot into a mixed-use neighborhood.

Even though small steps are being taken to improve the way in which the government manages its federal real property, in order to ultimately reduce and improve its property footprint, the GSA must firmly implement a long-term, government-wide strategy plan to promote effective and efficient use of warehouse space and other properties, and encourage each government agency to individually address all of its facility needs.

If these steps are not taken, taxpayers will continue to watch the government needlessly expend large amounts of their tax dollars to develop and occupy extravagant buildings, while millions of square feet of space rot inside of the empty shells of the federal government’s unused and vacant real estate portfolio.

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