CBO throws wet blanket on proposal to sell federal properties

The Obama administration's plan to profitably dispose of excess federal buildings would actually cost the government money, according to a June 27 letter from the Congressional Budget Office.

The plan, which has gained bipartisan support on Capitol Hill, "would increase direct spending by $60 million over the 2012 to 2021 period," primarily because it "would allow agencies to spend a portion of sale proceeds that will accrue to the federal government under current law and that otherwise could not be spent," CBO said in an analysis requested by Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee. "In addition, CBO estimates that implementing the proposal would cost $420 million over the 2012 to 2016 period."

The administration has estimated the Office of Management and Budget's proposal -- originally broached in the president's fiscal 2012 budget -- would bring in $15 billion in additional gross receipts from 2013 to 2017. It would allow agencies to keep up to 40 percent of the net proceeds of property sales. But according to the letter, "in CBO's view, the proposal does not offer many agencies sufficient new financial incentives to part with valuable unneeded properties."

CBO based its analysis on past results -- the Bush administration in 2004 set a goal of reducing the expense of unneeded federal buildings by $15 billion by 2015 -- and by studying the closing of military installations under the Defense Departments Base Realignment and Closure Commission. The Obama proposal, as well as a bill pursued by Rep. Jeff Denham, R-Calif., would create a civilian-style BRAC board to assemble bundles of properties to be sold following an up-or-down vote in Congress.

CBO said the BRAC process produced only modest property sales and estimated that 1 percent of the 14,000 properties identified by the administration would actually be sold under the president's plan, as many would be transferred to other public agencies or demolished.

OMB spokeswoman Moira Mack, in response, told Government Executive that the "president's proposal will cut through the red tape and politics that have long blocked or slowed the sale of excess property the federal government no longer needs.

"The same long-standing barriers to selling off unneeded property that give the CBO pause are precisely the barriers the president is committed to tearing down," she said. "Ultimately, what matters is doing the right thing and getting rid of these unneeded but valuable properties -- not how they score. If we are successful, which with Congress's help we hope to be, we will save money on maintenance and realize savings from sales to garner significant savings. And that is the real score that matters."

Denham, who chairs the House Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings and Emergency Management, emphasized that the current system is "not working."

In a statement to Government Executive, he said, "This report addresses the savings from simply disposing of excess government properties," whereas his bill "takes a broad approach and focuses on the long-term restructuring of how the federal government manages its real estate."

Denham said his bill would "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."

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