The federal government has more real estate than it knows what to do with, but getting rid of its excess property has never been easy.
Help is on the way, though. The independent Public Build Reform Board recently held its first meeting to discuss ways to save billions over the next few years. It has six months to identify at least five federal civilian properties with an aggregate fair market value ranging from $500-750 million to sell through an expedited sale and disposal process. Over the next six years, the board expects to identify $7 billion in potential cost savings.
The board, created under the 2016 Federal Assets Sale and Transfer Act (FASTA) will submit its recommendations to the Office of Management and Budget for review and approval. The board doesn’t have oversight of properties owned by the Defense Department, the National Park Service and the Postal Service.
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Former Public Buildings Service Commissioner David Winstead, one of the board’s five members, said the General Service Administration has authorities in place to reduce the government’s real estate footprint, but Congress and OMB, he said, have been “reluctant” to allow GSA to exercise those authorities.
The board is still getting a sense of how best to move forward with its mission to identify at least half a billion dollars in excess facilities in six months, but current and former federal real property experts say the solution might be a civilian version of the Defense Department’s controversial base realignment and closure (BRAC) process.
Dan Mathews, the commissioner of GSA’s Public Buildings Service, said a more streamlined sale and disposal process for civilian agency real estate would likely gain approval from stakeholders in local communities who could put some languishing properties to better use.
“Unlike BRAC, I would think the recommendations would largely be embraced, because [the] economic potential is probably not being tapped into, or it’s an eyesore that’s been sitting there for a while, and it would allow us to move on to a better future state,” Mathews told the board Monday.
GSA has tracked a significant reduction in the government’s leased property portfolio under the George W. Bush and Obama administrations. And with nearly a quarter of GSA’s leases set to expire in the next two years, PBS sees a major opportunity to renegotiate for longer-term leases on buildings where agencies plan on staying put — and at a lower rate.
But government-owned property remains a challenge. Mathews said agencies have held onto underutilized properties for a long period of time, with the expectation that they might someday have the funds to further develop it.
“They like to hold on to it, and that was viewed as a significant problem. First and foremost, that’s why an independent board exists, because the notion was agencies themselves would not necessarily volunteer properties for disposal. And I would say, given the three rounds of property recommendations that we requested from agencies, I would confirm that suspicion,” Mathews said.
Under FASTA, agencies have submitted five-year plans detailing what properties would be strong candidates for sale or disposal.
Former OMB Controller Danny Werfel told the board that OMB had developed a list of high-value assets during his tenure. That list flagged everything from waterfront properties to downtown properties in major metro areas.
Not everything on that list would be likely candidates for sale, but the list features properties like Moffett Field, a decommissioned military base now used by NASA’s Ames Research Center. The massive property is about a 15-minute drive from Palo Alto, California, and stands out as valuable Silicon Valley real estate.
But even though OMB had compiled the high-value asset list and considered going forward with the civilian BRAC-like procedure, Werfel said members of Congress threatened to hold up the process.
“I think there were concerns on the Hill that creating a civilian BRAC would also create similar challenges and that it wasn’t worth it. We didn’t have a compelling enough business case around what could be sold off, and what the value to the taxpayer would be in order to realize it,” Werfel said. “One of the reasons why we couldn’t build a business case is because some of the properties were so sensitive, that there worry about even building the business case.”
But data-driven decision-making could help the board succeed where previous efforts have stalled. Many federal employees now swipe into the office using their Common Access Cards (CAC), which can give agencies real-time data on its utilization.
GSA Administrator Emily Murphy, for example, used this data to decide to move about 1,300 employees from the agency’s National Capital Region building to its headquarters building. Those employees will complete the transfer this September.
“We know that we have 1,000 empty seats [at headquarters] on our busiest day, and out of the 1,300 people here [at the NCR building], there are never 1,000 actually here on any given day, so we’re pretty confident it can work,” Mathews said. “With that information, you can make meaningful judgments about your portfolio, where to put your money, where to dispose or to consolidate. Without that information, you’re guessing.”
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But beyond governmentwide data, the quality of real estate information gets murky. GSA maintains a big-picture snapshot of the government’s leased and owned property through its Federal Real Property Profile. The latest data from fiscal 2017 shows the government holds more than a billion square feet in real estate. That year, agencies reduced their owned property by more than a million square feet, and disposed of more than 1,000 buildings.
“The inventory is massive, it is complicated, it is dispersed across agencies. There is, in many respects, a lack of good information or controls over the properties. And there’s a general understanding that as a result, we’re spending more money on real estate, housing federal employees so they can meet their mission than is necessary,” Mathews said.
Board member Angela Styles, a former OMB procurement policy official, said the board has hired a contractor to help it “slice and dice” through federal real property data, but challenges still remain, especially identifying cases where agencies can sell a parcel of land separate from their buildings.
Werfel also pointed out limitations with what the current FRPP data can answer, but said agencies could better leverage technology to get better metrics on a building’s occupancy rate.