Government gears up to sell federal property often problematic

By Elaine Povich
Sunday, July 4, 2010

The Reagan administration came up with a nifty idea in 1982 for raising money for the 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.

Budget experts said that the sale would net the government millions of dollars and that the research could be 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 growing budget deficits and looking for new revenue, President Obama has called for a major effort to cull the federal government's property holdings. He issued a memo June 10 directing federal agencies to "accelerate efforts to identify and eliminate excess properties." Obama suggested that the sales could raise at least $3 billion by fiscal 2012.

The federal government owns 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 NASA and in the departments of Energy and Homeland Security. The GAO reported then that the government held $374 billion in real property assets worldwide, totaling 3 billion square feet.

'A proven track record'

Despite occasional setbacks, the GSA said it has been successful over the years in disposing of surplus property.

"GSA has a proven track record of being able to dispose of property," said David Foley, deputy commissioner for the agency's Public Buildings Service. He said that from 2003 to 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 Verizon Center. 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.

Not every property is so exotic. When the GSA decides to sell, it lists properties on its Web site 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.

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