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DISPOSAL OF FEDERAL REAL PROPERTY:

LEGISLATIVE PROPOSALS

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

JULY 27, 2011

Serial No. 112–82

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform
(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director
(III)

C O N T E N T S

Page

Hearing held on July 27, 2011 ............................................................................... 1

Statement of:

Gullo, Theresa, Deputy Assistant Director, Budget Analysis Division,

Congressional Budget Office; David Foley, Deputy Commissioner, Public Buildings Service, U.S. General Services Administration; Maria

Foscarinis, executive director, National Law Center on Homelessness

and Poverty; F. Joseph Moravec, former Commissioner, Public Buildings Administration, U.S. General Services Administration ..................... 30

Foley, David ............................................................................................... 40

Foscarinis, Maria ....................................................................................... 48

Gullo, Theresa ........................................................................................... 30

Moravec, F. Joseph .................................................................................... 59

Quigley, Hon. Mike, a Representative in Congress from the State of

Illinois; Hon. Jason Chaffetz, a Representative in Congress from the

State of Utah; and Hon. Jeff Denham, a Representative in Congress

from the State of California ......................................................................... 9

Chaffetz, Hon. Jason ................................................................................. 13

Denham, Hon. Jeff .................................................................................... 17

Quigley, Hon. Mike ................................................................................... 9

Letters, statements, etc., submitted for the record by:

Chaffetz, Hon. Jason, a Representative in Congress from the State of

Utah, prepared statement of ........................................................................ 15

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland:

Letter dated July 26, 2011 ....................................................................... 27

Prepared statement of ............................................................................... 7

Denham, Hon. Jeff, a Representative in Congress from the State of California, prepared statement of ...................................................................... 19

Foley, David, Deputy Commissioner, Public Buildings Service, U.S. General Services Administration, prepared statement of ................................ 42

Foscarinis, Maria, executive director, National Law Center on Homelessness and Poverty, prepared statement of .................................................... 50

Gullo, Theresa, Deputy Assistant Director, Budget Analysis Division,

Congressional Budget Office, prepared statement of ................................. 32

Issa, Chairman Darrell E., a Representative in Congress from the State

of California, prepared statement of ........................................................... 3

Moravec, F. Joseph, former Commissioner, Public Buildings Administration, U.S. General Services Administration, prepared statement of ........ 62

Quigley, Hon. Mike, a Representative in Congress from the State of

Illinois, prepared statement of ..................................................................... 11

Towns, Hon. Edolphus, a Representative in Congress from the State

of New York, prepared statement of ........................................................... 73

(1)

DISPOSAL OF FEDERAL REAL PROPERTY:

LEGISLATIVE PROPOSALS

WEDNESDAY, JULY 27, 2011

HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The committee met, pursuant to notice, at 10:05 a.m., in room

2154, Rayburn House Office Building, Hon. Darrell E. Issa (chairman of the committee) presiding.

Present: Representatives Issa, Mica, Platts, Lankford, Amash,

Gosar, Labrador, Kelly, Cummings, Towns, Maloney, Norton,

Kucinich, Connolly, Quigley, and Murphy.

Staff present: Robert Borden, general counsel; Will L. Boyington,

staff assistant; Lawrence J. Brady, staff director; Ashley H. Callen,

counsel; John Cuaderes, deputy staff director; Adam P. Fromm, director of Member services and committee operations; Linda Good,

chief clerk; Ryan Little, professional staff member; Justin

LoFranco, deputy director of digital strategy; Rebecca Watkins,

press secretary; Peter Warren, legislative policy director; Beverly

Britton Fraser, minority counsel; Kevin Corbin, minority staff assistant; Ashley Etienne, minority director of communications; Jennifer Hoffman, minority press secretary; Carla Hultberg, minority

chief clerk; and Mark Stephenson, minority senior policy advisor/

legislative director.

Chairman ISSA. The hearing will come to order.

Gentlemen, thank you for being here today. We will do opening

statements and then go to your testimony with all of you who have

been promptly here.

The Oversight Committee’s mission: We exist to secure two fundamental principles. First, Americans have a right to know that

the money Washington takes from them is well-spent. And, second,

Americans deserve an efficient, effective government that works for

them.

Our duty on the Oversight and Government Reform Committee

is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right

to know what they get from their government. We will work tirelessly, in partnership with citizen watchdogs, to deliver the facts to

the American people and bring genuine reform to the Federal bureaucracy.

Today’s hearing centers around the Federal Government’s current holding of over 10,000 excess properties and the way we spend

hundreds of millions of dollars annually just to maintain these facilities, many of them in poor condition. Congressional Research
2

Service says, by any measure, the Federal Government has approximately 14,000 too many buildings and structures and approximately 76,000 properties that the Office of Management and Budget say are underutilized.

Our committee, with jurisdiction over the disposal of these assets, takes seriously our responsibility. Additionally, we will take

seriously the record of property disposal, both under BRAC for the

military and civilian disposal, which has had an abysmal failure to

recoup any significant dollars.

It is regrettable that we now have an administration that spends over $1 billion per year to operate properties that are empty or unnecessary. It is more of interest to this committee that CBO’s interpretation of the amount of money that is presently scored in the

billions by this administration, as though it will happen, turns out

to be anywhere from the millions or possibly—and I repeat, possibly—could actually score an additional loss to the Treasury in its

disposal.

Making sure the American people continue to pay only for what

we use—or pay only for what we use and stop paying for unused

space is bipartisan. Republicans and Democrats on this dais are

united in trying to dispose of property. Today, our witnesses are

both Republicans and Democrats, each with good ideas of how we

can do better next time.

Our committee is dedicated to hear all ideas and to recognize

that if we keep doing what we have done in the past, we will simply have the same abysmal results, which is: no net savings to the

Treasury; no net elimination; and, in many cases, assets which are

more valuable being sold to the highest bidder being let to users

of convenience, who ultimately would be better off receiving the

money than receiving the housing.

This and other areas need to be looked at as in our jurisdiction.

Mr. Chaffetz, who chairs our National Security Subcommittee,

has proposed a program that would incentivize agencies to use

space efficiently and dispose of what is unneeded by letting agencies retain 20 percent of net proceeds of their sale while the Treasury would receive 80 percent for debt reduction.

Mr. Quigley, the ranking member on the Financial Services Subcommittee, has proposed allowing the GSA to more efficiently coordinate the sale of Federal properties and to establish a greater

level of transparency for data on Federal real property holdings.

Additionally, Mr. Denham has taken his learning and experience

in the State of California and has proposed a commission to identify and submit disposal recommendations to OMB that would be

subject to congressional approval.

I look forward to all of these ideas and more. It is clear that business as usual must be behind us, not in front of us.

And, with that, I recognize the ranking member for his opening

statement.

[The prepared statement of Chairman Darrell E. Issa follows:]
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Mr. CUMMINGS. Thank you very much, Mr. Chairman. And I

thank you for calling this hearing.

The efficient management of government real property has long

been of interest to this committee, the Government Accountability

Office, and the administration. While some improvements have

been made over the last decade, much more remains to be done.

The Federal Government has a vast real-property portfolio of

more than 900,000 buildings and structures, with a combined area

of over 3 billion square feet. The administration recently estimated

that 14,000 of these facilities were excess and 76,000 were underutilized, costing American taxpayers up to $1.7 billion in maintenance costs every year.

Some have estimated that the sale of excess Federal properties might generate significant revenue—as much as $15 billion. Personally, I am somewhat skeptical of these estimates. They rely on

property values estimated using replacement value or the cost to

build another similar structure rather than the more reliable appraisal method of using fair market value.

Nevertheless, improvements in Federal real-property management are clearly needed. In 2004, the previous administration, led

by the General Services Administration and the Office of Management and Budget, created the Federal Real Property Council,

which made significant progress in creating an accurate inventory

of the government’s property holdings.

The current administration has continued this effort. In June

2010, the President issued a memorandum directing OMB and Federal agencies to seek cost savings of $3 billion by the end of fiscal

year 2012 by increasing sales and reducing operating and maintenance costs for surplus properties. Earlier this year, the administration proposed legislation to create a commission to speed the disposal of unneeded, underutilized Federal property similar to the

BRAC process used for military facilities.

Today, we are honored to have three distinguished Members of

the House testifying on the first panel about bills they have introduced to improve the management of unneeded and underutilized

Federal properties.

Representative Quigley’s legislation would make improvements

to help speed disposals, require greater transparency in the reporting on Federal property, allow agencies to retain the proceeds of

property sales, and give GSA the authority to pay certain disposal

costs on a reimbursable basis.

Mr. Denham’s bill closely resembles the proposal put forward by

the administration. And I understand he worked on these issues at

the State level before coming to Congress.

Finally, Mr. Chaffetz’s legislation would create a pilot program

run by OMB to require that selected properties be sold for cash.

Under this bill, OMB would be directed to find $19 billion in sales

proceeds over the life of the pilot program.

I look forward to hearing from all of our colleagues, as well as

the witnesses on the second panel.

Finally, as we consider these various proposals, I hope we pay

careful attention to the current rules allowing nonprofits and local

and State governmental entities to obtain surplus Federal property

at a discount. These narrowly constrained rules allow for such con-
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veniences for the public’s benefit. And although they represent only

a small percentage of disposals, they are important to the entities

that receive them and to the public.

With that, Mr. Chairman, I yield back and look forward to hearing from our witnesses.

[The prepared statement of Hon. Elijah E. Cummings follows:]
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Chairman ISSA. I thank the ranking member.

All Members will have 7 days to submit their opening statements

and extraneous material for the record.

With that, we now go to our first panel of witnesses. The Honorable Mike Quigley, a member of the committee, represents the

Fifth District of the State of Illinois. The Honorable Jason Chaffetz

represents the Third District of the State of Utah.

Since you are both members of the committee, you know we don’t

swear members of the committee.

So, with that, Mr. Quigley, I would love to have your opening

statement, which, by the way, is the only way you can guarantee

an opening statement over and above the chairman and ranking

member. I think it was very clever for both of you to get your opening statements.

The gentleman is recognized.

STATEMENTS OF HON. MIKE QUIGLEY, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF ILLINOIS; HON. JASON

CHAFFETZ, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF UTAH; AND HON. JEFF DENHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

STATEMENT OF HON. MIKE QUIGLEY

Mr. QUIGLEY. You caught us.

I want to thank the chairman and the ranking member for holding this hearing, and the panel for joining me in this work on this

vital issue.

As you suggested, the Federal Government is the largest property owner in the world, with an inventory over 900,000 buildings

and structures and 41 million acres of land. Yet we waste billions

of dollars each year maintaining properties we no longer need. The

Federal Government currently maintains 14,000 buildings and

structures deemed excess and over 76,000 properties identified as

underutilized.

In fiscal year 2009, these underutilized buildings cost us $1.7 billion to operate, and we spent hundreds of millions more on buildings we simply don’t need. The GAO has continuously found that

many properties are no longer relevant to their agencies’ missions

and that agencies could do a better job of identifying and disposing

of unneeded properties. So why are we paying billions to sit on

thousands of unneeded properties?

To address these problems, I have introduced H.R. 1205, the Federal Real Property Disposal Enhancement Act. The bill addresses

three major hurdles to disposing of thousands of unneeded Federal

properties and generating much-needed revenue.

