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22–242 PDF 2005

WASTED SPACE, WASTED DOLLARS: THE NEED

FOR FEDERAL REAL PROPERTY MANAGEMENT

REFORM

HEARING

BEFORE THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

ON

H.R. 3134

TO AMEND TITLE 40, UNITED STATES CODE, TO REQUIRE THE FEDERAL REAL PROPERTY COUNCIL TO CARRY OUT A PILOT PROGRAM

FOR THE EXPEDITIOUS DISPOSAL OF UNDERUTILIZED FEDERAL REAL

PROPERTY, AND TO IMPROVE THE ECONOMY AND EFFICIENCY OF

FEDERAL REAL PROPERTY

JUNE 22, 2005

Serial No. 109–39

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

(III)

C O N T E N T S

Page

Hearing held on June 22, 2005 ............................................................................... 1

Text of H.R. 3134 ..................................................................................................... 6

Statement of:

Johnson, Clay, Deputy Director of Management, Office of Management

and Budget; and David M. Walker, Comptroller General, U.S. Government Accountability Office ........................................................................... 30

Johnson, Clay ............................................................................................ 30

Walker, David M. ...................................................................................... 34

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

Cannon, Hon. Chris, a Representative in Congress from the State of

Utah, prepared statement of ........................................................................ 63

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

of Maryland, prepared statement of ............................................................ 79

Davis, Chairman Tom, a Representative in Congress from the State of

Virginia, prepared statement of ................................................................... 4

Johnson, Clay, Deputy Director of Management, Office of Management

and Budget, prepared statement of ............................................................. 32

Walker, David M., Comptroller General, U.S. Government Accountability

Office, prepared statement of ....................................................................... 36

Waxman, Hon. Henry A., a Representative in Congress from the State

of California, prepared statement of ........................................................... 23

(1)

WASTED SPACE, WASTED DOLLARS: THE

NEED FOR FEDERAL REAL PROPERTY MANAGEMENT REFORM

WEDNESDAY, JUNE 22, 2005

HOUSE OF REPRESENTATIVES,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The committee met, pursuant to notice, at 10:04 a.m., in room

2154, Rayburn House Office Building, Hon. Tom Davis of Virginia

(chairman of the committee) presiding.

Present: Davis of Virginia, Shays, Cannon, Duncan, Turner, Issa,

Brown-Waite, Marchant, Dent, Waxman, Cummings, Kucinich,

Ruppersberger, and Norton.

Staff present: Melissa Wojciak, staff director; David Marin, deputy staff director/communications director; Keith Ausbrook, chief

counsel; Ellen Brown, legislative director and senior policy counsel;

Howie Denis, counsel; Robert Borden, counsel/parliamentarian; Rob

White, press secretary; Drew Crockett, deputy director of communications; Victoria Proctor, senior professional staff member; Cynthia Vallina, GAO detailee; Teresa Austin, chief clerk; Sarah

D’Orsie, deputy clerk; Leneal Scott, computer systems manager;

Mark Stephenson, minority professional staff member; Earley

Green, minority chief clerk; Jean Gosa, minority assistant clerk;

and Stacey Warady, minority staff assistant.

Chairman TOM DAVIS. The Committee on Government Reform

will come to order. I want to welcome everybody to our hearing

today on legislation to address longstanding problems in Federal

real property management.

The committee is well aware of the challenges of vacant, underutilized, and deteriorating Federal real property. Federal Government agencies control over 3.2 billion square feet of real property

assets to the United States and around the world. The Federal

Government spends billions of dollars annually to maintain those

properties; yet many Federal properties are in disrepair, lack upto-date technological infrastructure, and pose health and safety

threats to workers and visitors.

Out of 8,000 buildings managed by the General Services Administration, more than half are 50 years old and are deteriorating.

Combined, they require an estimated $5.7 billion in repairs. As a

result, agencies are often forced to vacate properties and lease costly space from the private sector.

With few exceptions, agencies don’t have incentives to dispose of

these excess surpluses or underutilized properties. For many agenVerDate 11-MAY-2000 12:02 Aug 24, 2005 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\22242.TXT HGOVREF1 PsN: HGOVREF1
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cies, revenue-generating sales for real property aren’t returned to

the agency capital accounts and therefore they reduce the incentives for agencies to invest in properties to make them usable. Furthermore, the placement of excess and underutilized Federal property and deteriorating facilities on the Government Accountability

Office high risk series underscores the need for this hearing.

Since the 106th Congress, I have chaired Government Reform

hearings examining innovative solutions to address the Federal

property management crisis. The committee has found that Federal

agencies are subject to several laws that limit their authority to acquire, manage, and dispose of real property. Agencies need broader

management authority to efficiently and cost-effectively manage

their properties. They must be able to implement life-cycle management principles that will improve operational management, financial management, and agency accountability, encourage cost-savings, and incorporate private sector best practices.

This committee marked up bipartisan legislation in the 107th

and 108th Congresses that included these comprehensive management reforms. The most recent version we approved was H.R. 2548,

the Federal Property Asset Management Reform Act of 2003, cosponsored by myself and our ranking member, Henry Waxman.

The bill was delayed because of a debate on its budget impact.

The Congressional Budget Office attached a high cost estimate to

H.R. 2548, implying that the Federal Government would spend

more money by passing the bill than if it did nothing. This, of

course, makes little sense; this is about saving money, not spending

more of it. Fiscal responsibility requires that we grant agencies alternative property management authority to address this growing

problem.

