House panel pressures GSA to speed sale of excess properties

Warning federal agencies that "we will demand lists" of underused and excess properties, a newly installed House subcommittee chairman on Thursday took a General Services Administration official to task during an unusual field hearing held in an unheated annex of Washington's Old Post Office building.

With lawmakers, three witnesses and several dozen audience members all shivering in their winter coats, the event -- part of an ongoing House Republican campaign to push the government to stop "sitting on our assets" -- was held in the empty portion of a federally owned historic building that for two decades has stymied efforts by administrations of both parties to turn what some call a "trophy" property into something other than a drain on the treasury.

Jeff Denham, R-Calif., in his first hearing as chairman of the House Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings and Emergency Management, said GSA loses $6 million annually by keeping a mere 400 federal employees in the Old Post Office, where private sector efforts to create a bustling shopping mall and food court have flopped. "We will shine a spotlight on vacant federal spaces," Denham said. "This business as usual must stop."

As of fiscal 2009, there were 45,190 underutilized federally owned buildings, totaling 341 million square feet, an increase of 1,830 from the previous year, according to the Government Accountability Office. They are spread across 24 agencies nationwide, the largest tenant being the Defense Department, and they cost $1.66 billion in annual operating costs.

Concern about government inaction in disposing of excess real estate does not appear to be partisan. President Obama in June 2010 issued a presidential memorandum calling for stepped-up efforts to unload unnecessary federal properties, and invoked the issue in his January State of the Union address. The arena in which the dispute does play out, it appears, is in talks between GSA and the Office of Management and Budget.

Robert Peck, commissioner of GSA's Public Buildings Service, defended his agency's record, saying to lawmakers, "we have the same motivation as you do" in returning funds to the taxpayer. Since 2002, GSA has "disposed of 204 vacant or underutilized properties, totaling more than 9.5 million square feet, from the inventory," Peck said. "This represents a 5.3 percent reduction in GSA's owned portfolio and the elimination of almost $484 million in anticipated repair needs."

He added that while the private real estate vacancy rate in today's "soft market" is 15 percent to 20 percent, GSA's is only 2.4 percent. "It is managed well," Peck said, adding that the process is complicated by intergovernmental regulations and the fact GSA must first offer buildings to homelessness organizations, and then to state and local governments, after which other political interests can still stand in the way.

Peck got some support from David Wise, director of physical infrastructure issues for GAO, who said, "GSA is in a position to take leadership on this issue."

In a newly released statement, Wise said the delays in disposing of real estate result from the many stakeholders who have an interest in the outcomes. They include "local governments; business interests in the communities where the assets are located; private sector construction and leasing firms; historic preservation organizations; various advocacy groups for citizens that benefit from use of federal programs; and the public in general, which often view the facilities as the physical face of the federal government in local communities," he said.

But equally tough on GSA as the Republicans was District of Columbia Democratic delegate Eleanor Holmes Norton, the subcommittee's ranking member. She said she was "mystified" that GSA, which was given enhanced authority in a 2008 law to work with the private sector in exploiting federal properties, has been unable to "take out the playbook" used in a nearby public-private project, in which the old federal Tariff Building nearby was leased and converted into the commercially thriving Hotel Monaco. "The GSA hasn't used its authority anywhere in the country," she said. "Is this emblematic of GSA management?"

J. Anthony Principi, former secretary of the Veterans Affairs Department, noted VA's successful efforts at spinning off federal property. Citing the repurposing of two underperforming VA medical centers in Chicago, he said, "it's important for all stakeholders to come together on a plan," and to employ "enhanced-use leasing" to allow public or private entities to adapt federal properties while the department retains the resulting revenues.

Denham pressed Peck on when GSA would put out a request for proposals on remaking the Old Post Office, which houses the national endowments for the Arts and the Humanities. "We hope to market it pretty soon," perhaps this summer, with a ribbon cutting in two and a half to three years, Peck said. The delays, he noted, have come because GSA is still responding to questions about the RFP from OMB.

Denham wondered why a previous GSA list of available properties numbered only 30 and not thousands. Not all federal properties are GSA-controlled, Peck said, citing internal government regulations governing the release of lists of other agency properties.

Norton asked Peck to deliver an RFP for redeveloping the Old Post Office within 30 days, or provide an explanation for further delay. She asked him to provide within 60 days a list of what GSA has authority to do with properties as a result of the 2008 law. And she asked him to provide within 30 days a list of GSA properties in the National Capital Region.

House Transportation and Infrastructure Committee Chairman John Mica, R-Fla., asked Peck for a list of recommendations on how OMB could streamline the RFP scoring process. He told lawmakers he wasn't sure of his next step, but it might involve bringing in private management.

Private sector entities that have to work with GSA are reluctant to criticize it, but the panel could subpoena them, Mica said. "It's a cold day for witnesses, the audience and the members of the committee, but it's been an even colder decade for taxpayers." Norton, a longtime champion of the Old Post Office, objected to the panel's holding the hearing in its vacant, unheated annex, noting that the modern addition is not part of the historic building.