First, administrative burdens. Agencies are often deterred from

disposing of unneeded property due to a variety of screening processes, which take up to 2 years and cost millions in maintenance

during the process. My bill establishes a pilot program that would

exempt certain properties unlikely to be used as homeless shelters

under McKinney-Vento from a requirement to screen properties for

homeless use before disposal.

Second, budgetary disincentives. Currently, agencies avoid disposing of excess property because of the high upfront cost of dis-
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posal. Paying for environmental cleanup can cost millions. My bill

would allow all agencies to retain the proceeds from the disposition

of the property and use those funds, as authorized by Congress, to

maintain, repair, and dispose of other excess properties. Any funds

not used to repair and dispose of property will be paid back to the

Treasury for debt reduction.

The third and final obstacle is the lack of transparency and oversight of Federal property. All Federal property information is currently maintained in an extensive data base managed by GSA, but

this information is not available to the public, Federal workers, or

most congressional staff. Our bill would require GSA to submit an

annual report to Congress that includes information on the number, value, and maintenance costs of all Federal properties. This information would also be made available to the public at no cost in

an online data base.

The transparency my bill will provide is absolutely imperative

because, as things stand today, we are flying blind.

Let me give you just one example. When I learned about all

these valuable excess properties, my staff decided to go take a look

at a few of them in my home State of Illinois. After spending 8

months going back and forth with various agencies to get the information, we visited a property that was reportedly worth over $8

million and cost more than $80,000 per year to maintain. The

USDA data base said the property was in excellent condition, but

the reality was quite different. The $8 million storage facility was

in shambles, complete with peeling paint and deteriorated siding,

the exterior overtaken by vegetation and the interior looted by vandals. And so it was with scores of other buildings on the site.

What the USDA spreadsheet represented as in excellent shape

and receiving thousands annually in maintenance was, in fact, a

dilapidated mess. As my staff learned when we toured the site, no

money had been spent on maintaining these structures since the

mid-1990’s. The USDA explained that a formula was used to arrive

at the estimates for annual maintenance costs and replacement

value but that the numbers had no relation to reality.

Clearly, there is a serious disconnect between what is on our

books and the reality on the ground. We can’t possibly know what

our assets are worth or make a plan to capitalize on them without

accurate data. Without better, more transparent data, we are flying

blind.

I thank the chair and my colleagues again for their work on this

issue. I look forward to continuing to bring transparency to our

Federal properties, selling what we don’t need and generating revenue when we need it most.

Thank you.

[The prepared statement of Hon. Mike Quigley follows:]
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Chairman ISSA. Thank you.

Mr. Chaffetz.

STATEMENT OF HON. JASON CHAFFETZ

Mr. CHAFFETZ. Thank you to Chairman Issa and Ranking Member Cummings for addressing this important topic, and other members of the committee.

I appreciate being here and allowing me to testify on behalf of

my bill, H.R. 665, the Excess Federal Building and Property Disposal Act of 2011. Today’s topic is important, and I look forward

to working with the committee to find solutions to excess-property

disposal issues facing our country.

The Federal Government is the largest single holder of real property in the United States. The Federal Government owns more

than 900,000 buildings and structures. Republican and Democratic

administrations and various government entities have identified

many of these properties as excess and underutilized. Yet tens of

thousands of unneeded properties remain in the Federal Government’s possession today. This is not acceptable.

Congress must work to streamline the Federal Government’s

real-property management strategy. President Bush and President

Obama both identified excess properties and structures that, if

sold, could generate billions in revenue and savings. The fiscal commission said, ‘‘Federal agencies operate and maintain more realproperty assets than necessary, often raising costs to the taxpayer.’’

The Government Accountability Office [GAO], estimated that the

Federal Government holds underutilized properties that cost nearly

$1.7 billion annually to operate. More recently, the Office of Management and Budget controller, Daniel Werfel, testified that the

government controls 14,000 excess buildings and 76,000 underutilized properties.

Clearly, the Federal Government’s disposal track record is subpar. In fact, since 2003, and more recently in 2011, the GAO designated Federal real-property management as a high-risk area of

the Federal Government.

The status quo is no longer an option. The fiscal challenges facing this country are deep and severe. Effective Federal property

management requires unique opportunities for the Federal Government to right-size its real-estate portfolio, reduce costs, and achieve

savings through public sale of unneeded properties.

The current disposal process is flawed for two reasons. First,

agencies lack the necessary incentives to initiate the disposal process. Second, a myriad of requirements throughout the process prevent properties from even being offered for sale.

Under current law, the disposal process begins when a Federal

agency reports an excess property to the General Services Administration [GSA]. Agencies lack the know-how, funds, and incentives

to simply report these excess properties to GSA. For most agencies,

doing nothing is more economical than engaging in the disposal

process.

The next step in the disposal process is laden with obstacles and

limitations. Current law and regulations handcuff GSA’s disposal

abilities. Excess properties first must be offered to other Federal

agencies. In the absence of other Federal needs, surplus properties
14

must then be made available for other uses, which includes homeless shelters, parks and recreation facilities, and State and local

government use. Once those requirements have been exhausted,

buildings are finally then offered to the public for sale.

Taxpayers lose under this current disposal process. A variety of

alternative-use and conveyance requirements prevent properties

from being sold at fair market value. According to GAO, these requirements denote that, ‘‘GSA’s underutilized or excess properties

may remain in the agency’s possession for years and continue to accumulate maintenance and operations costs.’’

My bill would establish a pilot program designed to expedite the

selling of unneeded Federal property. The pilot program would be

managed by the director of OMB, which is in line with the 2007

GAO report in which GAO recommended that OMB assist agencies

in the disposal process. The bill establishes an aggressive disposal

goal that would require OMB and others to effectively and efficiently identify and dispose of unneeded properties.

The bill provides Federal property managers with tools designed

to maximize disposals and taxpayer returns.

The first tool provides agencies with incentives to engage in the

disposal process. By directing 20 percent of the proceeds to agencies, agencies are empowered to quickly identify and report excess

properties. The other 80 percent would be used for debt reduction,

something this country desperately needs.

Second, properties considered under the pilot program are not

subject to the onerous disposal provisions described earlier. Once a

property is identified for disposal, the property would be immediately eligible for public sale. Property disposed under the pilot

program is exempt from normal transfer requirements, public-use

conveyance requirements, and other no-cost conveyance provisions.

Finally, by empowering OMB, GSA, and other Federal agencies

with the tools provided in the Excess Federal Building and Property Disposal Act, the Federal Government can finally rid itself of

deadweight and demonstrate to the American public that Congress

is serious about streamlining government and becoming more fiscally responsible.

I thank the committee for allowing me this opportunity on this

important subject, and I yield back.

[The prepared statement of Hon. Jason Chaffetz follows:]
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Chairman ISSA. Thank you, Mr. Chaffetz.

Mr. Denham.

STATEMENT OF HON. JEFF DENHAM

Mr. DENHAM. Thank you, Mr. Chair. I appreciate you holding

this hearing today. I commend the gentlemen on this committee

and my fellow colleagues on this panel for working toward realproperty reform.

In May, I introduced H.R. 1734, the Civilian Property Realignment Act, to establish a civilian BRAC-like commission to help

shed waste in the management of Federal buildings and properties.

I have been pleased to work closely with the administration in this

effort, as they similarly released a proposal along with a list of

14,000 properties already in the disposal process. By OMB’s estimates, our proposals could save the taxpayer more than $15 billion.

I actually believe that number is much, much higher.

I believe our efforts may truly produce a bipartisan solution to

significantly alter the manner in which Federal property is managed. As a member of the Committee on Transportation and Infrastructure, I am fortunate enough to chair the Subcommittee on

Economic Development, Public Buildings, and Emergency Management. This subcommittee has jurisdiction over Federal buildings

and improved grounds generally, and we have made significant

progress in bringing this issue to the public by holding several public hearings and a subcommittee markup on my legislation.

I first proposed a civilian BRAC commission at our subcommittee’s first hearing in February, and the President proposed a commission in his 2012 budget. It was clear then, as it is now, that

just having a fire sale of surplus property in a bad real-estate market is not going to generate significant savings for the taxpayer. Instead, redeveloping, consolidating, or selling certain high-value assets can unleash huge cost savings for taxpayers. For example, it

makes little sense for a few hundred Federal workers to be sitting

in an underutilized asset that could generate hundreds of millions

of dollars if redeveloped or sold.

As I have often stated and continue to maintain, to achieve significant savings, any solution must incorporate these key principles: First, it must consolidate the footprint of Federal real estate.

It must house more Federal employees in less overall space. It

must reduce our reliance on leased space for long-term requirements. It must sell or redevelop high-value assets that are underutilized or too valuable for housing Federal employees. And we

must dispose of surplus property much, much quicker.

Disposal is part of the process of streamlining; that process is important. CBO mentioned in its letter to this committee about previous failures in the disposal process. We have seen high-value

property, like Governors Island in New York and the Presidio in

San Francisco, fall by the wayside, when significant taxpayer savings could have been realized. The commission will be tasked with

creating value out of excess and surplus properties so the taxpayer

isn’t continually shortchanged.

However, to truly reform our asset portfolio in a way that generates significant and lasting savings to the public, we must ensure

that government also takes steps to realign and consolidate its foot-
18

print. And we must ensure—agencies are sitting on valuable assets

that would give the taxpayers a greater return if sold or redeveloped.

We have an opportunity to achieve comprehensive reform, and I

look forward to working with my colleagues to that end. I doubt

most government agencies would recognize a good real-estate opportunity if it stared them in the face. It is important that we get

this right.

After receiving input from experts and key stakeholders, one

thing became abundantly clear: The commission will need to leverage the expertise and market knowledge of the private sector on

behalf of the taxpayer in order to achieve real savings. I believe

this is an important point, and I look forward to hearing the testimony of the second panel to see if they agree that Congress must

leverage the private-sector expertise.

We also must ensure this process incorporates the right incentives and tools to maximize the return to taxpayers and require

that agencies not conduct business as usual. That is why a process

that includes an independent commission similar to BRAC is needed. Real savings will require a commission to look across government and identify ways to unlock the value in our properties without turf battles and red tape stalling the process.

I believe the potential to save billions of dollars is real, and our

challenge is to create a system where it will happen. Again, I thank

the chairman for holding this hearing today and inviting me to testify. I hope that our two committees can work together toward a

solution that delivers real savings to the American taxpayer.

[The prepared statement of Mr. Denham follows:]
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Chairman ISSA. Thank you.

I want to thank all of our witnesses. It is not a normal policy to

ask questions of Members, but would you take a short series if people have specific questions?

Also, Mr. Denham, you are invited to sit on the dais, if you would

like to, for the second panel. Our rules allow for you to sit. You will

be recognized last, but, as you see, that won’t be all that late.

If I could ask you just two short questions.

All of your bills deal in some small way with the homeless. Each

of them seems to reduce the ultimate benefit to the homeless.

Hopefully, each of you, as you are looking at your bills and bringing them before the committee, will recognize that it is unlikely

that any bill will leave this committee if there is not an equivalent

benefit to homeless in each of your bills.

If any of you would like to comment on whether you think you

have already achieved that or whether you can make amendments

to ensure that the ultimate benefit that has historically occurred,

which is about 2 percent of liquidations, would be retained in your

bills.

Mr. Quigley.

Mr. QUIGLEY. Well, I think it is a fair question. My bill establishes a program that would exempt certain properties that are

very unlikely to be used for the homeless to go through that screening process. But we are open to any amendments and suggestions

as to make sure that we cover all the bases and protect those.

