Hearing of the Economic Development, Public Buildings, and Emergency Management Subcommittee of the House Transportation and Infrastructure Committee - Saving Taxpayer Dollars in Federal Real Estate: Reducing the Government's Space Footprint

Hearing

The purpose of today's hearing is to explore how we can save billions of dollars by shrinking our federal real estate footprint. I think we have a tremendous opportunity this year to come up with a bipartisan bill that gains the support of the House, the Senate, and the President. We have the same goal: to get excess and underutilized properties out of the hands of government and onto the local tax rolls or local service providers. This can be a win-win solution for the taxpayer, local governments, and homeless assistance providers.

First let me thank Chairman Chaffetz of the Committee on Oversight and Government Reform for working closely with this committee on this important issue. I also want to thank Chairman Denham for his work and leadership on this issue. And, finally, I want to thank all of our witnesses and, in particular OMB Controller Mader, for being here today.

We know reducing the federal real estate footprint is a critical issue and can result in real and significant savings for the taxpayer. For example, since the beginning of last Congress, our committee has saved more than $2.5 billion by approving leases and other projects that reduce and consolidate space. That was no small feat, and it took this committee, working with GSA and OMB, to realize those savings.

Our subcommittee also has hosted a series of roundtables, working with GSA, to send the message of optimizing space and replacing expiring leases with good, long-term deals. In some ways the leased side of federal real estate is easier to address -- when leases expire, an opportunity is created to reduce space and negotiate good lease deals to lower costs. And, with 100 million square feet of leased space expiring in the next five years -- 50% of GSA's leased inventory -- the opportunity for taxpayer savings is huge. In light of that, I recently introduced the Public Buildings Reform and Savings Act, which will create a leasing pilot program GSA can use to cut the best deals for the taxpayer.

Today, however, we are focusing on a much more difficult problem: getting rid of federal real estate we no longer need. According to the most recent Federal Real Property Summary, the government owns more than 254,000 buildings, comprising 2.5 billion square feet of space, costing the taxpayer $14.4 billion annually. However, we are also told in the same summary that only 5,000 buildings are actually underutilized, despite the fact that 27,000 assets are labelled as "inactive." It is clear the data needs improving, but it is also clear based on work by GAO and others that there are a lot of vacant or underutilized buildings across the Nation that go unreported.

We don't have to look far to see prime examples of this right here in Washington. Just down the street sits the vacant Cotton Annex on land worth more than $100 million dollars. On Pennsylvania Avenue it took more than a decade and an act of Congress to turn the money-losing Old Post Office building into a profit center for the taxpayer. The West Heating Plan in Georgetown sat vacant for more than a decade, and it wasn't until this Committee shined a spotlight on it did GSA finally sell it for almost $20 million dollars.

When these properties sit vacant or underutilized, no one wins. The agencies and taxpayer pay to maintain them, no tax dollars are infused into the local economies, and they are not made available for sale or even screened for other purposes, such as to serve the homeless.

Previous estimates indicate we are wasting more than $1.6 billion a year on these properties, but if GAO reports are any indication, this is probably a low estimate.

Today, we hope to hear from our witnesses: what is the scope of the problem, what are the obstacles to reducing the real estate footprint, and how do we overcome those hurdles. A few challenges we have seen include upfront costs to make properties available (including money to move people out of underutilized buildings), land-banking (agencies holding on to valuable but vacant properties because they think someday they will need them), and a disposal process that is cumbersome, time consuming, and keeps properties from being sold. Chairman Chaffetz and Chairman Denham in the past have each offered proposals to address these issues, and I am pleased to see them working together on this issue.

The Administration proposed legislation in 2011 and reiterated the importance of that legislation in the fiscal year 2016 budget. In fact, in the fiscal year 2016 budget, the Administration states that despite the progress made through efforts like Freeze the Footprint, an independent board would allow us to achieve long-desired opportunities for reform and deficit reduction.

Again, I want to again thank all the witnesses here today. We have a great opportunity to finally get a bipartisan bill through Congress and address this long standing problem.

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