REAL PROPERTY ASSET
According to its fiscal year 2003 financial statements,
the Federal Government currently owns hundreds of billions of dollars
in real property assets. In addition, the government also owns or manages
one in every four acres of land in the United States. While much of the
Federally-owned real and personal property assets are used to support
agency missions, it is not clear how many of these properties are actually
being used in an efficient manner. For instance, much of the government’s
real property no longer serves the needs for which it was originally intended.
As a result, there is a great deal of underused and unneeded real property
within the Federal Government.
Lack of accountability within the Federal Government.
There currently exists no systematic or standard agency practice for
managing Federal real property. Most landholding agencies do not assign
a permanent position with the sole responsibility and authority for
determining which of its properties are being effectively used, maintained,
or disposed. Additionally, most agencies do not develop or implement
a plan within the entire agency for improving the management of its
real property assets. On a government-wide scale, there also exists
no particular group tasked with facilitating agency efforts to more
effectively manage their properties or improve accountability within
the agencies. As a result, seldom are responsible individuals in place
for implementing a coherent plan to manage federal properties at agencies.
Lack of useful property information within Federal agencies.
Government-wide information regarding the type and value of Federal
assets is not readily available. While agencies do report some of their
excess real property, most agencies do not maintain complete or accurate
inventory information on the use and condition of Federal properties.
As a result, there exists a lack of useful data regarding the underused
and unneeded Federal real property. To rectify this problem, it is important
for agencies to employ property inventory and management information
systems with regard to the location, size, and other relevant characteristics
of real property assets. Active and efficient stewardship of government
assets should be an objective for every landholding agency to appropriately
maintain those properties that are truly needed. Similarly, it is also
important for agencies to accurately determine and classify those properties
that are unneeded, and to take subsequent action toward disposing of
of underused or unneeded Federal property. While the exact
number is unknown due to the lack of a complete inventory, Federal agencies
currently hold significant amounts of underused and unneeded real property.
Some landholding agencies have reported examples of properties that
are either obsolete or in serious need of repair, although only a minimal
amount of these reported assets are sold each year. Increased attention
and focus is necessary to determine the amount of unneeded federal properties
at all landholding agencies, and to take action toward disposing of
Excessive cost to Federal Government. Maintaining
underused or unneeded Federal properties is costly to the government.
Many of these properties, while not actually used, still have expensive
day-to-day operational costs, such as regular maintenance, utilities
fees, and security expenses. Each agency that maintains underused or
unneeded property unnecessarily incurs an opportunity cost by failing
to sell or exchange the property for a more appropriate one. For example,
the L. Mendel Rivers Federal Building in Charleston, South Carolina,
has languished for years as a vacant, asbestos-contaminated, 100,000
square foot facility. Although the building has strong potential for
private sector demand, current Federal laws and regulations have made
it difficult to sell or lease the property. While this facility is finally
beginning to receive some attention, for years maintenance costs have
been incurred while no revenues have been generated.
of necessary tools and incentives for agency disposal of underused properties.
The current Federal property disposal system does not provide agencies
with the necessary tools for dealing with underused and unneeded property.
The laws governing the disposal of Federal property date back to 1949,
and they do not provide authority for agencies to outlease unused land
or to sell or exchange obsolete facilities for more suitable ones. Additionally,
the current disposal system does not provide motivation to deploy ineffective
assets into more productive ones, as any proceeds from sales are deposited
into the U.S. Treasury rather than the landholding agency.
Establish a Senior Real Property Officer at Federal agencies.
Established by an Executive Order, a Senior Real Property Officer will
be designated among the senior management officials within each agency.
This Senior Real Property Officer will serve as the senior manager tasked
with developing and implementing an agency asset management plan. Specifically,
the Officer will: identify and categorize any real property owned, leased,
or otherwise managed by the agency; prioritize actions to be taken to
improve the operational and financial management of inventory; make
life-cycle cost estimations associated with the prioritized actions;
identify legislative authorities that are required to address the priorities;
identify and pursue goals and targets with appropriate time frames and
deadlines; provide advice on adequate budget amounts for activities;
and focus on those activities and efforts allowed under current law.