Chairman ISSA. Mr. Chaffetz.

Mr. CHAFFETZ. I would say a very similar thing. This takes the

14,000 properties that have previously been identified. I would

hope that if the homeless program—that would be accelerated

under that, that those properties would be identified and accelerated. But I am open to suggestions from Members on either side

of the aisle about how we can make sure that we are helping in

that regard.

Chairman ISSA. Mr. Denham.

Mr. DENHAM. This is not something we have been negotiating

with the administration on, but, certainly, we would be open to

looking at amendments.

The goal of this is to save taxpayer dollars. We want to get rid

of as much red tape as possible so that we can actually sell these

properties. I mean, I think CBO has a great point. Do you really

have evidence that you are going to sell properties or not? And the

more red tape that we have out there, the more things that we hold

up the reason for selling these properties, the less savings we are

going to see for taxpayers.

So, you know, again, our goal is to consolidate, to make sure we

are getting the right use for the taxpayers on this, and to sell off

as much as possible during a huge debt crisis.

Chairman ISSA. Well, I appreciate that.

And I won’t phrase the next one as a question, but, from the

standpoint of the committee staff, we are also concerned that we

are going to have to add to one or all of your bills, as we go through

the process, some equally more efficient way to ensure that if property has real value to another sector of government, that there be

an efficient way to do it.
26

And I know each of you is trying to deal with the legacy of the

BRAC process, where the FBI takes one building and NSA takes

another, and pretty soon you have a hodgepodge of things that

can’t be sold.

But there is, in fact, a legitimate concern from within government that we have an efficient way for a willing buyer, willing seller, if they happen to both be government, to do it efficiently. And

as you look at your legislation, that is something you may want to,

sort of, add as something that the committee can see.

Yes, Mr. Denham.

Mr. DENHAM. And we actually have that addressed by consolidating the leasing authority. What we saw with the SEC was beyond a mistake; what they did was illegal. We have to make sure

that not only do they give up their leasing authority but that we

consolidate our leasing authority between all agencies, have it go

under one agency, and be able to hold that agency accountable. So

that if there are other government uses, if you have two agencies

that can occupy the same building, then we are doing that, that we

are making the best decisions based on one agency that can oversee

all of that.

Mr. QUIGLEY. And I do not believe there should be any pride of

ownership here. If there is more than one bill here, we should all

work together toward putting together the final best product to

serve the use here.

Toward that end, though, I do think the element in my legislation of putting everything online will help. I think other governments and people outside government don’t even know what is

available. So that centerpiece of information helps us from flying

blind and moves forward more appropriately.

Mr. CHAFFETZ. I would just add that we are relying upon the executive branch that has already identified 14,000 properties as excess, that they have gone through a lot of these gyrations and assessments along the way, and these are truly excess properties.

Chairman ISSA. Thank you.

And, Mr. Cummings, you had something short also?

Mr. CUMMINGS. Yes, thank you, Mr. Chairman.

First of all, Mr. Chairman, I want to thank you for raising the

question with regard to homelessness. It is a tremendous problem

in our country.

Just yesterday, the Pew Trust released a report that showed

that, between 2005 and 2009, Americans took a real hit with regard to their wealth. As a matter of fact, Hispanics’ wealth decreased by some 60-some percent, I think it was 66 percent; African

Americans, more than 50 percent; and others, substantial. A lot of

people are ending up who never thought that they would be in a

homeless shelter or walking the streets without a home, they are

there today.

And so, Mr. Chairman, we have gotten a letter from the homeless advocates dated July 26, 2011. It is addressed to you and me.

And I would ask that it be admitted into the record.

Chairman ISSA. Without objection.

[The information referred to follows:]
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Chairman ISSA. And we will work on a joint response.

Mr. CUMMINGS. Thank you very much.

There is one thing I just want to read from this, so that our

guests will be aware. In this letter, it says, ‘‘In their current forms,

property disposal bills H.R. 665 and H.R. 1734 pose serious concerns for homeless service providers. For example, unlike the Base

Realignment and Closure process, the bills do not require the civilian property realignment boards involve homeless service providers

in the decisionmaking process. They also contain certain timelines

that are too short for homeless service providers to identify appropriate properties. Additionally, a majority of the board members

are required to consider property for homeless service use. This requirement is unduly burdensome and would significantly reduce

the likelihood that homeless service providers’ needs would be considered.’’ And I hope that you all will take that into consideration.

With that, Mr. Chairman, I yield back.

Chairman ISSA. I thank the gentleman.

We will take a short recess to set up for our second panel.

[Recess.]

Mr. KELLY [presiding]. The committee will come back to order,

please.

At this time, we are going to recognize the second panel of witnesses. Ms. Theresa Gullo is here. She is the deputy director, assistant director of the Budget Analysis Division for the Congressional Budget Office. Mr. David Foley is the deputy commissioner

of the Public Building Service for the U.S. General Services Administration. Mrs. Maria Foscarinis is the executive director of the National Law Center on Homelessness and Poverty. And Mr. F. Joseph Moravec is the former commissioner of the Public Buildings

Service for the U.S. General Services Administration.

Thank you all for being here.

Pursuant to committee rules, all witnesses will be sworn in before they testify, so if you would please rise and raise your right

hands.

[Witnesses sworn.]

Mr. KELLY. And let the record show that all witnesses answered

in the affirmative.

Thank you, and please be seated.

Now, in order to allow time for discussion, please, if you could,

limit your testimony to 5 minutes. And your entire written statement will be part of the record.

Ms. Gullo, if you would, please.
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STATEMENTS OF THERESA GULLO, DEPUTY ASSISTANT DIRECTOR, BUDGET ANALYSIS DIVISION, CONGRESSIONAL

BUDGET OFFICE; DAVID FOLEY, DEPUTY COMMISSIONER,

PUBLIC BUILDINGS SERVICE, U.S. GENERAL SERVICES ADMINISTRATION; MARIA FOSCARINIS, EXECUTIVE DIRECTOR,

NATIONAL LAW CENTER ON HOMELESSNESS AND POVERTY;

F. JOSEPH MORAVEC, FORMER COMMISSIONER, PUBLIC

BUILDINGS ADMINISTRATION, U.S. GENERAL SERVICES ADMINISTRATION

STATEMENT OF THERESA GULLO

Ms. GULLO. Thank you, Congressman Kelly, Congressman

Cummings, other members of the committee. Thank you for inviting me here to discuss CBO’s analysis of the President’s proposal

to dispose of civilian real property. I will also offer you some

thoughts about other actions you might consider to increase the

proceeds from property sales.

Under the President’s proposal, an independent board would expedite the process of identifying unneeded property and present

recommendations for disposal. Unless the Congress disapproves,

the administration would implement those recommendations and

agencies would be allowed to retain and spend some of the proceeds

from sales.

CBO concludes that this proposal would induce some agencies to

sell property that would not be sold under current law and bring

in a modest amount of additional receipts. But the proposal would

allow the spending of those receipts and, also, of some of the receipts that will be collected but not spent under current law. The

net result, CBO estimates, would be an increase of about $60 million in direct spending over the next 10 years.

The proposal also would result in additional discretionary spend- ing of about $400 million over the next 5 years, assuming future

appropriations were provided to implement the program. Finally,

some savings in maintenance costs would probably accrue as the

stock of properties declined, but they would be realized only if future appropriations were reduced.

CBO’s conclusions are based on the experience of the Base Realignment and Closure program, an analysis of the stock of

unneeded properties, and on the outcome of previous efforts.

The BRAC program, upon which the President’s proposal is

based, was not structured to maximize the return from selling

unneeded assets. In fact, less than $2 billion from three sales have

been collected since the process began in the 1980’s. BRAC’s goal

is to consolidate operations and reduce O&M expenditures. It has

undoubtedly led to such savings, although they are very hard to

identify precisely.

In addition, previous attempts to sell civilian property have had

mixed results. Several high-profile attempts, including Governors

Island in New York, the Presidio in San Francisco, and the old Chicago Main Post Office, took years to complete and did not result in

anywhere close to the receipts initially expected.

The proposed civilian board would have goals similar to BRAC’s,

but it would not offer many agencies sufficient new financial incentives to part with valuable properties. Some agencies that manage
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large stocks of real property can already retain and spend the proceeds from the sale of excess properties, so the President’s proposal

would not offer an incentive for them to increase the number or

pace of sales. Moreover, some have the authority under current law

to enter into other types of arrangements, such as enhanced-use

leases, which often prove more lucrative for them.

Similar property-holding—smaller, I should say, property-holding

agencies would probably consider the opportunity to retain proceeds as an incentive to sell additional properties, and those sales

would bring in more receipts. But because agencies would be able

to spend some of the receipts that will accrue to the Treasury

under current law, the net impact would be a cost.

Part of the problem is that much of the property identified as

unneeded does not appear to be particularly valuable. The administration recently released information about 12,000 unneeded Federal buildings and structures. CBO reviewed that information and

concluded that gaining billions of dollars from their disposal is unlikely. Most of the property is either owned by the Defense Department and not covered by the proposal; is already in the process of

being disposed of under current law, largely through demolition; or

is likely to be conveyed for little or no return.

If the proposal is to generate significant additional proceeds,

more properties will have to be identified, and they will have to be

far more valuable in the private marketplace than the properties

currently listed. In many cases, they would be facilities that the

government is currently using, and that would be—and that they

would only be made available for sale by relocating ongoing activities.

CBO has identified three approaches to consider if the Congress’

goal is to increase the proceeds from real-property sales: One, creating clear incentives not just to dispose of property but to maximize proceeds; two, where appropriate, exempt some properties

from existing laws that slow the disposal process down or require

that properties be donated or given away; and, three, specify in law

exactly which valuable properties must be sold.

Even with those steps, however, the government’s ability to sell

land, as well as that land’s market values, often depend on local

zoning. Disposing of properties and maximizing sales proceeds will

be difficult as long as local stakeholders oppose such efforts. Making changes could have unintended consequences, however, and the

Congress and the administration will have to weigh the relative

benefits and costs of various impacts.

Thank you. I am more than happy to talk more about CBO’s research in this area and answer any questions you have.

[The prepared statement of Ms. Gullo follows:]
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Mr. KELLY. Thank you, Ms. Gullo. Appreciate it.

Mr. Foley.

STATEMENT OF DAVID FOLEY

Mr. FOLEY. Thank you. Good morning, Chairman Kelly and

Ranking Member Cummings and members of the committee. My

name is David Foley, and I am the deputy commissioner of GSA’s

Public Buildings Service. I am honored to join you today to discuss

our asset management strategies and our governmentwide role in

disposition, as well as the unique challenges of the Federal realproperty disposal process and how a civilian property realignment

initiative can help address those challenges to meet our obligation

to taxpayers to reduce costs and spend every dollar as effectively

as possible.

As the Federal Government’s landlord, we have a robust asset

management program to accurately track the utilization of our inventory, strategically invest in our assets, and aggressively dispose

of unneeded property. When we find underutilized space, we evaluate whether there is a Federal need in that location. If not, we immediately begin the disposal process. GSA leads the industry and

government with low vacancy rates and high utilization. Less than

3 percent of our portfolio is considered under- or not utilized.

