Team Trump Wants to Sell Unused Federal Buildings, but It Won’t Be Easy
Policy + Politics

Team Trump Wants to Sell Unused Federal Buildings, but It Won’t Be Easy

Carol M. Highsmith - Wikipedia

White House Budget Director Mick Mulvaney is aggressively moving ahead with Trump Administration efforts to slash spending, improve efficiency and downsize the federal bureaucracy.

As early as Wednesday, Mulvaney’s Office of Management and Budget (OMB) is expected to send out a “guidance” letter to federal departments and agencies, instructing them to design plans to streamline their operations and cut costs.

Related: The Federal Government Really Does Need an Overhaul: Can Trump Get It Done?

The letter stems from President Trump’s March 13 executive order, which called for a “comprehensive plan for reorganizing the executive branch,” with an eye to presenting a formal plan to the Republican-controlled Congress within a year.

With Trump and his son-in-law, Jared Kushner keenly focused on overhauling the federal bureaucracy and reducing government red tape, Mulvaney reportedly will be seeking proposals that eliminate redundant programs, implement best practices, and limit government waste. He’ll also try to sell federal property that no one uses, but that costs taxpayers a fortune to maintain.

That last idea – to unload surplus or underutilized federal buildings and land and funnel the profits into the federal coffers – has long been a dream of Republican and Democratic administration. Yet for decades the effort to shed surplus and abandoned real estate – both in civilian and military government – has proved to be an elusive goal.

 And for all the energy and determination that the former Tea Party conservative House member from South Carolina brings to his new job as budget czar, Mulvaney is likely to run into the same brick wall.

Related: Government Wastes More Money than You Think

With more than three billion square feet of real estate under its aegis, the federal government is far and away the largest landlord in the country. Much of that property – acquired over the years to help agencies fulfill their diverse missions -- is of little or no use to the government today. Yet Congress has appropriated billions of dollars over the years simply to preserve the unneeded and unwanted property that agencies can’t unload.

In fiscal 2010 – the last year for which accurate data is available – the government spent $1.67 billion operating and maintaining 295,000 underutilized or vacant buildings. The annual cost of preserving the surplus property has steadily added to the deficit.

President Obama was the last chief executive to try to do something about the problem. He launched an effort in 2012 to reform federal real estate management practices, with an eye toward culling the stock of underutilized or surplus property.

The OMB later issued government-wide guidance – known as the National Strategy for the Efficient Use of Real Property – but ended up with relatively little to show for the effort.

Related: The Five Biggest Winners and Losers in Trump’s Fiscal 2018 Budget

The General Services Administration – which manages about 15 percent of federal government holdings -- insists that it has made important strides in recent years. Between fiscal 2011 and 2015, the agency said it disposed of 947 properties managed by both the GSA and other federal land-holding agencies that generated $289 million in proceeds. 

Last April, GSA sold the Metro West facility in downtown Baltimore for more than $7 million in a public property auction. The previous year, GSA sold the Federal Reserve Building in Seattle for $16 million at an online auction with eight bidders competing.

While these and other transactions suggest progress, the proceeds from the sales are relatively paltry. The Government Accountability Office (GAO) said in a report last year that despite the best efforts of the Obama administration and some lawmakers, “significant challenges persist” for 23 government agencies and departments in managing their surplus real property. 

“Despite implementing policies and systems that may help federal agencies manage real property, the federal government continues to maintain too much excess and underutilized property,” Dave Wise, GAO’s Director of Physical Infrastructure, said in congressional testimony last year.

Related: Trump’s ‘Hard Power’ Budget Gives Billions to Defense, Guts Domestic Programs

In the District of Columbia, for example, the old Cotton Annex, an 118,000-square-foot aging hulk located just two blocks from the National Mall, has been vacant since 2007. It has taken many years for the government to dispose of portions of the old St. Elizabeths mental hospital campus in Southeast Washington. And the GSA for years has left numerous vacant warehouses throughout the city.

These problems are duplicated in cities and states throughout the country. The Baltimore Sun reported in July 2013 that two years after the Obama administration had rebooted the government’s efforts to dispose of surplus federal buildings, almost all of the excess property identified in Maryland remained in government hands.

“Red tape, lack of congressional action and inadequate funding have left federal agencies stuck with at least 200 vacant or underutilized properties in the state, from closet-size storage sheds in Beltsville to an eight-story, historic office building a block from Baltimore's Inner Harbor,” the newspaper reported.

There are no reliable figures for the total market value of vacant or underutilized federal property, although it is likely to be in the hundreds of billions. However, cashing in on that property is problematic at best. That’s because the GSA and other government agencies face numerous obstacles in disposing of federal property that a commercial realtor doesn’t routinely face.

For instance, there are legally prescribed steps in the disposal process that can take months to complete, according to GAO. This process includes requirements that the property is screened first for potential use by other federal agencies, then by homeless providers and state and local governments for other public uses.

Related: Congress to Pentagon: Don’t Even Think About Closing Military Bases

Also, aging government properties may not appeal to potential buyers or lessees if they require substantial repairs or environmental remediation – work that the federal government usually can’t afford to do in advance. The required environmental assessments and remediation can be highly expensive and time-consuming, a fact that often scares away would-be buyers.

Finally, key stakeholders involved in the process – such as local governments, non-profit organizations, environmentalists, tribal governments and business—often fight over how best to dispose of the property.

In the case of the Department of Veterans Affairs, veterans’ organizations frequently insist on being consulted on plans to reuse or demolish the VA’s historic buildings and how those plans impact the services provided to the nation’s veterans.

“Final decisions about a property may reflect competing interests and broader stakeholder considerations that may not align with what an agency views as the most cost effective or efficient alternative for a property,” according to the GAO report. 

The Trump administration could, of course, change those barriers to sale to save taxpayers money. If, for example, property has been on the market for 5 years, and no one has come forward to purchase it or tried to reconcile any dispute, then it could become a free and clear sale in accordance with the laws of the state.

If you want to see what the government is selling right now, including four Rolex watches, click on GSA Auctions