Today we are going to review narrowly tailored draft legislation,

language authored by myself and Chairman Nussle of the Budget

Committee, to begin addressing these management challenges and

combating this inexcusable waste. The draft legislation creates a 5-

year pilot program to allow for the expedited disposal of excess,

surplus, or underutilized Federal real properties. Under the proposal, 10 eligible properties per year are to be sold for at least fair

market value, and the agency affected by the disposal can retain

a portion of the proceeds. This creates needed incentives for agencies to deal with unneeded properties.

In addition, the draft legislation codifies provisions from Executive Order 13327. The order borrowed several key provisions from

H.R. 2548, such as: the creation of a Senior Real Property Officer;

the development of agency asset management plans; the creation

of an accurate and updated inventory of all Federal real property;

and an emphasis on financial management.

I want to thank Chairman Nussle of the House Budget Committee for ensuring that the Fiscal Year 2006 Budget Resolution provided a $50 million reserve fund to the Government Reform Committee to pay for the pilot program. This fund will allow us to meet

CBO’s objections under the draft legislation and to prove that real

property reform actually saves money.

The committee anticipates that at the end of the 5-year program

the pilot will have resulted in considerable savings to the Government, thereby clearing the way for more fundamental real property

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reform. Potential net benefits to the Government include improved

Federal spaces, lower operating costs, and increased revenue without up-front Federal capital expenditures.

Today we are going to hear from Clay Johnson, the Deputy Director for Management at the Office of Management and Budget,

and David Walker, the Comptroller General at the Government Accountability Office. GAO has conducted several studies on the state

of Federal real property. Mr. Walker will discuss GAO’s evaluation

of the underutilization of Federal real property, its rationale for

placing this issue on the GAO high risk list, and potential legislation to improve efficient use and sale of excess, surplus or underutilized properties. Mr. Johnson will testify about the administration’s experience in dealing with deteriorating and underutilized

property and the potential impact of legislation to improve efficient

use and sale of excess, surplus or underutilized properties.

We are fortunate to have them both and I look forward to hearing from them.

Also, Mr. Johnson is accompanied by members of the Federal

Real Property Council. I want to thank them for joining us here

this morning, and appreciate the work that they are doing.

[The prepared statement of Chairman Tom Davis and the text of

H.R. 3134 follow:]

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Chairman TOM DAVIS. I now recognize our distinguished ranking

member, Mr. Waxman, for his opening statement.

Mr. WAXMAN. Thank you, Mr. Chairman, for holding this important hearing on Federal real property management. Our committee

has been a leader in focusing the spotlight on the deficiencies that

exist in real property management and attempting to find bipartisan solutions to these difficult issues. I am glad you are being persistent in trying to overcome some of the bureaucratic hurdles that

stand in the way of fixing these vexing problems.

We are here today to examine the very genuine, costly and pressing problems the Federal Government has managing its real property, its public buildings and lands. As GAO has indicated by placing this issue on its ‘‘high risk’’ list, problems abound. Unneeded

and underused buildings are in the Federal inventory. Some buildings are literally falling apart. Accurate data on Federal real property is hard to obtain from agencies, and costly leasing of office

space is too often the quick answer.

These are far from trivial problems. In fact, they are costing the

Federal Government and the American taxpayer billions of dollars.

We are spending $3 to $4 billion a year on buildings we don’t need.

In addition, the amount of money required to bring needed Federal

facilities up to minimally accepted standards is truly staggering,

properly close to $100 billion.

Last year the administration issued an Executive order in an attempt to address some of these issues. The order established the

position of Senior Real Property Officer in all major executive agencies, created an interagency Federal Real Property Council, and directed the Administrator of GSA to establish and maintain a single, comprehensive database of all Federal real property. These

steps should help bring needed information and focus to this problem within the executive branch.

Chairman Davis plans to introduce a bill that attempts to deal

with some of these problems in Federal real property management.

In addition to codifying last year’s Executive order, his bill would

create a pilot program with the aim of encouraging the executive

branch agencies to dispose of properties which they no longer need

to perform their missions. While this is a worthy goal, I am troubled by some of the methods the bill uses to attain this goal.

Drafts of that legislation that I have seen contain a number of

troubling provisions. First, under the pilot, excess property at one

agency could be sold without an assessment of whether another

agency might want it. I am not sure that is a very good way to

manage Federal property.

Second, the pilot requires at least 10 properties per year for 5

years to be sold using expedited processes. There is no upper limit,

so under this pilot the expedited process could become the standard.

Finally, the pilot waives provisions of the McKinney homeless assistance act and the Federal Property Act that give homeless providers and State and local governments a first crack at surplus

properties at a discounted price if the properties will be used for

certain defined public benefits. I question the merits of allowing

such a waiver, and I think State and local governments and homeVerDate 11-MAY-2000 12:02 Aug 24, 2005 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 D:\DOCS\22242.TXT HGOVREF1 PsN: HGOVREF1
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less providers should have the opportunity to put their positions on

the issue on the record.

That being said, the Chair is committed to working with the minority to address some of these concerns, and I hope at the end of

the day we have a bill that everyone can support.

Thank you, Mr. Chairman.

[The prepared statement of Hon. Henry A. Waxman follows:]

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Chairman TOM DAVIS. Mr. Waxman, thanks. Let me just say this

is draft legislation. We are going to be hearing from a lot of people,

and I welcome your input as we move forward. On the issue of the

McKinney act and the exemption we have carved out, let me just

say I look forward to working with you to try some satisfactory balance to this.

For the record, I started the first shelter for the homeless out in

Fairfax County, at Baileys Crossroads. In fact, there are two shelters that we championed out there. I am committed to this, but I

also recognize that, as we move this legislation forward on a trial

basis, we want to make sure we get input from all the stakeholders, and hopefully we can work out something that works for everybody.