An underutilized asset must be distinguished from an unneeded

asset. It may still be in the taxpayers’ best interest to retain an underutilized asset. For example, in the national capital region, GSA

has 1.9 million square feet of underutilized space, but 1.7 million

square feet is currently categorized as underutilized because it has

been vacated to undergo a major renovation. These buildings will

provide highly utilized, modern, and cost-effective space when the

renovations are complete.

In 2002, under Commissioner Moravec, GSA began a portfolio restructuring. Since then, we have disposed of more than 200 GSA

properties, valued at $467 million, covering more than 91⁄2 million

square feet. Since 2005, GSA has had the authority to retain sales

proceeds. This authority has returned almost $227 million to the

Federal Buildings Fund. Beyond the proceeds the government received, those dispositions and demolitions also eliminated an estimated $484 million in future repair needs, and millions more were

saved in operating costs. Similar incentives are contemplated for

all agencies in the administration’s proposal.

In addition to managing our own inventory, GSA has authority

to dispose of properties for other Federal agencies. The Property

Act disposal process and guiding environmental and historic statutory requirements create some unique challenges for agencies.

These congressionally mandated requirements are intended to

strike a balance between social and economic policy objectives.

Each individual land-holding agency is responsible for determining if they have an ongoing mission for the asset. If not, they

report the unneeded property, which may be one or more assets excess to their needs. When GSA accepts a report of excess for a

property, we take 30 days to survey other Federal agencies to determine if there is another Federal use for the property.

If no other agency needs the property, it is considered surplus to

the government’s needs and offered to public organizations, pri-
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marily State, county, and city entities. These entities can acquire

the property through a public benefit conveyance or negotiated sale

at fair market value. If there is no viable public interest for a benefit or negotiated sale, then GSA conducts a public sale of the property. This process can be as short as 60 days or take up to 6

months.

Every property is unique, and GSA develops disposal strategies

specific to each asset’s characteristics within the existing statutes.

One of the most common delays in the process results from competing stakeholder interests and community expectations. The administration civilian property realignment initiative would streamline the process while minimizing external stakeholder influences

that could delay or interfere with effective strategic asset management.

Based on our experience, we believe that reform to real property

asset management must address three central challenges: one,

incentivizing disposals by enabling agencies to realize the benefit

of proceeds; two, addressing the upfront costs associated with disposals and consolidations; and, three, resolving competing stakeholder interests that can slow down or prevent good asset management decisions.

The administration’s efforts anticipate working with Congress to

create a successful initiative, and we welcome the efforts of OMB,

this committee, and other Members of Congress to successfully reform and improve real-property management. Given GSA’s expertise in asset management and our experience partnering with other

Federal agencies to dispose of real property, we are well aware of

the challenges in domestic Federal disposition process. We welcome

the opportunity to be part of the ongoing dialog and can help inform the process of establishing a successful civilian property initiative.

Thank you for the opportunity to appear here today before you,

and I welcome any questions you may have.

[The prepared statement of Mr. Foley follows:]
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Mr. KELLY. Thank you, Mr. Foley.

Ms. Foscarinis.

STATEMENT OF MARIA FOSCARINIS

Ms. FOSCARINIS. Thank you. And good morning, Chairman Kelly

and Ranking Member Cummings, members of the committee.

Thank you for holding this important hearing and for inviting my

testimony. I am Maria Foscarinis, executive director of the National Law Center on Homelessness and Poverty.

In 1987, Title V of the McKinney-Vento Act put in place a commonsense, cost-effective provision to help homeless people. Under

the law, nonprofit service providers have a right of first refusal to

acquire at no cost excess Federal real property to provide housing

and services to people who are homeless. Providers take on maintenance expenses, alleviating a cost otherwise borne by the Federal

Government. My organization assists these providers to acquiring

used property, receiving no financial gain for our work.

More than 2.4 million Americans each year receive assistance

through Title V, which has provided access to nearly 500 properties, like the New England Center for Homeless Veterans in Boston, which serves over 1,000 homeless vets per year. Surplus Federal properties now provide shelter, transitional and permanent

housing, case management, food pantries, job training, mental

health and substance abuse treatment, and child care. As homelessness continues to increase across the country, this is not the

time for Congress to weaken or eliminate this vital program.

The Law Center understands the concerns of this committee and

OMB that surplus Federal real property is languishing, but Title

V is not the cause of delays in Federal property disposal process.

Indeed, the Title V process takes only a few months, and it should

not be harmed or eliminated in the name of procedural reform.

The Law Center has consistently worked with Congress, HUD,

and other Federal agencies to improve and streamline Title V. As

detailed in our written testimony, we recommend improvements.

These include: excluding properties that are not useful to homeless

service providers; publishing available properties online rather

than in the Federal Register; requiring HUD, GSA, and HHS to

provide meaningful outreach and support to streamline the process;

and making additional HUD properties, such as the HUD homes

now in foreclosure, available to address dramatic increases in

homelessness and cut costs.

I will briefly now address the proposals before the committee.

The Civilian Real Property Alignment Act, H.R. 1734, like the

OMB proposal, would waive Title V rights and create a, ‘‘BRAClike board’’ to decide whether surplus property should be disposed

of or sent to HUD for homeless use screening.

We oppose both proposals in their current form. We are concerned that the proposed board would not fully consider the needs

of homeless persons. We recommend requiring that the board include at least two members with homeless advocacy or direct service experience.

We are also concerned that the proposals would eliminate Title

V’s most critical feature, the requirement that Federal surplus

properties be offered for homeless assistance. We recommend that
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a property must be offered to homeless service providers if a single

member of the board requests it.

Finally, we are concerned about the deadlines. They would not

offer enough notice to allow public comment to be well-informed

nor enough time for homeless service providers to apply. We recommend a fairer, more reasonable timeline.

H.R. 665 would create a pilot program granting the OMB director sole discretion over disposal of excess Federal real property for

a 10-year period, waiving much of the existing legal framework, including Title V. We oppose the bill in its current form.

We are concerned by the level of discretion granted to the OMB

director in this proposal. The statutory incentive for-profit sale of

the director would be at direct cross-purposes with the needs of

homeless service providers seeking Title V properties at no cost.

There is no reason to believe a significant number of providers

would have any meaningful access to any properties that become

surplus during the 10-year period.

H.R. 1205 would create a pilot program that exempts a narrow

set of properties from Title V. Because it would cover only a very

limited number of properties, such as national security properties,

H.R. 1205 would not be harmful to homeless persons, and we do

not oppose it. But we recommend the bill be expanded to include

our recommendations for Title V reform.

Homelessness is now increasing at dramatic rates across the

country. Family homelessness increased by 9 percent in 2010 alone.

This is not the time for Congress or the administration to reverse

its commitment to the lowest-income Americans.

Thank you for allowing me to testify, and I look forward to your

questions.

[The prepared statement of Ms. Foscarinis follows:]
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Mr. KELLY. Thank you, Ms. Foscarinis.

Mr. Moravec, please.

STATEMENT OF F. JOSEPH MORAVEC

Mr. MORAVEC. Good morning, Mr. Chairman and Ranking Member Cummings and members of the committee. My name is Joe

Moravec. I have spent most of my career in the commercial realestate industry as a broker, manager, and owner of commercial

property and commercial real-estate services companies.

From June 2001 through July 2005, I had the privilege of serving

my country as the commissioner of GSA’s Public Buildings Service,

a position——

Mr. KELLY. Mr. Moravec, I am sorry, is your mike on? Or maybe

just move closer. We are not hearing you.

Mr. MORAVEC. From June 2001——

Mr. KELLY. Thank you.

Mr. MORAVEC [continuing]. Through July 2005, I had the privilege of serving my country as the commissioner of GSA’s Public

Buildings Service, a position for which I was well-prepared professionally. As public buildings commissioner, my goal was to apply

well-proven, private-sector asset-management practices to improving our agency’s performance as a real-property manager.

Prior to 2002, GSA did not have, by private-sector standards, a

consistent, comprehensive, or measurable approach to investing appropriated funds in the repair and alteration of its inventory of

owned properties. In simple terms, capital improvement funds were

spread yearly over the entire portfolio without adequate consideration of whether buildings were capable of meeting the long-term

programmatic needs of the agencies they housed or, indeed, whether they were viable as financial assets. Buildings of marginal utility were improved to perfection, and buildings housing critical functions were often neglected. The backlog of deferred maintenance, in

the absence of a disciplined resource allocation process, continued

to swell.

Our team developed detailed profiles of every single property in

GSA’s portfolio. We determined whether there was a long-term

Federal need for the property and assessed whether the rent our

agency customers were paying us justified reinvesting in it and, if

so, at what level of investment.

What emerged was a triage ranking of GSA’s entire inventory,

which divided the portfolio into three tiers of assets. The top tier

was comprised of buildings for which there was a clear long-term

Federal need. Investment in these buildings would result in a sustainable rental income, providing GSA with capital for continued

reinvestment in their upkeep. These buildings merited reinvestment; they could stand on their own.

The middle tier were buildings which could be made into sustainable financial assets by judicious reinvestment as outlined in individually approved asset management plans. The lowest tier consisted of buildings which were beyond hope. These went immediately into the disposal process.

This new discipline of looking at buildings as financial assets,

just as a private-sector owner would, had a profound impact on the

Public Buildings Service organization and the behavior of our pro-
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fessional managers. Our people understood the new rules, and an

agency-wide consensus informed by a sense of urgency developed

around what separated valuable assets from those ready for disposal. Property disposals accelerated, and, since then, GSA has disposed of hundreds of its own buildings, representing millions of

square feet and translating into hundreds of millions of dollars of

savings to the taxpayer. Today, GSA has very few empty buildings

in its inventory.

The moral of this success story is that good disposal policy grows

out of good, disciplined lifecycle asset management. Moreover, even

without any statutory reform, the disposal mechanism which GSA

administers for itself and across government can produce results

once bureaucracy understands the rules and is motivated to put individual functionally or physically obsolescent properties serving no

programmatic purpose into the disposal process.

The chief impediments to timely and aggressive disposal of surplus Federal properties are these: One, Federal executives have inadequate financial incentive to declare properties excess and turn

them over to GSA for disposal. Agencies incur front-end costs

which are often not reimbursed. And in the absence of special legislative authority, they do not get to retain sales proceeds even if

their property makes it to the open market and has any market

value.

Two, a disposal process itself is attenuated and Byzantine. Statute and regulation, including adherence to rigid environmental

standards, community benefit criteria, and historic preservation

considerations, all of which are all desirable from a social perspective, obviously, virtually ensure that disposals become public-benefit conveyances or negotiated sales with little or no economic benefit to the Federal Government as seller.

Three, politics and truths—or as they say in government, external shareholders, including Members of Congress, special interest

and advocacy groups and State, county, and local officials—have

ample opportunity to intervene, slow down, and redirect the process to achieve lots of results, except returning money to the Federal

Treasury.

A BRAC-style approach to Federal property disposal such as the

administration and Representative Denham have proposed would

have several distinct advantages over the present system. It would

require by law that agencies produce real lists of excess properties.

It would provide the framework for intergovernmental dispute resolution and administering the process so often lacking now. It would

insulate the process from extraneous and unproductive political interference, and it would be measurable, requiring a specific outcome within a finite timeframe. These are all salutary results.

I would add only a few cautionary notes. First, keep expectations

real. With rare exceptions, most of the government’s disposable

property, as CBO has correctly reported, has limited market value.

