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CBO finds bill to sell fed buildings cost-prohibitive
Thursday - 6/30/2011, 2:13pm EDT
Federal News Radio
The Congressional Budget Office (CBO) reports new legislation that changes the way the government sells off unused civilian agency real property could end up costing agencies more than the current system.
President Barack Obama's proposal to create the Civilian Property Realignment Board (CPRB) would cost the government $420 million from 2012-2016 to prepare the properties for sale or transfer, CBO stated.
If the legislation passed, the CPRB would submit property disposal recommendations to Congress and, after approval, begin to get rid of unused property.
Even if the properties sold for fair market price, CPRB would still end up in the red, CBO stated. As an incentive to dispose of as many unnecessary properties as possible, the bill would let agencies keep 40 percent of the net proceeds from each sale.
"The legislation would probably not result in a significant increase in proceeds from the sale of federal properties over the next 10 years because we expect that the number of properties sold would not be significantly higher than what would be sold under current law," CBO wrote in a report to Rep. Darrell Issa (R-Calif.), chairman of the Oversight and Government Reform Committee.
Issa wrote a letter in May to CBO asking for a review of the proposal.
Rep. Jeff Denham (R-Calif.), chairman of the Subcommittee on Economic Development, Public Buildings and Emergency Management, said in a statement issued to Federal News Radio that the "[CBO] report addresses the savings from simply disposing of excess government properties."
Denham has introduced a bill, Civilian Property Realignment Act (CPRA) that "takes a broad approach and focuses on the long-term restructuring of how the federal government manages its real estate." The bill "includes a plan to implement innovative management philosophies to also consolidate the footprint of federal real estate, house more federal employees in less overall space and reduce our reliance on costly leased space," Denham said in the statement.
CBO draws its predictions from the performance of the Defense Department's Base Realignment and Closure Program (BRAC), the model for CPRB.
Congress created BRAC in 1988 to dispose of unneeded federal properties managed by the military. Under that program, the secretary of defense makes recommendations to realign and close DoD properties to the BRAC Commission, which finalizes the list before getting approval from the president and Congress.
Selling property under BRAC, however, never focused on maximizing profit as much as tried to find ways to avoid maintenance costs on buildings DoD didn't want.
Over the past 20 years, BRAC has led to the sale of more than 350 military installations, CBO stated. Proceeds from sales have amounted to about $1 billion - an annual average of less than $50 million. Of the $1 billion, nearly half of it came from selling a single Marine Corps air station in California, CBO found.
Advocates for BRAC and CPRB argue that the programs in the long-term will save the government from paying maintenance costs, stated CBO.
The Government Accountability Office has reported that operation and maintenance costs account for 60 to 85 percent of the lifetime costs of a building. Even if the sale proceeds are negligible, stepping away from the ownership costs could be the most beneficial outcome.
Jory Heckman is an intern with Federal News Radio.
(Copyright 2011 by Federal News Radio. All Rights Reserved.)