We have to remember that if nothing happens on this, that if no

property is disposed of, the homeless get nothing. So hopefully we

can work through and they can have some input into this process.

I am concerned about the rigidity of the McKinney act and a pilot

program, and what that would do to it.

But if we can work together, hopefully we can find some satisfactory balance, and I look forward to your concern on this issue, and

Mr. Shays’ concern, Ms. Norton’s and others, as we more forward

to see if we can have a pilot program that works, but at the same

time make sure that some of these other groups are included in the

process.

Any other opening statements on this side?

Ms. NORTON. Mr. Chairman.

Chairman TOM DAVIS. Ms. Norton.

Ms. NORTON. Mr. Chairman, I applaud your effort here to deal

with the tremendous waste of real property lying idle throughout

the United States. I am not sure how much of it is useful, but a

lot of it surely must be. And the Executive order begins to develop

a database so that we at least know what we are talking about

here.

I am ranking member of a subcommittee on another committee,

and appreciate especially your effort because a fair amount of this

unused land had been in the District, and the Southeast Federal

Center, 5 minutes from the Capitol, is perhaps the best example

of the use of Federal property now for the benefit of the Federal

Government and, as it turns out, for the benefit of the local jurisdiction.

The Federal Government continues to own the land, but the land

is being privately developed. That is only one approach, but it is

certainly an approach that everybody can see with their own eyes,

that the most valuable land perhaps on the East coast was lying

there on the Anacostia River unused, and now there is much construction going up there, to the benefit of all concerned.

Mr. Chairman, there is another novel bill that I have introduced,

and I have asked your staff for feedback, and I ask once again for

feedback. This bill combines a bill on which you are a co-sponsor

with me with the District of Columbia’s need for completely, totally

unused Federal land for 150 years, land, again, very close to the

Capitol, near RFK Stadium, where the General Hospital has been,

where the prison has been, a very large plot of land, 150 years the

District has had administrative use of. It can’t do what needs to

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be done on the land, highest and best use, because it doesn’t own

the land, and the Federal Government is right not simply to transfer ownership of Federal land to whoever wants it.

That and another parcel of park land, also unused since the District was created, where the District wants to make use of it, I

have put into a bill that would transfer that land to the District

of Columbia in exchange and partial payment for what the GAO

says is owed to the District because of a structural deficit. And I

would like to have some feedback on that, which is another way to

deal with getting the highest and best use for Federal land, which

the Federal Government does not need, would be paid for in-kind,

and yet another approach.

I am always searching for such approaches, and, therefore, I appreciate that you have come forward with this pilot program. I

would like to raise a few questions, some of which have been raised

by the ranking member. I have not had an opportunity to look at

the bill. It says that the land would be sold for 90 percent of market value. Why not sell it for market value? If the market value

is low, then that is what it sells for. If the market value is above

what we thought it was, that is what it sells for. So I didn’t understand the 90 percent. If that could be clarified.

I join the ranking member on the concern about jumping over the

public benefit, wiping out the public benefit sections. He has spoken of McKinney, you have spoken of McKinney, but I want to say,

Mr. Chairman, that one of the most important reasons for the public benefit section is that local jurisdictions themselves can get this

land at a much reduced price or trade for use as libraries, hospitals, or other public benefits. They can’t just flip it and use it for

market matters, for ordinary commercial matters. And I think that

there are many local jurisdictions in the United States that would

wonder why that right would somehow be lost to them in this local

matter.

I think I would like to look at the legislation. I have to assume

that there would be an auction to the highest bidder. When it says

that this Council will select the properties, I am assuming that

they would be sold in the same way that everything in the Federal

Government has to be done, by competitive bidding, although you

hadn’t mentioned that, and I just have to assume that is the case.

I didn’t understand why this Federal Property Council——

Chairman TOM DAVIS. Mr. Walker has limited time today to appear before us.

Ms. NORTON. Mr. Chairman, I am almost finished.

Chairman TOM DAVIS. All right.

Ms. NORTON [continuing]. Was going to select the land. And if

there is money, I would hope that it would be used to repair some

of this dilapidated property.

And I thank you for your indulgence, Mr. Chairman.

Chairman TOM DAVIS. All right, thank you.

Let me just quickly note we are waiting for the GSA to give us

an inventory of the Federal properties in the District, and at that

point I think we can have a fruitful discussion over what the Government might do and what the D.C. government might do with it.

I have some strong views on how the city ought to have that. I

know Ms. Norton does, the Mayor does, and hopefully we can move

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forward and this will be something that will be very helpful to the

city over the long term.

Gentleman from Tennessee.

Mr. DUNCAN. Mr. Chairman, I will be very quick. First of all, in

the materials we have been provided, it is upsetting, or should be

upsetting to everyone, to hear that the Department of Defense is

paying $3 to $4 billion a year just for the maintenance of unneeded

facilities. And also that the GSA estimates that the Federal Government has thousands of buildings that are deteriorating and that

it will cost tens of billions of dollars to make them fully functional

again.

I know also from my service on another committee that the BLM

has identified 3.3 million acres of land that they identify as surplus

that they would like to get rid of, but there are some of these

groups that just oppose it any time the Federal Government wants

to dispose of any land. In fact, they want the Government to take

over more. All politicians want to create parks, and that sounds

good, but our parks are very underused for the most part, and that

takes land off the tax rolls and makes it harder on the remaining

property that is on the tax rolls.

I know also from my service on the Public Building Subcommittee the most underused space in the Federal inventory is in Federal courthouses. I had a member of the other body, the Senate,

say to me one time that you could shoot a gun at 3 p.m., down the

hall in almost every Federal courthouse in the country and probably not hit anybody. I thought of that recently when I read in the

Tennessee Bar Journal that the average Federal judge tried 40 jury

trials a year in 1960, and now they try about 12 a year. Yet, you

very seldom can get judges to share court space.