This is particularly true if the property must be offered to public

entities at little or no cost.

Second, ensure that agencies have enough upfront money to participate and to discourage malicious compliance. This means not

only providing funds to defray the cost of bringing properties to

market, but the related and potentially much larger costs of replac-
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ing through consolidation and colocation Federal workplaces eliminated by disposal.

Third, do not underestimate the challenges of applying a BRAClike discipline, which was created to serve one agency, albeit a

huge agency, with one mission to the entire government. Across

dozens of agencies with very diverse missions and constituencies.

Fourth, remove to the greatest extent supportable or feasible, the

many statutory and regulatory roadblocks to bringing properties to

the market. If a private sector result is expected, constraints on the

Federal Government that would not constrain a private seller need

to be modified, replaced, or suspended, as proposed in Representative Chaffetz’s bill.

And finally, know that the implementation by law, the wholesale

approach to disposal of surplus Federal property will have, I believe, the undesirable practical effect of slowing down or even stopping other ongoing disposal activity under present law, until it can

take effect. So once implemented, it really needs to work.

Thank you for the opportunity to provide testimony on this critical subject, so very timely as we as a country struggle as never

in modern times to reduce the cost of government. I am, of course,

available to answer your questions.

Mr. KELLY. Thank you, Mr. Moravec.

[The prepared statement of Mr. Moravec follows:]
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Mr. KELLY. At this time, the chair recognizes the gentleman from

Oklahoma, Mr. Lankford.

Mr. LANKFORD. Thank you, Mr. Chairman. Thank you all for

being here and allowing us to have some input into this and some

conversation back and forth on it. I just want to have some conversation on it.

On an independent board set up to be able to take these issues

on, my question is: Is that needed, or what I am hearing from your

conversation, do we really need to clean up the rules that GSA has

to function under already? And anyone can start taking that on.

But I’m hearing some say the whole process is very slow because

of—I love the term—the Byzantine rules that are in place to be

able to deal with this.

So are we creating some independent agency which will at some

point have its own Byzantine rules at some point, or do we need

to just clean up the GSA process to streamline this?

Mr. MORAVEC. Speaking for myself, I am skeptical, like apparently you are, about creating a new bureaucracy to do the work——

Mr. LANKFORD. That we have an existing bureaucracy to do.

Mr. MORAVEC [continuing]. That often fails and costs a lot of

money. BRAC works because it was one agency and really had one

challenge, and that worked reasonably well. The BRAC process, by

taking the workings of this outside of the framework of government

in a sense, does in fact insulate it from many of the things that

impede its efficient function.

Mr. LANKFORD. Politics.

Mr. MORAVEC. Politics being the principal one.

Mr. LANKFORD. Right. But do you think that is the principal

issue here is the politics of it? Or is the principal issue here how

slow and difficult and tenuous it is to go through all the requirements that GSA is now having to labor under?

Mr. MORAVEC. The latter.

Mr. LANKFORD. That is what I’m asking. An independent board

seems to be solving the wrong problem here.

Mr. MORAVEC. I think that what is needed, as has been previously testified by three of the four witnesses on this panel, are

incentives for Federal managers to declare property excess and to

move it into the—swiftly into the disposal chute. I think the law

needs to be either suspended or modified or streamlined to an extent that it—in a way that is, obviously, not irresponsible, when it

is deemed to be impeding the process.

And finally, we really do need to insulate it from interference. I

mean, right now it is a very open process and it is not unlike procurement. Once the government decides to procure something and

enters into a formal procurement process, it is insulated from politics in my opinion.

Mr. LANKFORD. Right. I understand.

Several of you mentioned the incentive issue, and you can respond in your answer, but my first question is—well, if you choose

to. The incentive issue also brings up its own dynamic as well. I’m

not interested in having agencies hold onto properties in case there

is a lean year, when at some point Congress cuts their budget and

so they are banking properties over here, saying if it ever gets lean,

I’ve got my own stockpile of money basically in real property that
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I can sell and then have more money at that point, if you understand what I mean.

So how do we deal with incentives without creating a property

bank for different agencies to be able to have and sell at their

whim?

Mr. FOLEY. I would like to just step back to the first question.

I think the disposal process as it is set up now, there are a lot of

steps, and it can take some time. But at GSA we have figured out

how to navigate that process. And many of the screenings we do

simultaneously while we are doing other due diligence to

prepare——

Mr. LANKFORD. How long does that take? Not counting listing it,

getting it out, how long does that take to go through that process?

Mr. FOLEY. Right now it is comparable with private sector. And

so it depends on the type of disposal. And it can be—you know,

when we get to the point of sale, as I mentioned in my opening

statement, anywhere from 60 days all the way to, you know, as

much as 6 months. But where we tend to hit the pause button is

where we get a lot of those competing stakeholder interests, and

there are discussions back and forth of is it eligible for this, you

know, public benefit, or should it go for this use or that use. And

so that is really what the board was designed to try and help do,

is insulate from that.

On your second question in regards to the retention and proceeds, I think at this point the majority of the work we do at GSA

happens to be for agencies that can retain proceeds. And as CBO

pointed out, many agencies find it cheaper to hold onto a property

in a given year and pay the minimal operating cost as opposed to

prepping something for sale where there could be significant upfront investment.

So something like the administration’s proposal or some of the

other bills that provide a way to cover some of those upfront costs

and provide an incentive for agencies to—where they can get some

of the benefit back—to recover those costs they may have to make

in those properties to get them ready for sale it is critical to, I

think, getting many of these properties broken loose. I don’t see it

as a big land bank right now. I think there is really an economic

disincentive to agencies disposing of property.

Mr. LANKFORD. Okay. Thank you. You’re going to make a comment on that as well?

Ms. FOSCARINIS. Congressman Lankford, I would like to address

your question as well.

Mr. LANKFORD. Sure. Yeah. I just have a few seconds left, so——

Ms. FOSCARINIS. On the first point, I think the answer is not to

create a new board or a new bureaucracy but to streamline the current process. And on the comment that was just made, it is not because of competing stakeholders, certainly not because of Title V,

which is our concern here, that the process is Byzantine or takes

a long time. Title V adds a matter of mere months, and what it

does is ensures that public resources, Federal properties, are used

for what is a public need and a growing public need and a national

priority, which is addressing homelessness. That is not the cause

of the delays. The 14,000 properties have not—have already gone
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through Title V, almost all of them have, and they are not holding

up the process.

Mr. LANKFORD. Okay. Thank you. Thank you. I need to yield

back my time.

Mr. KELLY. Thank you, Mr. Lankford. The chair now recognizes

my colleague and friend from Virginia, Mr. Connolly.

Mr. CONNOLLY. I thank the chair and I want him to know that

my Great Grandfather Kelly would be so proud to know there is

a Kelly in the chair. He might even be proud if his great grandson

were in that chair, but that is—at any rate.

And I want to thank the ranking member, Mr. Cummings, for

being so gracious in letting me go. And welcome, all of you. And

I particularly want to thank Ms. Foscarinis for being here, because

you’re a great witness to the fact that there are considerations

other than maximizing our profit when we talk about the disposal

of excess property.

In Northern Virginia, we have examples of incredible positive results by careful disposal of a property, an excess property; namely,

the old Lorton Federal Prisonsite. And then we have examples

where it didn’t work out so well, the GSA site in Springfield, which

is where the MARC Center should have been put, and unfortunately it wasn’t, and we are now going to face catastrophic results

in terms of transportation on the I–95 corridor here in the National

Capital Region.

And if you look at Lorton, one of the things that created unbelievable economic energy, an arts foundation in the prison

workhouse, a new world-class golf course, lots of new open space

and playing fields and new trails, the preservation of almost 2,000

acres. Nonetheless, it generated in the immediate vicinity enormous economic activity: new town centers, new residences, new

commercial centers. It is now the fastest growing part of my community. Ten years ago it was the—it was losing population and it

was lagging behind any other part of Fairfax County in terms of

economic activity.

But what gave us that energy? It was the fact, the willingness

of the Federal Government to sell that property to the local government at below market rate. It generated jobs and economic activity

and it had incredible positive externalities. But had we stuck to a

rigid standard, that sorry, that property has to be disposed of at

market rates, it absolutely would have had to have been developed

in ways that were not consistent with community goals and, frankly, would have done economic harm.

And so my question to you all is—and I noticed the Quigley bill

sort of has a provision, and I think this is a conservative principle,

Mr. Chairman, not just a Democratic or Republican principle. Let’s

take into account the realities on the ground and the needs and

wishes of the local governments, because they know their communities best. Because we can be a force for good in the disposal of

excess property and we can also, frankly, unwittingly be a factor

of not so good.

So I just open that up to the panel and would welcome your reactions to that proposition.

Mr. FOLEY. Sure, Congressman. We certainly appreciate the local

community interests. And my experience has shown that successful
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property disposition requires a ton of outreach and partnership

with the local community entities. And I think in any of these proposals you would still have to have that for a successful property

disposition. I think even in instances where a property, you know,

could go to a homeless use, or you might not see the proceeds from

the sales, there are tremendous benefits to the government in

terms of reduced operating costs and maintenance for many of

these facilities where there is no longer a need, and from the consolidation and different uses of those properties.

So, for instance, the government has thousands of properties

across the country where they have locations for field offices in

every community. There are different ways of doing business now,

and a lot of the work can be done on line and through different

mechanisms. So, looking at does it make sense to still have all

those properties across the country, or is there a way to consolidate

that or do it differently that could free up many properties for disposal? And even if they did go for a homeless use or another public

benefit conveyance, there would still be significant cost savings for

the Federal Government and the taxpayer.

Ms. FOSCARINIS. Yes, thank you for that comment, Congressman.

I think you are absolutely right. It is not just about maximizing

proceeds. It is also about a longer-term approach and how the properties can be used for the greater public good and also to generate

savings. Because in the case of Title V, service providers who take

the properties, who get the properties, take on the operations and

maintenance costs, which are now or otherwise being borne by the

Federal Government. So that is a cost saving, and they are also

providing an important public good.

And in Northern Virginia for example, there is also the Carpenter Shelter, which is providing services and a place to stay for

working homeless men and women. That is incredibly important in

helping people become productive members of society again.

Mr. CONNOLLY. I thank you. Mr. Chairman, my time is up. But

while you were out of the room, I was just pointing out that your

predecessor and my predecessor, Mr. Davis, and this committee

have a great success story in working with GSA in the disposal of

the Lorton property. And although we didn’t maximize proceeds in

the actual transfer to local government, the economic activity it

generated more than made up for that. It is one of the great success stories of how to do it carefully, I think, as we proceed in this

whole subject. And I thank the gentleman.

Chairman ISSA. I thank the gentleman. Would the gentleman

yield?

Mr. CONNOLLY. Of course, Mr. Chairman.

Chairman ISSA. You know, this is one of the reasons early on in

the hearing that I said to our three earlier witnesses how much I

appreciated what was in their bills but questioned some of the

things that were not in their bills. And clearly their desire for

speed, because speed ultimately means we save money sooner, has

to be offset with the consideration of the best good, not just the

highest dollar. So that is part of where this committee is going to

make sure we blend some of their suggestions with some ideas like

yours.
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Mr. CONNOLLY. I thank the chairman, and I couldn’t agree with

him more. And I look forward to working with him on this issue.

Chairman ISSA. Thank you. With that we go to the gentleman

from Arizona, Mr. Gosar.

