Republicans criticize government's management of real estate holdings

By Jonathan O'Connell
Capital Business Staff Writer
Sunday, October 31, 2010; 10:13 PM

Seven House Republicans have coined a phrase to describe how they think the federal government is managing its property, including its local real estate portfolio: "Sitting on Our Assets."

Led by ranking minority-party member John L. Mica (Fla.), Republicans on the House Transportation and Infrastructure Committee recently issued a report by that name, criticizing the management of real estate and other assets by agencies including the General Services Administration, Coast Guard, Army Corps of Engineers and Federal Emergency Management Agency.

The federal government is the country's largest real estate owner, with a portfolio of about 1.2 million facilities nationwide. An audit conducted during the George W. Bush administration found that the government owns 14,000 vacant buildings and underuses 55,000 other locations.

Although President Obama issued a memo in June requiring federal agencies to reduce real estate costs by $8 billion by the end of fiscal 2012, the Republicans' analysis says the government continues to overly rely on leased space and retain underused and vacant property. The GSA, the report says, "struggles to dispose of its surplus property in a timely fashion and for reasonable rates of return despite its enhanced property disposal authorities."

Of the $3 billion in cuts the federal government needs to find beyond savings expected from the Base Realignment and Closure process, the Office of Management and Budget says it is halfway there, noting that it recently sold a vacant former office building in Bethesda for $12.3 million.

But the Republicans seized on the Bethesda building and other Washington area properties as examples of what they called mismanagement. The Bethesda offices, formerly occupied by the National Institutes of Health, "sat vacant for eight years, missing the height of the real estate market during which time GSA could have realized a good return on investment," they said in their report. A GSA spokesman declined to comment on the report.

The Republicans also lamented the government's inaction in re-purposing some prominent Washington properties. In the report, they point to the Old Post Office Pavilion, a partially occupied historic building on Pennsylvania Avenue NW that the government spends about $12 million annually to maintain, producing an annual operating loss of more than $6 million. During the real estate boom, developers expressed interest in transforming the property into a hotel, but the government has not moved to sell or lease the property.

A new annex to the E. Barrett Prettyman Courthouse, at 333 Constitution Ave. NW between the Mall and Judiciary Square, is also on the underutilized list. Though federal courts occupy the courthouse and annex, the buildings house 10 fewer judges than projected, and two fewer "than it had when the new annex was proposed," according to the report.

The criticism could have an effect on current and future GSA searches for office space, particularly if the GOP wins control of the House in Tuesday's elections. The report criticized the new headquarters of the U.S. Transportation Department, which the government leases, as well as plans to lease 427,000 square feet for the Federal Trade Commission, arguing that buying a building instead could save the government as much as $300 million over the life of the facility.

© 2010 The Washington Post Company