Fears had been aired on Capitol Hill last winter that the General Services Administration would start funneling millions of dollars unnecessarily to commercial real estate agents who were helping to sell unneeded federal property.
But through Sept. 9, the agency has made only three sales with the help of brokers. Two agents from California and one broker from Arizona have earned $64,337 helping to find buyers for three parcels of surplus government property worth $10.7 million, according to agency statistics.
"The program is still in the formative stages, even after nearly a full year of operation" at an accelerated pace, admitted Earl E. Jones, GSA's assistant commissioner for real property. "It takes time to get the word out."
Jones said "there really isn't a good story there right now" because broker-clients have won sealed-bid sales only rarely. Under the system GSA is using, brokers are allowed to participate in virtually all land sales. If their client has a high bid accepted by GSA, the broker earns a commission.
In its fiscal 1983 budget, GSA had Congress increase from $1 million to $47 million a line item in its budget that funded brokers, auctioneers, appraisers and advertisers. Besides the money spent for brokers, GSA has spent $65,955 to pay two auctioneers to help dispose of 11 properties. No figures were available to show how much has been spent for appraisers and advertising.
The budget increase drew flack last December from Democratic Sens. Carl Levin (Mich.) and Dennis DeConcini (Ariz.), who feared that $42 million in government funds could end up in brokers' hands. The senators believed that the work should be done solely by federal employes, already well-paid, to sell government land.
But the system drawn up by Jones proved effective in attracting more competition for unneeded properties, although there has been a depressed economy.
"We never wanted to use brokers just for the sake of giving them some federal dollars," Jones said.
In only one instance, here in the District, did GSA give brokers the sole right to bring in clients. It was done because the so-called Wilburn Family Housing Annex property seemed unsellable after five regular efforts to find a buyer for the 7.15-acre parcel at 4th and Trenton Sts. SE. In each case, bids did not match a confidential and ever-changing private assessment of the fair market value of the property.
The broker-generated bids for Wilburn closed Sept. 7 with only one offer in GSA's hand--for $100,000 from Allen C. Moran Co. Although the figure is less than half the $200,000-plus offered in two sale attempts in 1981, Jones said it may be "in the government's interest" to ask Congress to approve the sale at less than fair market value because marketing costs and maintenance continue to tap the federal treasury.
The largest deal involving a broker was sealed in August when Hewlett-Packard Corp. outbid 12 competitors for a 13.8-acre Federal Aviation Administration facility in Palo Alto, Calif. Broker Kathy Scullin of Sherman Oaks, Calif., brought Hewlett-Packard to the GSA bidding room and earned a $52,750 commission--1 percent of the first million dollars of the $9.55 million sale and then one-half percent of the balance.
The other sales using brokers included:
* An 11-acre portion of the Davis-Monthan Air Force Base at Tucson was sold for $960,200 to Speedway Associates through Grubb & Ellis Co., which earned a $9,602 commission.
* A three-acre portion of Hammer Field in Bangor, Calif., was sold for $198,494 to C&G Demings through Farco Inc., which earned a $1,985 commission.
In an attempt to accelerate the land sales program, GSA will try to get a private marketing/advertising firm involved in designing direct mail letters, a special GSA land sales logo and distinctive fliers announcing properties that are available. Private-sector experts will be asked to assess the strengths and weaknesses of GSA's in-house marketing capabilities.
Jennie Shamey, a GSA property sales specialist responsible for overseeing the broker/marketing program, said the solicitation will be available Sept. 26 to interested firms or individuals. The bids will be opened Oct. 18.
GSA Federal Property Resources Commissioner Carroll Jones said that the "aggressive in-house efforts" already have allowed the agency to earn more from the sale of unneeded properties in fiscal 1983 than in any other year in the 34-year history of the program.
Although brokers have not been helping the sales program as aggressively as expected, Carroll Jones still believes that the agency's target of $350 million in sales can be met. That figure, interestingly, is only about 55 percent of the Reagan administration's revised official target: $644 million.