Also, I remember when the Secret Service wanted to build a new

headquarters, they were going to pay $70,723,000 for one-third of

an acre in downtown Washington, when there were nine other parcels of property all within the parameters of where they needed the

building that were between $10 and $30 million. We did get them

to agree to knock $50 million off the price of the building by removing some of the gyms and kitchens and so forth, but they agreed

to that if we would let them go ahead and still buy the $70 million,

one-third of an acre property.

So there are a lot of bad deals here, there is a lot of waste and

inefficiency, and I am certainly pleased that you are looking into

this. Thank you very much.

Chairman TOM DAVIS. Thank you very much. I appreciate the

gentleman’s comments.

I think we are ready to move to our first panel.

Members will have 7 days to submit opening statements for the

record.

I will now recognize our distinguished panel, the Honorable Clay

Johnson, Deputy Director for Management, Office of Management

and Budget; and David Walker, Comptroller General of the Government Accountability Office.

It is our policy we swear you in before you testify, so if you would

just rise and raise your right hands.

[Witnesses sworn.]

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Chairman TOM DAVIS. First, thank you very much for being here.

You have both given this a lot of thought and we appreciate your

being here. Give your opening statements and we will move to

questions. Thank you.

Mr. Johnson, we will start with you.

STATEMENTS OF CLAY JOHNSON, DEPUTY DIRECTOR OF MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET; AND

DAVID M. WALKER, COMPTROLLER GENERAL, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

STATEMENT OF CLAY JOHNSON

Mr. JOHNSON. Mr. Chairman, members of the committee, thank

you for having us up here.

The Federal Government thinks it owns $300 billion or so of real

property, but we are not sure. We do know for sure that we have

a lot of property that we don’t need, and we have a lot of property

that we do need, but it also needs to be improved. And I think dealing with one of those matters will help us deal with the other.

We had the President issue an Executive order last year to deal

with this matter, and we are delighted that you are attempting to

codify this with this legislation. There is more interest in the executive branch on this issue of real property than just about any

other management issue we are tackling.

The Federal Real Property Officers, the agency leadership, the

Federal Real Property Council is about as energized a bunch of

people on this subject as anything else we are working on, and obviously there is a lot of interest in this committee and in both the

House and Senate in general. It is something that needs to be

taken care of, and with the help of this legislation and the work

of the Real Property Officers and Real Property Council and other

legislation, we will take care of this. This is not brain surgery; this

just requires a lot of dedication, a lot of attention to detail, and we

are all in the process of doing that.

Our Executive order a year ago attempted to assign agency accountability for real property by the assignment of Real Property

Officers in each agency and the creation of a real property initiative with the President’s management agenda, so we are monitoring and holding agencies accountable for their performance in these

matters with our well-used score card—red, yellow, green. We attempted to provide a Government-wide perspective on this matter,

which we have done by creating the Real Property Officers Council.

We are working hard to develop this inventory which you talked

about. We have performance measures that we have agreed to that

we are in the process of developing metrics for each of the properties. And then once we have some information about all these

properties, each agency will be challenged to put together a real

property plan about what they intend to do to bring sensibility and

fiscal accountability for the real property inventories.

This legislation is actually probably a little bit ahead of us in

that this calls for specific corrective opportunities or corrective provisions, and we can’t really tell you yet—we are probably a year

or so away—what we would do with these flexibilities. But it is a

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great time for us all to come together and start talking about these

things because this is a big problem, a big opportunity, both.

So I applaud your efforts, sir, and the committee, and look forward to working with you in the future.

[The prepared statement of Mr. Johnson follows:]

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Chairman TOM DAVIS. Thank you very much, Mr. Johnson.

Comptroller Walker.

STATEMENT OF DAVID M. WALKER

Mr. WALKER. Thank you, Mr. Chairman. It is a pleasure to be

before the House Government Reform Committee. I would respectfully request that my entire statement be entered into the record.

Chairman TOM DAVIS. Without objection.

Mr. WALKER. I will just hit the highlights right now.

I appreciate being able to visit with you regarding the issue of

Federal real property. As you know, GAO designated this area as

a high risk area in January 2003. There are a number of reasons

that we designate it as a high risk area. It is currently estimated

that the Federal Government owns over $300 billion in real property assets in all 11 Federal regions. For example, the DOD alone

spends $3 to $4 billion a year in maintaining properties that it believes it does not need. Other agencies are also spending money as

well.

I think it is important to note, as contained in our recent 21st

Century Challenges document that has been provided to every

member of this committee, that this is another example of how

much the Federal Government is based upon conditions that existed in the 1950’s and the 1960’s. Our current Federal real property is based upon organizational models of the 1950’s. It does not

give appropriate consideration to the advancements in technology

and transportation systems since the 1950’s, and it also does not

give due consideration to our needs to safeguard and protect Federal properties because of the increased risk of terrorism since the

1950’s.

As has been noted, a number of these Federal properties are in

a state of deterioration; there are large and growing deferred maintenance costs. There has been progress made since we designated

this as a high risk area. As Clay Johnson has noted, the President

has taken action by issuing an Executive order, by creating the

Real Property Council, and by asking that Council and other responsible parties to take a number of steps. And I do note, as Clay

did, that your proposed legislation would codify the Executive

order, as well as address a number of other issues.

In summary, I think enabling legislation is needed. There are a

number of positive aspects of this draft legislation that I would be

happy to share with the committee in the question and answer period. There are a few areas that I would ask you to consider in addition to what you already have, which I can cover in the Q&A.