Mr. GOSAR. Thank you. I’m going to go across the board with

this, and then I am going to kind of make a real brief statement.

Arizona, as you know, is heavily laden with Federal inventory of

not only lands but also buildings, okay, not only from a private sector but from a Native American sector, okay, for the BIA. I see a

working relationship not just in capitalization of selling to the private industry, but also to local communities.

I want to bring up that, you know, we have been underfunded

with our secure programs, our PLL programs. It has been diminishing because of our restrictions on our national lands multiuse

aspects. So I see this in a different perspective and actually have

engaged in local communities, county governments, and city governments to inventory Federal buildings in which to take in lieu

of. And I think this works extremely well, particularly in a State

like Arizona, that the proceeds from our natural resources and

from our Federal and State lands go to our schools and go to some

of our health care issues—very similar to like Wyoming and Alaska.

Tell me, how you would streamline, particularly in inventory, a

first right-of-refusal to communities of interest, like cities and

towns and counties? How would you streamline and what would

you streamline in the situation so that we could have that aspect

or further this process down? I’m not just interested in homeless

people because, you know, I’m from Flagstaff. Very large amounts

of Federal ground, very limited amounts of private ground. We

need to have the working families being able to afford—the teachers. We need to have people being able to afford to stay and live

there, maybe as a stepping stone to see generational kids that want

to stay in towns, to be able to move into a segment that is maybe

a lower-rent district’s Habitat for Humanity, whatever it may, be

that is conditional with the local and State entities.

Tell me how you would proceed and what do you see the roadblocks are? And how could we get that first—first from the private

sector—not private sector, but with cities, counties? And second,

from the BIA, which is even more important to me? I think it is

even more streamlined and can be very much more quickly for the

BIA because of the self-determination rules that exist. And we’ll

start with you, Mr. Moravec.

Mr. MORAVEC. Thank you. I would say first I, like some of the

members are, I’m skeptical of huge financial benefits coming out of

this process. I mean, the real advantage to the Federal Government is savings in terms of expenditures for maintenance. But as

a practical matter, there are things that need to be done to reform

the process, and that is what I think your question is focusing on.

I was very pleased to hear Ms. Foscarinis mention when talking

about Title V that there needs to be—that one step might be to immediately exclude properties that were clearly not suitable for

housing the homeless. I mean, that would be a great step in the

right direction, rather than putting it through an

intragovernmental, interagency process involving HUD and GSA
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and other shareholders. If there could be a way of focusing quickly

and achieving consensus very quickly on whether a property was

suitable for homeless, and then removing it from the process if it

wasn’t, would be a very big step in the right direction.

I think another way would be to limit the time that external or

local shareholders have to make their views known, to sort of cut

off the debate when it wasn’t leading to a fruitful or productive outcome. As Deputy Commissioner Foley testified, that really is where

the delay is. The properties sort of get into this limbo land where

there is no way of resolving the disputes or the competing interests

of groups for claiming a property that has been declared surplus.

Mr. GOSAR. Could you see a hierarchical aspect, a first right-ofrefusal, particularly when you look in lieu of taxes, particularly

what we have seen from secured schools and PLLs, that the counties and cities have an advantage or a State has an advantage over

or——

Mr. MORAVEC. I think it would be very difficult to establish a

template or an inflexible hierarchy. That is essentially what we

have now. I think each individual asset is different and deserves

to be treated as an individual problem; and the solutions can be

very different, asset by asset.

So I would be—I would be hesitant to—to establish a right-offirst-refusal protocol just that then again would be—try to apply—

would be applied in a wholesale way.

Mr. GOSAR. I’m running out of time.

Ms. FOSCARINIS. We do suggest streamlining the process so that

properties that are clearly not suitable are excluded. For example,

national security properties, contaminated properties, properties inside secure facilities, military properties, or inside military facilities. We also suggest publishing the list of properties on line as opposed to in the Federal Register, and publicizing them through a

LISTSERV and a data base electronically.

We are also suggesting requiring the Federal agencies to provide

greater outreach and support to applicants. Right now this is a

very cumbersome and difficult process and the applicants are typically an unsophisticated shelter, or other service providers. Greater

support would allow these providers to more quickly complete the

process and would streamline it.

Mr. GOSAR. Don’t you think—don’t you think—I am sorry.

Chairman ISSA. The gentleman can have 30 additional seconds.

Mr. GOSAR. Okay. Don’t you think that—a wonderful point to

revolutionize it, it would be the Native Americans because of the

unique treaty obligations that we share with them and the BIA

constraints on that. To me it seems like it is a perfect fit to demonstrate ownership to the tribe in the Self-Determination Act that

actually is a first step of maybe revolutionizing how we look at

these inventories, because you need to deal strictly with the tribe

first and then the individual entities.

I disagree that the homeless is the number one aspect because

I think you also have to have the empowerment of economies for

the tribes that associate both.

And then I also think that you look at the veterans’ aspects of

empowerment as well. So those are my two cents worth and I’d like
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to get—you know, I have run out of time but I would love to have

your additional comments for the record.

Ms. FOSCARINIS. Okay. May I——

Chairman ISSA. You may have the time you need to respond.

Ms. FOSCARINIS. Okay. Wonderful. Thank you very much. I like

that.

Congressman, I’m not familiar, unfortunately, with the specific

constraints on tribes or requirements, but I do know that tribes

certainly suffer from homelessness and poverty, and that is a very,

very critical issue. Veterans as well—many homeless people are

veterans, and so it is very important that we address that issue.

I think the larger point is to allow these properties to be used

for any kind of permanent housing, not just—right now it is limited

to homeless shelters or services for homeless people or permanent

supportive housing. But we are advocating for the expansion to

permanent housing per se so that a broader swath of needs can be

met.

Chairman ISSA. Thank you. Sorry, Mr. Labrador. But we are now

going to the former chairman of the full committee, Mr. Towns.

Mr. TOWNS. I would be delighted to yield a minute. Mr. Chairman, I would yield him 30 seconds.

Chairman ISSA. It is all yours.

Mr. LABRADOR. Thank you, Mr. Chairman. I was just going to

yield my time to Mr. Gosar, so we will wait.

Mr. TOWNS. I reclaim my time. I reclaim my time.

Chairman ISSA. We—you understand, we have a lot of formality

in our informality sometimes.

Mr. TOWNS. Thank you very much.

Mr. CONNOLLY. And way too much comedy, Mr. Chairman.

Mr. TOWNS. Thank you very much, Mr. Chairman. First of all,

you know, I’m happy to see you, Ms. Foscarinis. I knew Stew

McKinney, he was a very good friend of mine. Of course I remember the work in those days.

And, of course, let me begin by we established that tens of thousands of properties are languishing in the Federal inventory without being sold, and some agencies may blame Title V, the process,

for slowing down their ability to dispose of property.

For example in 2008, the Department of Veterans Affairs reported that GAO—that the requirements for the McKinney Act can

add as much as 2 years to the disposal process.

Ms. Foscarinis, recognizing that you’re one of the primary architects of the McKinney Act, I want to address a few questions to

you. Does the screening process for Title V require that agencies

screen Federal properties for use by nonprofits serving the homeless, even when the property is entirely unsuitable for the purpose?

Ms. FOSCARINIS. Congressman Towns, it does not. But unfortunately the way—the language does not, but the way that the program has been interpreted, the screening process is, in our view,

overly broad, so that properties come into the process that clearly

are not suitable. And that is one of our recommendations. We think

it could be streamlined.

But I don’t think that that is the main problem or that Title V

is the cause of the delays or the reason why all those properties

are now languishing. In fact, the majority of almost all of those
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14,000 properties that are now languishing, that have been referred to by a number of witnesses, they have already been through

the Title V process. Title V is not the problem.

Mr. TOWNS. So what is the problem?

Ms. FOSCARINIS. Well, I’m not an expert on the entire Federal

property disposition process, but I am familiar with Title V and I

know that Title V is not holding up the process. The process happens after Title V and the—and that is a process that—that is a

question that needs to be addressed to the other pieces, the other—

the agencies that deal with that process.

Mr. TOWNS. Well, most people here today seem to agree that the

current property disposal process is not working. What would you

suggest we change to improve the disposal process and to make it

work more efficiently? What are your ideas?

Ms. FOSCARINIS. Well, Congressman, I think as far as Title V is

concerned, much can be done to speed up and streamline the process so that properties that are potentially suitable to help homeless

people are quickly identified, so that the agency support applicants

in a process—which, as I mentioned, the applicants are often very

unsophisticated, underresourced nonprofit organizations. Additional support from the Federal agencies to help them complete the

process would be—would help streamline that process.

I think as well that making available resources from the Federal

Government—for example, we have proposed 5 percent of sales

from all Federal property dispositions could be used to support the

homeless service providers in applying for and operating their programs on the property. That would help expedite it.

Mr. TOWNS. Mr. Foley, let me ask you the same question.

Mr. FOLEY. Sure. I think as I testified, the three main areas that

we need to do to improve the Federal disposition process for real

property are: One, we need to provide incentive for agencies to dispose of unneeded and underutilized property; two, we have to have

a way to help fund some of the upfront costs that are required,

whether it is through consolidation or cleanup of property or just

basic work to get it ready for sale; and then, three, we have to figure out how to deal with the competing stakeholder interests that

can delay the process down the line.

So again, it can be after screening and as you get down into figuring out what is going to happen to the property next. And so that

is really, I think, the three areas where we can make a big difference and improve the process.

Mr. TOWNS. Well, you know, I think that the three bills that

have been put forward, you know, really, really could help in a lot

of ways. But still I see some problems, you know, as we move forward, even with the three bills that we talked about earlier today.

So, Mr. Chairman, I think we still have a lot of work to be done,

but I think that is a framework that we could start from and that

we can do a lot better than what we are doing. So thank you. I

yield back.

[The prepared statement of Hon. Edolphus Towns follows:]
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Chairman ISSA. I thank you and very much agree we can. Mr.

Labrador.

Mr. LABRADOR. Mr. Chairman, I yield my time to Mr. Gosar.

Chairman ISSA. I’m shocked. The gentleman is recognized.

Mr. TOWNS. I don’t object to that.

Chairman ISSA. Sure.

Mr. GOSAR. I want to continue my line down to hear your ideas.

Mr. FOLEY. Absolutely. First BIA. They do have standing in the

current Federal disposal process. And I believe it happens at the

Federal screening. So Department of the Interior would express an

interest on behalf of the tribe. So they do have an opportunity before it even gets to the point of the public benefits.

Mr. GOSAR. Unfortunately that doesn’t work because there is

not—there is not an outlined procedural aspect to allow them to debate—to actually challenge that ruling. It is almost an absolute ruling, and that can’t work. So there is something wrong. So keep

going.

Mr. FOLEY. Sure. And I think, you know, a lot of the items that

my colleagues here on the panel mentioned are critical. I think determining upfront which properties really are suitable for which

entities, so you don’t have a rigid process that requires screening

of properties we all agree may not be suitable. And we do have

some flexibility with many of the screening processes. So, for instance, if it is not near an airport, we wouldn’t do an airport

screening. So figuring out how we determine which properties are

most suitable, putting more strict time limits on. I think the actual

limits for the screening process for homeless is only about 60 days,

and 30 days for many of the others.

So it is not really the process itself. As you mentioned, it is when

there is a dispute or a discrepancy and then trying to sort through

and figure those pieces out.

