Federal Real Estate Swelled in 2009 Ahead of New Push to Purge Inventory

The federal government picked up thousands of new buildings in 2009, a real estate spree which raises questions about the Obama administration's commitment to savings billions by shedding excess property.

President Obama over the summer signed a memorandum ordering department heads to "identify and eliminate" unneeded properties, with the goal of saving "no less than" $3 billion by fiscal 2012. The order followed a similar efficiency pledge made by former President George W. Bush in 2004.

While the administration claims it's making serious headway toward that goal, a recent inventory from the Federal Real Property Council showed that 2009 was a banner year for gaining -- not selling -- federal property.

"The federal government must improve its real property asset management," the report declared, calling on Washington to push harder in getting rid of buildings and land it's not using.

The report showed that the government successfully purged 19,500 assets -- a combination of buildings, land and other structures. But in total, the two-dozen agencies required to provide data reported picking up a net 23,000 buildings from a year earlier. That's 71 million more square feet than it had in 2008, most of it in the form of leased property.

Tad DeHaven, a budget analyst with the Cato Institute who has monitored the federal asset issue, said the inflated inventory is simply a reflection of the fact that the federal government has gotten bigger. He suggested the push to shed property might not be as effective as it sounds on paper.

"It is symbolic of a government that is so big, so expansive that it doesn't know what it has," he said.

The bulk of the government's inventory is devoted to office space, warehouses, housing and other purposes. As the country's biggest and most prolific property owner, the federal government expectedly has a lot of excess baggage. But that baggage grew considerably in 2009. The number of "underutilized" buildings rose from 43,360 to 45,190. The number of flat-out "excess" buildings rose from 10,140 to 10,327.

The property the government shed in 2009 was projected to save about $149 million in yearly operating costs.

With Obama having since committed the government to $3 billion in savings, the administration is pledging to do much better by 2012.

Jeffrey Zients, deputy director of the Office of Management and Budget, or OMB, reported in late October that federal agencies had identified $1.7 billion toward the $3 billion goal for non-defense savings.

The administration estimates the Defense Department's planned military base closures and reshuffling will save another $5 billion in property costs.

"We are working closely with federal agencies to achieve" the president's goal, Zients wrote on the OMB blog.

He said the government was off to a "good start" by selling an office building in Omaha for $1.3 million; a building in Springfield, Mass., for $2.5 million; and a building in Bethesda, Md., for $12.4 million.

The budget office has also proposed cutting off inefficient lease arrangements, consolidating office space across agencies and encouraging more workers to telecommute.

But Republicans say the government's not moving fast enough to shed some of its 3.3 billion in square footage across the country. The GOP side of the House transportation committee hammered this point in a report released in October. Republicans have also brought up the issue via their YouCut program, an online site that solicits ideas on potential cuts to the federal budget.

One proposal on the site calls for rolling back federal regulations that make it harder to sell property - the law often requires the federal government to first offer excess property to other agencies and local governments, but the proposal would require an "expedited process."

DeHaven said those regulations pose a big challenge to the government when trying to get rid of its real estate.

That's not to mention the dismal market which isn't exactly seller-friendly. Most the time, the federal government doesn't even sell the property it sheds. The most common method of disposing of property in 2009 was "demolition." It might sound like a waste, but the government still saves operating costs in doing so.

DeHaven said at this point the federal government should just auction off whatever it can to the private sector, at whatever price.

"Give it away. At this point I don't even care," he said.