The agency that manages the District government’s property has failed to collect millions of dollars in rent and struck a financially questionable deal with a private real estate broker to lease space that might not be needed, according to a new inspector general’s audit.
The audit, released Thursday by D.C. Inspector General Daniel W. Lucas, found that the city’s Department of General Services has essentially lost track of government-owned real estate in the nation’s capital and is spending nearly $180 million a year leasing additional buildings.
Lucas also found that the department did not properly oversee its contract with the commercial real estate broker hired to negotiate those leases, paying it questionably large fees and, in some cases, overpaying outright. Lucas identified roughly $633,000 that the broker, international firm Savills Studley Inc., owed the city.
The audit is another blow to the reputation and morale of the District’s property-management agency, thrown into turmoil last summer with the abrupt resignation of its then-director, retired Rear Adm. Christopher Weaver.
Weaver said he left because he was being inappropriately pressured by the administration of Mayor Muriel E. Bowser (D) to steer a contract to one of the mayor’s campaign contributors. Two of his lieutenants were fired shortly after his departure.
At the most basic level, Lucas found that the agency lacks a complete inventory of city-owned real estate. The department claims to manage about 580 city-owned properties, according to the inspector general’s office.
Yet in reviewing tax records, the inspector general found additional sites not in the department’s in-house database. A sample of department records also showed they often lacked detailed descriptions of properties in its inventory, creating a risk that the city might needlessly rent buildings similar to some it already owns but isn’t using, the report states.
Lucas also criticized the District’s relationship with Savills Studley, which it hired in 2014 to handle its needs as a tenant in leased buildings.
The inspector general asserted that the city renewed the firm’s contract without competitive bidding in 2015 and that the city is paying a flat commission rate per square foot that can result in large fees for spacious buildings.
When it comes to the department’s duties as a landlord, Lucas also found mismanagement, citing $4.85 million in rent city officials failed to collect. Officials at the Department of General Services and Savills Studley did not respond to requests for comment.
In a written response to the inspector general’s office, department officials asserted that the audit records were faulty and that the true amount of unpaid rent was closer to $3 million.
They also said they did not need to put the renewal of the broker’s contract out for bid because they had selected the broker from a list of federally approved vendors.