I think, third, as Ms. Foscarinis mentioned, clearly anything we

can do to improve transparency in community outreach and outreach to our partners is critical so that they understand which

properties are available, they understand what the uses are. And

we have a better understanding upfront which screenings and

which uses would be most appropriate for that type of property.

Mr. GOSAR. Ms. Gullo.

Ms. GULLO. I don’t know much about the BIA’s role in this process, but it sounds to me that we are talking bureaucratic issues

that could potentially be solved through changing the existing process, and you wouldn’t necessarily need a new civilian board or

something to address and resolve some of those issues.

But as Mr. Foley pointed out, a lot of the problems end up coming in terms of local stakeholder interests that sometimes conflict

with what other people want to do with the land. And that can

often slow things down and even prevent property from getting exchanged or given to people.

Mr. GOSAR. Well, don’t you—I mean, to me—look, I am a business guy. And, you know, I’m also from the nonprofit arena as well.

So there’s—there’s some risks that you take. And when you start

looking at this in competing ventures, particularly when we are

putting the handicap about the homeless—I’ve got a big heart,

don’t get me wrong. But you have to make this into a play that ac-
76

tually is competitive. And that is that if we are going to make sure

that everything is—if I sell my house, okay, I have to look at—and

somebody wants to buy it, we go through a negotiation, okay. Dr.

Gosar, we don’t like this about the house, we want you to give this

in compensation for upgrades, da-da-da-da-da.

We ought to be doing that at the Federal level, not adjudicating

this thing where we are going to have to handicap it and put more

additional money here. We want to allow the competing factors to

bring assets to the table. We can’t hold everybody’s hand. We are

in a financial crisis here and we have to empower people to fix

things, to be at the bargaining table, to put risk in the game.

Which brings me to my next point. It seems to me like we have

a contractual hierarchy already, okay, because we have established—particularly in the Western States, because—you know,

like in my State of Arizona, we have 60 percent—72 percent in my

district that is federally owned for multiple use. So it seems to me

that the hierarchial aspect there is first for disposal, is to education, communities, State land, counties, cities, and smaller entities. That is how it has to go.

That seems to me that we ought to be dialoguing first at the

State level, and State by State, to include them into that risk pool,

because we have had contractual obligations. And I’m not a lawyer,

but I do understand something about contracts, is they are not subservient usually to other whims. They are contractually the

hierarchal aspect. So I would hope that you would look at—and I

may further some other questions to you—look at it in that vein.

How do we structure this maybe to expedite a contractual obligation not only to our States, but to our counties and cities in the expedition of these properties?

So thank you. I have run out of time.

Chairman ISSA. I thank you. I recognize myself now for a round

of questioning. Oh, I’m sorry. The gentleman is recognized.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. The Congressional Budget Office and the White House have very different

estimates of the potential revenue that could be generated through

the President’s proposed Civilian Property Realignment Act. The

White House estimates the proposal would generate more than $15

billion in additional gross receipts over a 5-year period. Over that

same 5-year period, CBO estimates that implementing the President’s proposal would cost $420 million in additional. This is quite

a large discrepancy.

Mr. Foley, would you explain how you arrived at the $15 billion

estimate?

Mr. FOLEY. Certainly. The administration’s proposal, we looked

at as broad a range of savings as we could possibly get. So everything from proceeds when we sell a property to eliminating operating costs when you no longer have a property in Federal use, to

cost avoidance for future renovations that we would have to do.

And then another component that I think is critical to that is consolidations as well.

I mentioned previously where there are opportunities to, you

know, downsize and get rid of three locations and move to one, or

six locations and move to one potentially. And so when you look at
77

all of those factors, there are—I think the potential for cost savings

are enormous.

Mr. CUMMINGS. So you have—so you don’t—you go beyond just

what it would be sold for. You’re going to all of those other things.

Mr. FOLEY. Correct. When we are talking about the $15 billion

number, it is not just direct sales proceeds of dollars that would be

received back from property that would be sold.

Mr. CUMMINGS. Well, why is the CBO’s estimate so much different?

Mr. FOLEY. We certainly respect CBO’s opinion. And I think that,

you know, the way they looked at the legislation, they even recognize that there would be cost savings to those. I think it gets down

into the interpretation of what happens as a result of those cost

savings. So, are the funds actually still given to agencies, or is

there a change in the appropriations? And I don’t want to speak

for CBO——

Mr. CUMMINGS. She can speak for herself. But I’m just curious;

what is the difference? Do you know?

Ms. GULLO. Well, I think that Mr. Foley is correct; that our job

is to look at the net effects on the Federal budget over a certain

time period. And we do think that a proposal such as the President’s proposal for the civilian board would increase receipts by a

modest amount. The problem is that by allowing some agencies

that currently are not allowed to keep their proceeds from sales—

and that money goes 100 percent to the Treasury under current

law—this proposal would allow those agencies to keep 40 percent

of the proceeds. So right there you have a net cost to the Treasury.

Again, we think that is fairly small because the bottom line is we

don’t see over the next 5 years that there is a stock of properties

that are going—that are valuable enough to produce a large

enough receipt to the Treasury that is really going to net out

against those types of costs.

We do agree that there could be savings in operation and maintenance costs over time. Those costs are only going to get realized to

the Treasury—to the government, however, if future appropriations

are reduced. So again, from CBO’s point of view, you have the difference between direct spending and discretionary savings, which—

so it is just a matter of those different pots of money. It is very

hard to see and calculate those types of O&M savings. We are not

saying they would not accrue to the Treasury. But unless you can

see in the future that total appropriations will be reduced by that

amount of money, then the government hasn’t really reduced the

deficit at all.

And we have seen that with the BRAC process. BRAC has surely

resulted through consolidations in lower O&M costs, but you certainly can’t see that by looking at O&M spending by the Defense

Department. It has continued to go up. So in order to calculate

those savings, you would have to know what the costs for O&M

would have been without BRAC. And that is sort of a counter factual that is pretty hard to calculate.

So we think that there are savings. I actually think that over the

next 10 years, the idea that we would save $15 billion, even in reduced O&M costs, if what we are talking about is getting rid of excess properties, is unlikely because the average maintenance costs
78

of those excess properties is actually fairly low. The high costs

come in those underutilized properties, and the underutilized properties are going to be harder to get ready for sale and dispose of.

And that is where you could start seeing some significant O&M

savings from consolidating and then getting rid of some of those

underutilized properties. But that is going to be a harder thing to

do.

Mr. CUMMINGS. I’m sure the economy is going to get better, but

in Baltimore we have a dispute going on right now, right now, with

regard to building some—a new State Center for all the State offices because there is so much vacant property downtown. So the

vacant property owners downtown are saying, wait a minute, why

are you building new buildings when we have all this vacant property? I mean, your estimates—do you take into consideration the

fact that there is already a lot of private problems right now, particularly with commercial properties and things of that nature?

Ms. GULLO. Well, I certainly think those issues go to estimates

of what the value of a particular property is, absolutely. And that

will—could sometimes depress the average values of properties,

Federal properties that might be available in that area.

Mr. CUMMINGS. Okay.

Mr. FOLEY. Can I just add one more thing? I think that, you

know, another area of savings is in the lease inventory. So an example at GSA is our headquarters building that we are renovating

and we intend to improve the utilization. Prior to the renovation,

we had about 2,500 people assigned to the building. After the renovation, we are going to have 6,000 people assigned to the building.

So that is going to eliminate O&M costs in a few Federal facilities.

It is going to eliminate lease costs that we are currently paying the

private sector for space that we are occupying. And I think there

are a lot of opportunities out there like that, that are contemplated

under the administration’s bill, that are hard to score what the direct benefits are. But there are potential tremendous millions and

millions and billions of dollars’ worth of savings that are out there,

because that is one small example right here.

Chairman ISSA. Thank you. I’m going to continue with the ranking member’s line in a number of ways. But, Ms. Foscarinis, I’m

going to ask you—in one of your proposals, which would be for

HUD to be required to develop a grant program for construction rehabilitation of Title V properties funded at 5 percent, let me ask

you the crux of sort of the program as it has been versus the program as it could be.

If you received a percentage greater than your current percentage you actually historically received, a percentage either in cash

or—obviously, you could use that cash—those chits to bid on properties, but you were simply a bidder, would that streamline your

system? So you wouldn’t look at a building unless you wanted a

building. You wouldn’t care if a tribe was picking up a piece of

land, a city was picking up a piece of land, you would essentially

get a commission out of the decommissioning process that would

buildup a fund, probably administered by HUD, that would result

in grants where you could go, or at least the homeless in general

could apply for grants that would allow them to pick the location
79

and the least cost and most efficient place to take care of homeless

needs.

Is that the system that if this was a perfect world, we would use

this funding mechanism to provide you with options?

Ms. FOSCARINIS. Chairman Issa, I appreciate the question. Our

recommendation is for a fund in addition to——

Chairman ISSA. I know it is. And I am not going there.

Ms. FOSCARINIS. Okay.

Chairman ISSA. And I’m not going there for a reason. That is

subject to an appropriation that is easy to talk about and unlikely

to be easy to achieve. And it is one of the reasons that as we are

looking at property disposal, we are looking at you historically getting about 2 percent of property. And as you say, rightfully, you get

the property, you get it late, you get it in sometimes not so great

condition, certainly not in as good a condition as you looked at it

at the beginning of the process, and then you take over maintenance and utilities and so on.

I’m looking and saying if we in this process have an opportunity

to streamline the system and to help the homeless be better off

than they are from a dedicated pool of money, then we on this committee have the ability to do what we cannot do if we are subject

to appropriation.

We can have all the discussion we want, but if I author a bill,

the ranking member authors a bill, it is going to be subject to appropriation and it is going to be subject to other committees’ jurisdiction. That is one of the reasons I asked you a more focused question is, I’m looking, saying, What is it that we can do for you?

Ms. FOSCARINIS. Well, we have focused on the property itself because we feel that in many communities, access to a piece of property is really key. And it is—we have not been open to this point,

to the idea of instead of the property, substituting money, because

we feel that the property is important and it gives an important

resource to groups who otherwise might not have access to it.

Chairman ISSA. And we are assuming in many cases that you

would use this fund at HUD and the grants provided from that

fund to bid on those properties. But you would be bidding with sort

of this earmarked money. If today you’re getting 2 percent and the

fund is 4 percent, now you have a grant process administered

where they are looking at the needs of various communities; they’re

prioritizing the community certainly that needs homeless shelters.

Perhaps they’re looking disproportionately at whether also our opportunity because of land or building, but it is administered by the

agency that we expect to look at the homeless problem to where,

quite frankly, in Mr. Gosar’s district, the disposal of land with

some buildings that may or may not—they may be way out there.

They may be of no value, but they are part of the pool.

On the other hand, in Mr. Cummings’ district, it may be or may

not be that the building being delivered is of any value to you, but

it is in the right area. So you have both the option of bidding on

the building and the option of—to the grant limit, whatever, you

know, HUD was going to make available. But basically HUD would

be your partner sitting there saying, we are going to pay what we

need to pay to get this building.
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And I’m not prejudging whether that would be a true option or

an appraised value or some other system. What I’m viewing is it

would be quick because you would have your partner and you

would have this pool of money.

