Group seeks to make it easier for agencies to sell property

An emerging private-sector coalition is gearing up to lobby for new rules designed to make it easier for the federal government to sell off surplus property and real estate.

Currently, when federal property is sold-say, if the Navy wanted to peddle surplus beachfront to a hotel developer-the proceeds would go straight into the federal government's general fund rather than to the coffers of the agency or department that sold the asset. This, critics say, is a big disincentive to such sales. Sources said the General Accounting Office is about to release a report showing how much money could be returned to the federal government if the rules were eased.

Some agencies, like the Defense Department, have already begun to make administrative changes that enable tangible property, such as furniture, to be sold more easily. And the U.S. Postal Service-which now has a mostly private status-has served as a model of deal-making to federal agencies. For instance, the USPS rents out part of an old Washington post office to a brew-pub, the Capital City Brewing Co.

The solution now being offered by officials both inside and outside government is to allow asset-sale profits to be returned to the agency doing the selling. One idea being floated is to create a new office analogous to the Resolution Trust Corporation, the federal entity that was charged with disposing the assets of failed savings and loan institutions.

According to such proposals, this RTC-like office would spearhead a sell-off of unneeded assets government-wide. It remains unclear whether the office would be placed inside the General Services Administration-the agency that manages the federal government's real estate holdings-or in another entity, such as the Office of Management and Budget.

"I think legislation is going to be dropped in Congress in late January or early February," said Robert L. Raasch, a principal with Keane Public Enterprise Consulting, a government-efficiency strategy firm. Raasch, who is heading the drive to build a private-sector coalition to push the forthcoming legislation, said he's in the process of recruiting real estate, construction and mortgage interests, although he declined to name specific supporters yet.

Raasch said the political stars are aligned to pass such legislation in 1999. Because Congress passed the Federal Activities Inventory Reform Act earlier this year, which ordered federal officials to determine which of their services could be privatized, Raasch sees an opening for legislation on asset sales, a related issue.

"With this Congress' slim majority, members of both parties will be looking for win-win legislation," Raasch said. Unlike the FAIR Act-which threatened jobs and thus riled up federal employee unions-asset-sale legislation "has no jobs at stake, so I think it should be less controversial," Raasch added.

Still, challenges could emerge. For one thing, environmental liability-particularly for sites once owned by the military-remains a stumbling block. Few companies will want to purchase land that may saddle them with heavy liability for old environmental damage-but granting waivers from such liability could prove controversial. Also, the real-estate industry is likely to be split on the issue, Raasch acknowledged. Some real-estate brokers will be eager to see more space opened up for commercial purposes, but property management companies may fight efforts that would result in additional competition in saturated property markets. "It's hard to see who comes out of the woodwork, because no bill has been dropped yet," Raasch said.

Sen. Sam Brownback, R-Kan., and Rep. Pete Sessions, R-Texas, are said to be likely candidates to sponsor efforts to pass asset-sale reforms in the 106th Congress. Aides to Brownback and Sessions did not return phone calls.