Establish a Federal Real Property Council.
Established by an Executive Order, a Federal Real Property Council will
serve as a working group to facilitate the success of the agency’s
asset management plans. The Council will be composed of all agency Senior
Real Property Officers, the Controller of the Office of Management and
Budget, and the Administrator of General Services. The Deputy Director
for Management of the Office of Management and Budget will be a member
and serve as the chair of the Council. The Council will establish appropriate
performance measurements for evaluating the costs and benefits involved
with acquiring, repairing, maintaining, operating, managing, and disposing
of Federal real properties at particular agencies. The Council will
also serve as a clearinghouse for best practices in evaluating actual
progress in the implementation of real property enhancements.
the authorities for managing Federal real property.
The Administration supports legislative efforts to reform the asset
management and property disposal process. Specifically, the Administration
supports “Freedom to Manage” legislation that would provide
agencies with the authority to: outlease or sublease underutilized properties;
sell or exchange unneeded property and use the proceeds for replacement
services; enter into public-private partnerships to construct or renovate
need facilities under certain circumstances; and retain the sale proceeds
of surplus properties. Agencies should be provided with the appropriate
asset management tools and financial incentives to manage their real
property more effectively. The Administration will continue to engage
Congress in an effort to enact modern and common-sense property management
THE EXPECTED NEAR-TERM RESULTS
Without Comprehensive Government-wide Legislation
Without the benefit of comprehensive government-wide Federal
legislation, the Administration expects that an Executive Order will lead
to an increased level of agency accountability and the development and
implementation of agency asset management plans.
The Administration expects that these initiatives will lead to an increased
level of accountability for real property management within the agencies.
For the first time, each landholding agency will have a senior property
officer devoted to achieving a complete inventory of its real properties;
and with specific real property information, meaningful goals and objectives
can be developed and progress against those goals can be measured. Additionally,
the agencies will have the benefit of a Federal Real Property Council
to assist them in their efforts to improve the management of real property.
management plans. The Administration expects that the
efforts by the Senior Real Property Officers and the Federal Real Property
Council will lead to the development and implementation of agency asset
management plans. Such plans will help to foster an environment within
Federal agencies that will promote better asset management and the disposal
of unneeded Federal properties.
authority. In the absence of broad, government-wide federal
legislation, the Administration will identify those landholding agencies
and/or specific real properties in which it believes asset management
flexibilities would be particularly useful. The Administration will
then seek demonstration authority through the appropriations process,
in order to apply these asset management flexibilities on a limited
or temporary basis.
Comprehensive Government-wide Legislation
benefit of comprehensive government-wide Federal legislation, the Administration
expects that additional near-term results would be attained, including
an improved standard real property disposal process.
standard disposal process. The Administration expects
the legislative efforts will create an improved process for disposing
of real properties. By providing the necessary tools and incentives,
agencies will be in a better position to manage their properties through
an increasing opportunity for outlease or sublease agreements, public-private
partnerships, and replacement or sales transactions.
EXPECTED LONG-TERM RESULTS
Comprehensive Government-wide Legislation
- The Administration
expects that these initiatives will lead to a regular and well-organized
inventory of Federal asset management practices within all landholding
agencies. In the long-term, agencies will possess real-time property
data that can be used to determine what Federal properties should be
maintained, require cost-effective repairs, or qualify for disposal;
this information can then be used to strengthen the argument for the
creation of new real estate management authorities.
Comprehensive Government-wide Legislation
the benefit of comprehensive, government-wide Federal legislation, in
the long-term, the Administration expects there to be an improved, incentive-driven
process for agencies to exchange or dispose of their properties. Agencies
would then have the necessary tools and incentives for more proficient
management of their federal properties. The Administration expects that,
in the years following the passage of comprehensive legislation, these
initiatives can ultimately lead to the effective and efficient stewardship
of Federal real property assets.