Mr. Cummings and I would say, you know, the politics are out

of it; we are not trying to force a decision in our community. We

are looking and saying we have an agency, they have an allocation

of money from all dispositions that gives a predictability greater

than it is today. And, quite frankly, that money would allow you

to have what you are asking for here, which is this 5 percent net

proceed. We can talk about 5 percent, 2 percent. It is not important

for the percentage. But the idea is it would be built in a single fund

where you would be, in fact, generating both the purchase acquisition, if you will, and the renovation.

I’m not sure we can get to 5 plus 2, which is what your arithmetic adds up to, or 7 percent, you know, or 2 percent of the material—of the disposition and then 5 percent of the proceeds.

Ms. FOSCARINIS. Right. That is assuming, of course, that 2 percent is the right number.

Chairman ISSA. It is just a historic number and that is what I

want to improve from.

Ms. FOSCARINIS. Right. I understand. We need to look at that in

detail as a specific proposal. Our concern about substituting money

for buildings is that there are already appropriations through HUD

and through other Federal agencies to assess homeless persons.

They are not sufficient by far. I mean, the funding now is vastly

oversubscribed. Our concern is we don’t want this resource, which

is a different type of resource, to become part of that mix of appropriations where, you know, we can cut or not significantly increase

other HUD funding because—while we have this other pool of

money and that goes into the overall mix. That is our concern.

And there is also a separate concern about the property itself.

And many communities having a building makes a big difference

because community groups face issues like NIMBYism. They face

opposition. These buildings are typically—because they are Federal

property, they can more easily—and they are being used for a Federal purpose. They can bypass some of that community opposition

and allow—give greater strength to the group trying to use them.

So there are reasons why the property matters.

However, you know, we are open to discussing any proposal. We

need to take a look at the specifics of it.

Chairman ISSA. Sure. I would like your thoughts as we go

through this process. Like I say, I jumped onto the 5 percent, but

I knew that, in fact, there is a certain point at which the appropriator starts saying we are not going to let that happen. So we want

to make sure we steer clear of it.

Ms. Gullo, there’s a number of things that I’m interested in. In

your report, which is already in the record, you come up with some

interesting figures as to Mr. Foley’s organization’s scoring. Fortyfive percent of the buildings listed, the structures were already on

the list, so half of his 15 billion, if we assume all things being

equal. So we are double-counting potentially, or counting what has

previously been counted. Twenty-eight percent of the buildings in

your study are probably going to be demolished, which I hope they
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didn’t score them before demolishment; 20 percent have already

been disposed of and are no longer considered excess. That part

certainly is going to affect the 15 billion. Six percent have already

been slated for conveyance at little or no cost to other public entities. And less than 1 percent of the properties, a total of 30, are

expected to be available for sale. And there are only, you know,

what, 30 sales of them; the highest was $2.5 million. Is that also

part of your belief, that there isn’t that much there, there?

Ms. GULLO. Yes, sir. I mean, basically I think what that—what

that data base shows is existing stock of excess properties. And I

think many of those, as we pointed out, are already in the process

of being disposed of. And I think the point we were making—there

are two. First of all, most excess properties end up getting demolished and a fairly small percentage are actually sold. And that

property doesn’t have a lot of value.

So the point we were trying to make there is that in order to see

receipts anywhere close to in the billions of dollars, you would have

to identify significantly more valuable property and dispose of that

through sales in order to get receipts of 15 billion. If what you are

talking about are avoided O&M costs, then you could achieve

avoided O&M costs with properties that aren’t as valuable.

Chairman ISSA. But aren’t a lot of these properties—they are basically being shuttered, and in many cases the maintenance is not

sufficient to maintain them at a usable level. So the truth is they

are depreciating very, very quickly. These are buildings with leaky

roofs, broken windows. They just try to stop the vandalism pretty

much. That’s, as Mr. Quigley mentioned, that’s what you see a lot,

isn’t it?

Ms. GULLO. Yeah. That is our impression. I mean, Mr. Foley

could probably speak on that.

Chairman ISSA. Mr. Foley, I misstated. I realize OMB’s numbers.

Let me just share with you something, and I know I’m going on,

but if I’m kind of the last I might get away with it.

You know, I took a team down to Puerto Rico to look at Roosevelt

Roads. Now, that was worth—and this is BRAC, but it was worth

about $2 billion estimated at the time of closing. Today it is worth

about 2 cents. All of the electrics have been damaged or destroyed.

And they estimate $110 million just in copper having been looted.

And this is, by the way, where there were guards on the place,

military operations still going on in small pockets of a large base.

The giant iguana have destroyed the road structure considerably,

and they just keep trying to patch them so the cars can go over

them just to inspect things. People implanted in the middle of the

base, little pockets of new military, thus making it impossible to

sell the land in a way in which a developer would want to be there.

To be quite frank, you don’t necessarily want the National Guard

Armory right on the beach. But that is where they put the Army

National Guard, was right on the beach. So needless to say, for the

casino or the resort or anybody else, it wasn’t—it is no longer very

good. And on top of that, we spent as much as $110 million a year

to maintain it with these guards and so on. Well, $60 million worth

of power plant that had contamination has never been cleaned up.

So the Governor is looking forward to having it transferred to him
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at no cost, not much value, and we still have to do the $60 million

on the power plant. That is my basis for concern.

In addition to—and, Ms. Gullo, I’m not so sure that you actually

very quickly get that savings. I was at Fort Ord as a young Army

officer, obviously a long time ago, but I watched it get closed. On

the day it closed, I watched the carpenters continue to put new

roofs on brand-new buildings still under construction. We find a

way to spend money even after we close things.

I have one or two more quick questions. The American people see

that we have this excess property. Currently the inventory, and

Mr. Foley more currently, and Mr. Moravec, historically, isn’t our

biggest problem that we abandon property or choose not to go to

it while we lease property down the street?

I can show—the FBI chooses to be in a nice tower building in the

city where we have excess military installation because there is no

structure to say, from a command-and-control standpoint, no, you

will go to what we own if it is good enough; no, you may not rent

what you want if we can in fact provide it cheaper.

And, Mr. Foley, isn’t that really part of the authority the GSA

would need to start really reining in the selective ‘‘I’ve got my

budget, I’m going where I want to go’’ type mentality and bureaucracy?

Mr. FOLEY. I think our process right now does look at do we have

existing Federal properties first. But the biggest challenge often

with those facilities is there is a cost to convert them. So you mentioned the FBI. If you have to put in SCIF space or do something

to improve the security around it, there is a cost to that. And finding the resources upfront to be able to do that is often the biggest

challenge versus going out and leasing where, you Know, it is just

an annual rental payment. So you’re looking at, in some cases,

hundreds of billions of dollars to renovate an existing Federal facility or convert it for use, versus an annual rental payment, you

know, of $3 or $4 million.

Chairman ISSA. Right. For example, if we took the GSA and we

made you a leasing agent, and we took you off budget for a moment—in the perfect world, we take you off budget. We make you

a landlord.

Mr. FOLEY. We will take it.

Chairman ISSA. It ain’t going to you personally. And instead of

looking at the capital cost of buying or the capital cost of renovating, we look at the competitive rent versus rent avoidance. So

now we are actually scoring against your competitor, the private

sector competitor. And I’m as private sector as anybody that will

ever sit on this dais.

But I will give you an example—Moffet Field. We have donated

huge amounts of tracts to schools and everybody we can think of,

while in fact major Federal agencies are sitting in very expensive

space in San Jose, Santa Clara, and the area. Why? Well, I can’t

quite figure it out. It is not that I don’t want to do good, but those

agencies could have been told the GSA has land behind a secure

gate. We already have NASA and highly classified programs there.

We can put you behind that gate. We will put you behind that gate,

and we will meet your requirements as we see for renovation.

Maybe capex was part of it, but quite frankly, our per-year cost—
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we have tenants that pay almost nothing for land that—and facilities they normally wouldn’t have taken, except it was almost free.

And we are not talking homeless in this case. You can’t afford to

be homeless in San Jose as it turns out.

Don’t we need to change that system so that we don’t score—and

this is really a CBO thing. Can’t we get to where we score it in

a 10-year window or a 20-year window so that we are not constantly trying to look at these capexes.

My bases have, including Camp Pendleton, have PPV. PPV is a

good program because of a bad accounting system that we live

under. The idea that we pay somebody 50 years’ worth of a guaranteed lease so that they will make the capex so we don’t have to,

and it scores cheaper for us, is a disingenuous way of doing it. But

the fact is the appropriators won’t guarantee they will do the

MILCON every year; and there is no agency that has the ability

to say, look, we can compete and really meet this cost at the same

or less, but we are not able to compete.

Ms. GULLO. Congressman, we agree with you on the issue of capital leases. When we see legislation that would authorize and allow

for that kind of a long-term lease, CBO’s scoring will score that

up—the full cost of those upfront. I mean—so we agree with you.

Chairman ISSA. You’re stuck with the existing way of scoring because we have given it to you.

Ms. GULLO. Right. But I think—and that is not always the way.

If it is an ongoing lease that is just for, you know, annual leases,

then those are scored just on a cash basis each year. But we do

tend to take that view, that if we are entering into a long-term capital-type lease, we would score that up front, the full cost of that,

so that it is a little bit more comparable to what we would have

to pay or appropriate to build a building.

Chairman ISSA. You try to normalize it as best you can. But PPV

exists because of government’s failures, not because it was inherently cheaper for the private sector to build barracks on my bases.

Mr. MORAVEC. I think that is right. I would add—I mean, the

reasons that the government leases space as opposed to constructs

it or finds a way of people putting in owned space is several. It begins with the fact that it is much easier to get the money from Congress for a lease because of budget scorekeeping rules and because

of the availability of funds than it is to federally construct or acquire space.

Second, it is much faster. The private sector actually is much

faster at producing a finished facility that supports the mission of

the tenant agencies than the public sector. It just is.

And the final thing is that the agencies actually prefer to be in

private, modern, efficiently run space, as opposed to having to force

themselves to accommodate their mission to an existing federally

owned installation. In your Moffet Field example, that would be—

that is a great example except that—of course, it begs the question:

Where does the money come from to build the facility behind the

fence? Okay. The land is free, but where does the money come from

to build a—in many cases, a special purpose building? That is one

other thing I want to mention. A lot of these Federal buildings are

not just plain vanilla office space.
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You mentioned the FBI. An FBI building is a very special-purpose building. It has anti-progressive collapse technology in the

way it is developed. It is typically on a very large site. It gives

standoff distances to the surrounding areas. It has hardened curtain walls, blast-resistant glass, a lot of special functionality. And

it is just—you can’t just move into a regular office building and

turn it into that kind of facility, especially given the Federal Government’s requirements with regard to security in the post 9/11 era

and with regard to environmental sustainability, which are both

highly laudable social objectives. When you add those factors in, it

really adds to the cost of building a Federal building.

Chairman ISSA. Did I mention that the FBI took one of the

shacks—I am sorry—one of the old buildings at Roosevelt Roads

because they could? And we don’t know what they are doing there,

and we can’t find out.

I want to thank the ranking member. This was an unusually

long set, and he was patient to hear me out.

We thank you for both your comments on some other areas and

on this. The committee is committed to help in both parts, the

property disposal and trying to create a situation in which new acquisitions, whether leased or purchased, can be better thought out

to save the American taxpayers’ money.

And, with that, we stand adjourned.

[Whereupon, at 12:05 p.m., the subcommittee was adjourned.]

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