But the bottom line is this: we need to make progress in this

area for several reasons. No. 1, to save money. Not only not to

spend money on things that we don’t need, but to obtain the economic value of assets that we don’t need. Second, to enhance the

safety and security of Federal properties and those that are in

those properties and around those properties. And, third, to promote economic development.

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There are three major benefits to making progress in this area,

and it would be a very positive step toward trying to realign our

Government to recognize 21st century realities if progress could be

made in this area.

Thank you, Mr. Chairman and members of the committee.

[The prepared statement of Mr. Walker follows:]

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Chairman TOM DAVIS. Thank you very much.

Mr. Johnson, let me start. The reason we are on a 5-year pilot

is because Congressional Budget Office scoring, to me, appears very

arcane, but doesn’t score the savings. Do you know does OMB

agree with the Congressional Budget Office on the scoring or does

OMB think that we can save money by disposal of the property?

Mr. JOHNSON. I can’t comment on the specifics of their scoring

methodology, but we find within OMB, too—not just CBO scoring,

but within OMB—we find ourselves debating how to score different

mechanisms, and one of them is some of these real property mechanisms; and it needs to be thought through. I think the best reference that I heard to scoring issues is scoring ought to be done

so as to best serve the American people. And we need to make sure

that we are doing that and have good, lively debates about how to

score these things, but make sure that the winner, no matter how

it is scored, is always the taxpayer, the citizen.

Chairman TOM DAVIS. That is why we prompted it with a 5-year

pilot, so we can get some real-time experience, instead of looking

at some arcane scoring rules. So in that case you support this concept. Not the specifics, necessarily, but the concept?

Mr. JOHNSON. Yes, we very much support the concept. And we

also support the concept of a 5-year time period. The Council has

informally adopted the goal of taking a 4-year or 5-year time period

to do all the things that the bill calls for, codifies what the Executive order did last year, but to identify the worst performing 5 percent. We just grabbed a number, 5 percent, which might equate to

$15 billion worth of real property.

And let us figure out and demonstrate what can be done in the

super responsible fashion to deal with the worst of our property

issues, and demonstrate what the potential is and then look at how

to extend that beyond that worst 5 percent. And the thought is that

a 5-year or 4-year time period is a reasonable period of time to do

that with.

Chairman TOM DAVIS. The draft legislation will permit the Federal Real Property Council to retain a percentage of the proceeds

of sale for the disposition of property to be available and used for

further investments to upgrade and improve other properties so

that they can be available for disposition as well. It would also provide proceeds to be retained by affected agencies that could be used

to implement their asset management plans.

What disincentives do agencies currently face in disposing of excess property? And do you think that the proceeds from sales will

provide a sufficient incentive for agencies to dispose of more properties and better manage their properties?

Mr. JOHNSON. My personal opinion is I don’t think the primary

reason why more has not been done on this is, one, there are statutes that make it difficult to deal with it effectively, but, two, agencies have never been held accountable. I don’t think you need to

hang a big carrot in front of agencies; you just need to tell them

this is what you are expected to do and hold them accountable for

doing that.

That is the first thing that has to be done, and I think we are

a year into making that happen. And the agencies do not resist

this, they welcome it. And as I mentioned in my opening remarks,

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they are as enthusiastic about this management opportunity as

anything else we are working on, because they realize the huge potential and the opportunity to take proceeds from the sale of unused property and use it to improve and make more productive the

properties that they do need.

So the general concept here we fully endorse. I don’t think incentive is the key. I would recommend that we make as big a percentage, if not all of the proceeds, of this disposition of properties available for use on other real property needs. We have huge deferred

maintenance challenges that we, for perhaps very good fiscal reasons, don’t fund, and have not funded for many, many years, and

this is a potential source of funds for that purpose.

Chairman TOM DAVIS. Thank you.

General Walker, the GAO recommends that a comprehensive, integrated transformation strategy for real property is still needed to

buildupon the Executive order. What does this mean? How would

it help the Government to improve its real property management

and how will this complement the agency asset management plans?

Mr. WALKER. Mr. Chairman, I think, as in many areas, you need

to have a comprehensive, strategic and integrated plan that lays

out what you are trying to accomplish, by when, who is responsible

for what, that crosses the various silos and organizational structures in the Federal Government in order to maximize the chance

of success. I would agree with Clay Johnson that one of the real

keys here is transparency. We need a lot more transparency with

regard to what the Government owns, what the State of that is,

and a variety of other factors. We need more accountability to

make sure that people are making progress. I think this plan could

help assure that accountability.

But I do believe that your incentives would be a plus, that it

would encourage people to be able to take actions, because right

now the current budgetary rules are such that it costs money to

save money. And right now they might not have the money to be

able to engage the disposition, and they don’t keep any of the proceeds when they do. Therefore, that is a very real impediment.

Chairman TOM DAVIS. OK, thank you very much.

Ms. Norton.

Ms. NORTON. Thank you, Mr. Chairman.

Mr. Johnson, reading your testimony, I want to commend you on

what looks like a very business-like way of trying to get a hold of

this really huge problem. You talk about the information that the

agencies will need or the Council will need on operating cost, condition, utilization, mission dependency. That is very important. This

is not just a piece of land. This is not just an asset.

And, very importantly, you say in your testimony which agency

property should be maintained. You know, some of these properties

have been ignored. That doesn’t mean they should simply be disposed of. And calling attention to the fact that you have ignored a

valuable asset in your inventory surely should be a part of this

process, which require cost-effective repairs. That is all very business-like. That is how business would go at whether or not to—

they wouldn’t just say choose some properties and get rid of them.

