Why the federal government wastes large amounts of property it often doesn’t even know it owns

March 13

NPR has an interesting story on how the federal government owns large amounts of unused property. Often, government agencies don’t even realize they own the land in question:

Government estimates suggest there may be 77,000 empty or underutilized buildings across the country. Taxpayers own them, and even vacant, they’re expensive. The Office of Management and Budget says these buildings could be costing taxpayers $1.7 billion a year.

That’s because someone has to mow the lawns, keep the pipes from freezing, maintain security fences, pay for some basic power — even when the buildings are just sitting empty….

[T]he only known centralized database that the government has…[is] not reliable…

Sen. Tom Carper, a Democrat from Delaware, is one of the lawmakers pushing to get a clearer picture.

“We don’t know how many properties we have, we don’t know which ones we own, which ones are leased,” he says. “We don’t know whether we ought to be building or buying instead of leasing.”

But Carper says that even when an agency knows it has a building it would like to sell, bureaucratic hurdles limit what it can do. No federal agency can sell anything unless it’s uncontaminated, asbestos-free and environmentally safe. Those are expensive fixes.

Then the agency has to make sure another one doesn’t want it. Then state and local governments get a crack at it, then nonprofits — and finally, a 25-year-old law requires the government to see whether it could be used as a homeless shelter.

Many agencies just lock the doors and say forget it.

Economist Alex Tabarrok points out that the NPR article actually understates the extent of the problem:

The NPR article is excellent but it vastly underestimates the size of the problem. In addition to empty buildings, the Federal government owns/controls millions of acres of land that are worth hundreds of billions and perhaps even trillions of dollars. The land is not being used to its full value or potential even though maintenance costs runs in the tens of billions annually.

The whole situation is an unintended lesson in the advantages of private property rights. If a private owner has a piece of unused property, he or she has strong incentives to find some valuable use for it. If he can’t, he has a strong incentive to sell it to someone else who can do better. In both cases, he gets to keep the profit. For that reason, he also has incentives to keep track of the property he owns, and avoid imposing burdensome bureaucratic procedures that make it difficult to sell unused land.

By contrast, government officials get little or no reward for finding better uses for underutilized government land. Indeed, a conscientious bureaucrat who tries to do so may just end up annoying his colleagues and superiors, for whom it means extra hassle with little chance of any gain. For similar reasons, government agencies sometimes have little incentive to even keep track of the land they own, or to make it easy to sell unneeded property.

In theory, voters could incentivize efficient use of government-owned resources by using the power of the ballot box to punish politicians who let them go to waste. In reality, however, widespread voter ignorance makes this unlikely. Most voters have little if any idea of how efficiently the federal government uses the vast amount of land it owns. Like government bureaucrats, voters have little incentive to keep track of government-owned property and assess whether it is being used effectively. Each individual voter has only a tiny chance of affecting the results of an election, and this leads to rational political ignorance.

Some government ownership of land may be an unavoidable necessity. But we would be better off if a substantial part of the federal government’s vast landholdings were privatized.

Ilya Somin is Professor of Law at George Mason University. His research focuses on constitutional law, property law, and popular political participation. He is the author of "The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain" (forthcoming) and "Democracy and Political Ignorance: Why Smaller Government is Smarter."
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