For Sale: Government Tower, Ideal for Business Startup
Policy + Politics

For Sale: Government Tower, Ideal for Business Startup

The Reagan administration came up with a nifty idea in 1982 for raising money for the cash-strapped federal government: selling off part of the 7,000-acre national Agricultural Research Center. The crop research facility sat astride one of the few undeveloped large tracts in suburban Washington, D.C.

Budget experts boasted that the sale would net the government millions of dollars and that the research could be easily shifted to a less expensive site. But farm groups and the Agriculture Department raised a fuss, and critics of the proposed sale noted that the “Ag Center” was a major attraction for visitors from the farm belt.

This year, the Ag Center celebrated its 100th anniversary, and it is still owned in its entirety by the federal government. 

The battle over the Ag Center is a cautionary tale of how difficult it can be to dispose of federal property, much of it controlled by the General Services Administration. For decades, Republican and Democratic administrations alike have sought to bolster the government’s coffers by unloading underutilized or unneeded federal property, buildings and even lighthouses, only to encounter resistance from within and outside the government.

Now the Obama administration is trying its luck. Facing the prospects of a $1.4 trillion budget deficit for the second year in a row, President Obama has called for a major effort to cull the federal government’s property holdings in search of fresh revenue. He issued a memo June 10 directing all federal agencies to “accelerate efforts to identify and eliminate excess properties.” Obama suggested the sales could raise at least $3 billion by fiscal 2012. 

The federal government owns more property than even Donald Trump, about 1.2 million buildings. The maintenance budget: a cool $19 billion annually.  A Government Accountability Office report in 2007 found that many departments held excess or underutilized property, including 10 percent of the facilities in the Departments of Energy, Homeland Security and NASA. The GAO reported then that the government held $374 billion in real property assets worldwide, totaling 3 billion square feet. 

GSA: Deleting the ‘P’ from Presidential
Despite occasional setbacks, the GSA says that it has had much success over the years in disposing of surplus property. “GSA has a proven track record of being able to dispose of property,” David Foley, deputy commissioner for the GSA’s Public Buildings Service, told The Fiscal Times in a recent interview. He said that between 2003 and 2009, GSA sold 170 federal properties, constituting 10 million square feet of space, out of a portfolio of 1,500 government buildings and 815 million square feet. “It’s possible to do it, and GSA has done it,” he said.

For example, consider the Hotel Monaco in the nation’s capital, two blocks from the Verizon Center sports arena. That is the former “Tariff Commission,” a national historic landmark built in 1836 that had fallen into severe disrepair. It was an eyesore until the government negotiated a long-term lease with a hotel company that agreed to preserve its historic character while creating boutique lodging space. “They spent $30 million to restore it and did all their work so that any change to the historic fabric is reversible,” said Michael McGill, GSA press officer for the National Capital region.

Of course, not every property is so exotic. When the GSA decides to sell, it lists properties on its Website, and usually conducts online auctions. The properties range from dilapidated warehouses to undeveloped plots of land. Current listings include 320 acres of undeveloped land (with no public road access) one mile from the Deschutes River near Bend, Ore., and seven buildings in Kansas City, Mo., that were used as an Army Quartermaster Depot during World War II.

“We’re selling lighthouses all across the
country right now,” said Tim Sheckler.

A jewel in the real property sale program is one that is aimed at selling off lighthouses. While their locations are often picturesque, the properties also tend to be isolated. “We’re selling lighthouses all across the country right now,” said Tim Sheckler, director of the real property utilization and disposal division for GSA’s national Capital Region. “Technology has taken over and lighthouses are in no conceivable way useful. They are being destroyed by natural elements.” The GSA is putting the Latimer Reef Lighthouse, on tiny Fisher’s Island in Suffolk County, N.Y., up for auction Wednesday morning, with a starting bid of $10,000.  

But standing in the way of those presidential efforts are many hurdles, both congressional and bureaucratic. “Bureaucracy, bureaucracy, bureaucracy,” muttered Sen. John McCain, R-Ariz., when asked why it’s so hard to realize savings from selling federal property. McCain, a member of the Homeland Security and Governmental Affairs Committee, has been a prominent proponent of cutting wasteful government spending.

Department of Homeless Security
Consider just a few of the hoops an agency must jump through in order to sell a “surplus” building. First, the law requires that the agency determine if any other office within that department can use the space. If not, then the agency must offer the building to other government departments. If there are no takers, the next step is to offer the building up to the homeless.

Under the McKinney-Vento Act, the government must make the property available to agencies that serve the homeless. Those agencies decide if they can use the property for shelter, schooling or feeding homeless people. The act was passed in the wake of increased homelessness in the early 1980s, and supporters say it has been instrumental in providing shelter and other services.

An effort to cut back on providing surplus buildings to the homeless as part of an effort to sell more federal property for profit ran into a buzz saw of opposition from advocacy groups. Sen. Tom Carper, D-Del., chairman of the Federal Financial Management Subcommittee of the homeland security committee, said he has been discussing this issue with Obama since Obama was elected president and gave his farewell speech on the Senate floor. After the speech, Carper said, he joined a line of pages waiting to shake the president-elect’s hand, and pressed an envelope into his hand. On it were written five suggestions – including getting rid of surplus property.

But when Carper tried to move a bill on the issue, the homeless groups protested and the bill died. Now armed with the president’s directive, he is meeting with the groups again this month hoping to strike a compromise that will ease surplus property sales, while accommodating needs of the homeless.

Bureaucracy is not the only stumbling block. Sometimes members of Congress don’t want the federal government to sell properties in their districts, hoping they can convince the agency to stay there and continue to provide jobs income for their districts.  “It always is, it always is [a problem],” McCain said.

In the case of the Ag Center, located in Beltsville, Md., members of Maryland's congressional delegation fought against the sale of any of the land back in the 1980s, according to a Department of Agriculture spokesman. Even today, lawmakers from Maryland still regard the center as critical to "bolstering the productivity of our nation's farmers and the success of our agricultural economy," said House Majority Leader Steny Hoyer, D-Md., whose district is nearby.

Hoyer noted that some plant products are tied directly to the soil in which they grow. "Selling this land would be an unwise and irreversible action that would severely hinder that research and undermine the security of our food, our environment and our nation’s biological safety,” Hoyer told The Fiscal Times.

Moreover, not all federal property is controlled by the GSA. Some agencies, including the departments of Defense, Agriculture and Veterans Affairs, control their real estate portfolios. And some of the agencies under the auspices of the GSA are not allowed to retain the proceeds of their property sales for their own budgets. The money goes to the Treasury — a fact that acts as a disincentive, according to the GSA.

Former Rep. Tom Davis, R-Va., attempted to fix that problem with legislation before he retired from Congress last year. But again, competing interests got in the way and the bill was never passed. “You get no credit for selling assets; you bring in some cash, but it’s offset because you take an asset and sell it. We had that problem consistently. The ‘scoring’ rules do not make it easy,” he said.

With all of the obstacles and all of the opinions, perhaps Davis summed it up the best.

“Nothing is ever as easy as it looks on this,” he said.

This article was updated at 3:30 p.m. on June 29, 2010

Correction, July 2, 2010: This piece originally stated the starting bid on the Latimer Reef Lighthouse was $20,000. The starting bid was $10,000.

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