I am concerned here about—I think it was Mr. Walker that

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son is—that DOD is one of the few agencies that can sell properties. Now, maybe this agency with a huge budget needs some

very small financial incentives. When you are talking about incentives to the DOD budget, it is almost laughable.

But it seems to me the whole notion of accountability is what is

at work on DOD. They are sitting on top of properties. They say,

you know, we are in the base business, we are in the war-making

business, we are not interested in these properties, or something

like that, when they have the capacity to simply do what most

agencies don’t do, and that is dispose of the property right now

themselves.

How do you account for that, that they are not moving on the

property?

And maybe Mr. Johnson knows something about why some agencies that already have—I notice you say the Veterans Administration has this flexibility and is using it. You don’t mention DOD, for

example.

I would like to hear both of you on that, because that is probably

where most of the property is.

Mr. JOHNSON. Well, my brief comment is that is what BRAC is

about, I think, and it is a very contentious issue when you decide

you don’t need a whole lot of property with a whole lot of employees on it and earning a whole lot of paychecks in somebody’s district or somebody’s State. So there is a process for dealing with

that, and I think there is a 5-year cycle and so forth.

Ms. NORTON. Are these old BRAC properties? You mean old

BRAC properties that they no longer use and are just sitting there?

Mr. JOHNSON. No, I believe properties they don’t need. They

might be functional, but they really don’t need them. They could

consolidate. They could work more efficiently if they were able to

close some bases that they don’t need.

Ms. NORTON. No, sir. I am talking about the ones that are already excess properties that could sell—Mr. Walker alluded to

them—and that they are not in fact using their existing flexibility

to deal with.

Mr. JOHNSON. Well, on that, I can’t turn the clock back, but I

think DOD is enthusiastic about identifying what they need, what

they don’t need, what they have, what they wish they didn’t have,

and then coming up with a plan for getting rid of that, and then

being held accountable for the implementation and execution of

that plan. So I don’t think the key is that there haven’t been incentives. I think the key is that it has not had the focus that it is

going to have, that it has now. And with focus and attention, and,

as David said, transparency and accountability, there will be attention.

Ms. NORTON. Yes, Mr. Walker.

Mr. WALKER. Two things. No. 1, you need a plan, you need transparency, and you need accountability. They haven’t had that, but

there is the expectation that they will, in part because of the Executive order, in part because of, hopefully, the codification of that

Executive order, which is one component of this bill.

Some of the properties, however, that are excess do have to do

with proposed actions under BRAC. But you are correct to say not

all of them do. So, therefore, we need that comprehensive and inteVerDate 11-MAY-2000 12:02 Aug 24, 2005 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 D:\DOCS\22242.TXT HGOVREF1 PsN: HGOVREF1
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grated plan that provides the right type of transparency and accountability mechanisms.

Ms. NORTON. I am not talking about proposed. If you looked at

the inventory of the Federal Government, you would find right

now, for decades, that inventory is largely in the hands of DOD,

which always could dispose of it. I accept your answer that focus

in on what the Executive order does, which is say, hey, fellows, we

are paying attention to this, so you better, is certainly the first

step.

I would like to ask both of you, before the chairman—I am the

only Democrat here—tells me I have to move on to the next person,

one more question, and that is whether you believe it is wise to

eliminate the public benefit. I am particularly asking about States

and localities who would have an opportunity to buy at least at a

reduced price if the land is to be used for a public benefit like a

hospital or a school. Is that a good thing to still have in the Federal

process of disposing of land or not?

Mr. WALKER. I would respectfully suggest that is an area that

needs to be explored further. My understanding of the draft bill

says that you have to sell the property for at least 90 percent of

the fair market value. The hope would be that you would sell it for

fair market value. There could be some circumstances in which,

where there is a public benefit, you might sell it for somewhat less

than fair market value.

Ms. NORTON. No, sir, I am asking a wholly different question. I

am saying right now land is offered first to a Federal agency—and

I think Mr. Johnson’s testimony indeed has the Federal agencies

looking to see whether or not they should make use of it—and, second, if the land is of no use, a State or locality gets an opportunity

that the commercial sector would not get. I am asking very specifically if that should be maintained.

Mr. JOHNSON. Well, my feeling is—and I think the chairman

talked about this—that there are many issues here to be addressed, so many needs. None of these are totally contradictory to

one another, and they can all be addressed. We are all here to

serve the American people, and we can figure out a way to do that

in a balanced, responsible fashion.

Ms. NORTON. Thank you very much.

Chairman TOM DAVIS. If I could just add to that. That is right,

but we don’t want to put one group necessarily ahead of the other,

particularly for this pilot program, when we want to save money.

And many times if you just dispose of this and give it to a locality

or something, it is going to show a net loss on the books and we

defeat the whole purpose. So I think we have to handle this a little

differently but at the same time be sensitive to the issues that

were addressed by Mr. Waxman and Ms. Norton. We are going to

try to find that balance. But that is the reason for the waiver.

Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman.

I would like to concentrate my questions and comments on this

bill and what we hope to accomplish with non-DOD Federal land

versus the history of BRAC. And particularly to Ms. Norton, the

homeless waiver I think is essential, and let me just explain. Bases

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closed in California have been an amazing magnet for people who

take free land.

At March Air Force Base, with no public transportation, homeless home units were made available to people who needed them.

No problem. Except today they are directly across from some of the

most classified continued uses of March Air Force Base. So you

have a top-secret war on terrorism facility, and when you walk out

the door you are looking at a fence—and you can’t do much more

than put in a chain-link fence—and you have a completely unregulated area of the base.

It is that sort of reuse that, because of the mandate, occurred.

Certainly not the intent of the McKinney act, but it happens, and

it happens because the act doesn’t say give me 5 percent off the top

of revenues and I will go put homeless facilities in its best location;

it says I can get land and buildings for free and go in and house

people.

And I don’t blame anyone for taking that, but that is certainly

not the best way to achieve it. And hopefully, as we go through this

process, if we have a consideration for the homeless, that we look

and say it is a dollar equivalent to the homeless that does the most

value, not necessarily making a facility or a part of a facility available just because it would be at no cost.

The other area that I am very concerned about is in the BRAC

process communities have had special rights and certainly rights to

redevelop. One of the things that they have done is they have effectively zoned out the highest and best use. El Toro in Orange County, 50 years an Air Base, intended very much to be a world-class

airport that would have given Orange County the equivalent—well,

actually, a better facility than LAX. Local objections controlled that

out. And I have no problem with that, but it also turned it into a

park for which we received effectively zero.

Last, but not least, regardless of what has been said, Tustin Air

Base was essentially sold for a profit by the city. In no uncertain

terms they flipped it and turned it into housing units. The Navy

did get some net proceeds from it, but the community maneuvered

it so that it was a huge direct gain to them.

And I would like you to comment on how we could prevent these

kinds of loopholes, if you will. I can’t call them abuses because the

law clearly allowed for it. But none of them were the intended consequences. Thank you.

Mr. WALKER. First, I think one of the things you were talking

about, Congressman, is to the extent that you want to have a public benefit provision and to the extent that you want to consider the

issues that Ms. Norton talked about, should it be on a discount

basis versus a free basis—and that is the point that I was trying

to make.

You may decide as a matter of public policy that there ought to

be rights of first refusal and that there are certain types of activities that have a public good, State and local, and whatever else.

But the way to deal with that is a discount from what otherwise

would be paid versus a giving it away for free.

Second, I think that it is also important to make sure that we

keep in mind that most of these properties have little value on the

books of the financial statements of the U.S. Government. Most of

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them have been fully depreciated. So whatever we get is going to

be additional proceeds for the taxpayers, for the benefit of the taxpayers. It is going to be a gain, and we are also going to avoid additional expenses.

Last thing is I think in addition to having these types of safeguards, we ought to look to find out whether or not other Federal

agencies need these properties. That should be a standard part of

the process that goes through as well.

Thank you.

Mr. JOHNSON. The concept of what is the standard part of the

process I think is the key. I think it is all about defining what success is, what would be a successful disposition or dealing with a

piece of property. And we could define 17 questions you ask yourself, or 27, or 6, or whatever it is; does it do this, does it do that,

does it prevent this, make this possible, whatever. We could define

that based on all of the concerns you have.

And as we are contemplating the best way to deal with this property that we don’t need, figure out the best way to do that. And

it won’t be a clear black and white issue—you should definitely do

this—but it will be a balanced approach, because there are so many

different ways of looking at it, and we just need to make sure that

we are all in agreement that these are the component parts of what

the definition of success is.

Again, what the process should—the process is not this is a free

piece of property, should it be given to the homeless or not, this is

a piece of property we don’t need, now what are all the issues we

need to address and what is the best balanced way to address that.

So I don’t know the answer to your question, but I am very confident that we are all smart enough to figure out the best way to

do that.

Mr. ISSA. And if I can just clarify my question, chairman, for the

record. When I was talking about homeless, what I was suggesting

is that if we are going to have a homeless element, rather than

saying here is your free land, here is the percentage value that is

allocated. You can take that from the cash proceeds of the sale, you

can take it in land exchange 100 percent, or you can take it at a

discount.

That flexibility, at least in the San Diego and southern California

area, almost certainly would have caused them to take those dollars and move them to either one base out of many or even to other

land that would have been available that would have given them

an idyllic location, rather than having to take the location where

the free land was.

Mr. JOHNSON. And, again, it might have been taking the McKinney act and say what is the desired purpose of that? It might be

used for the homeless. Is that really the question that is being

asked or might the proceeds be used for the homeless—which is

your point—and figure out what we are really defining as success

here and figuring out how all these things match up.

Mr. ISSA. And I look forward to working with our Members to try

to achieve that in this act.

Mr. WALKER. And I think land use has to be a consideration. It

is not just the economic value and who is benefiting, but what is

the use of the land going to be with regard to contiguous properties

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where the Federal Government still has ownership interest and is

using that property.

Mr. ISSA. Thank you, Mr. Chairman.

Chairman TOM DAVIS. Thank you very much.

Gentleman from Utah, Mr. Cannon.

Mr. CANNON. Thank you, Mr. Chairman. Thank you for the opportunity to offer my views on the need for Federal real property

management reform.

Let me begin by thanking Mr. Johnson and Mr. Walker for appearing before the committee today. Your testimony and expertise

on Federal property ownership is valuable and will help shape future management of Federal real property.

Although the explicit topic today is Federal real property, especially referring to buildings, I would like to take a moment to point

out what I see as a direct corollary between the problems associated with Federal buildings and federally owned lands. Let me

begin by giving you a quick review of the current status of Federal

land ownership.

One way to do that is by quoting one of my heroes, Ronald

Reagan. We have up here on the screen on either side, if you would

like to take a look at that, a map that he was referring to in a 1998

press conference when he said the following: ‘‘I have a map. I wish

everyone could see it. It is a map of the United States. And land

owned by the Government is in red and the rest of the map is

white. West of the Mississippi River, your first glance at the map,

you think the whole thing is red, the Government owns so much

property. I don’t know any place other than the Soviet Union where

the Government owns more land than ours does.’’

Seventeen years later the Soviet Union is gone and President

Reagan has passed on, but the land holdings of the United States

have increased year by year. In fact, today the Federal Government

oversees an estimated 671 million acres, an area more than six

times the size of California. Over 90 percent of this land is located

in the western States. Additional land is added to the Federal estate every year. Over the past 10 years Federal land acquisition

funding has averaged $347 million annually, and over the last 40

years an area larger than the State of Florida has been added to

the Federal estate, that is, since John Kennedy was President.

Spending millions of dollars for additional land acquisitions

makes even less sense when one considers the condition of existing

Federal lands. Not only are Federal facilities deteriorating, a recent

Congressional Research Service report estimated the maintenance

backlog for our Federal lands exceeds $15 billion. Roads, campgrounds, and other basic facilities in our existing national parks

are crumbling and not being repaired.

And it is not just underutilized buildings and facilities. GSA has

also identified more than 5 million acres of Federal land as vacant,

with no Federal purpose. Seven years ago the BLM surveyed lands

identified as surplus or suitable for disposal and estimated the

value of excess lands at nearly $2 billion.

In the same way that it makes little sense for the Department

of Defense to spend $3 to $4 billion each year to maintain

unneeded facilities, it makes even less sense to spend hundreds of

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millions of dollars each year acquiring new Federal lands when we

are not properly caring for the lands that we own.

Making matters even worse, the Federal Government doesn’t

even have a good accounting of its Federal lands. For example, in

my home State of Utah, the most recent Government statistics put

the amount of Federal land at 57 percent. In 2003, those same statistics stated that 66 percent of the land in Utah was owned by the

Federal Government. Where did these lands go? Some might assume that the 14 percent of the Federal Government actually reverted to the State. In fact, the actual amount of land didn’t

change; the only thing that changed was the Government’s accounting of Federal lands. Indeed, the records and accounting for

Federal ownership are so poor that nobody really knows how much

Federal land is in Utah.

Now, nationally, 48 other States also saw significant changes in

the Federal ownership between 2003 and 2004, despite the fact

that relatively little land was bought, sold, or exchanged in the

course of the year. That is why I introduced H.R. 1370, the Federal

Land Asset and Inventory Reform Act of 2005. Although numerous

provisions of law require the Federal Government to inventory its

land, existing inventories are old, outdated, and inaccurate.

The legislation would require the Secretary of the Interior to develop a multi-purpose of Federal real property to assist with Federal land management, resource conservation, and, perhaps most

importantly, the identification of surplus and unneeded Federal

lands. I believe that if we dedicated the same amount of time, attention, and money to land disposal that we currently do to acquire

new Federal lands, both the people and the lands would be in much

better shape.

For those reasons, I strongly support the efforts of this committee to confront the barriers to making underutilized public buildings or properties usable and available for sale. At the same time,

I would also like to encourage us to consider ways to facilitate the

disposal of unneeded or surplus Federal lands. I also believe it is

crucial that the Federal Government develop a current, accurate

inventory of its land holdings. Taxpayers have already invested

hundreds of millions of dollars over decades to achieve such an inventory, and my bill, H.R. 1370, is the appropriate congressional

directive to get what Congress has long sought.

Let me just add that this comes at a huge cost to people in the

west. The area that you see in red is largely the area that is growing in population in the country. And that area, if you overlaid the

amount of per capita taxation, would show that we tax at a higher

rate in the west.

And if you looked at our student expenditures in schools, you

would find that we spend significantly fewer dollars all over the

area in the west, and that is largely due to the fact that we don’t

own the land. We can’t tax the land. Our local jurisdictions have

no income except for PILT, that is, payment in lieu of taxes.

[The prepared statement of Hon. Chris Cannon follows:]

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Mr. CANNON. Mr. Johnson, you have a couple of things that relate intimately to this, and I would like to just ask two questions

and I look forward to your answers. The first is will you take an

aggressive role in helping us identify and do something to be more

rational about how we identify, utilize, and sell off surplus Federal

lands? And, second, given the burden of the Federal land ownership on western taxpayers, will you assure us that you will help

us get full funding of the payment in lieu of taxe programs next

year?

Mr. JOHNSON. The answer to the first question is yes. And I don’t

know enough about the second question to answer one way or the

other.

Mr. CANNON. Thank you. I hope that you will look at it. This is

a relatively minor program. Full funding of PILT would be less

than what we are spending on the annual acquisition of land,

which is about $347 million over the last 10 years. Full funding of

PILT would be in the $320 million range. I think the House passed

an amended bill that included $242 million for PILT.

We have a higher birth rate, we have many more people moving

in the west. The burden on our education system is really crucial

in the west, and especially in these areas where people are moving

to more and more rural areas. These are wonderful areas to live,

some of the most beautiful areas in the world.

And, yet, when they move there, they have to make the conscious

decision that they are going to pay a significantly higher tax rate

and that their children are going to get a significantly lower cost

of education. And I just don’t think it is appropriate. When the

Federal Government owns it—you know, I love my northeastern

friends, Republicans and Democrats, who claim that these are

America’s lands. Fine. Pay for them.

Thank you, Mr. Chairman, and I yield back the balance of my

time.

Chairman TOM DAVIS. Thank you much.

Ms. Brown-Waite.

Ms. BROWN-WAITE. Thank you very much, Mr. Chairman.

I have a question for both of our panelists, and that is has the

reluctance of the Federal Government to get rid of some of the land

been based on the fact that when it is sold, that the funding goes

into general revenue rather than back to the agency holding the

land? That would be my first question.

Mr. WALKER. I think there is absolutely no question that has

served as a disincentive. But I come back to what I said before.

You have to have transparency, you have to have an inventory, you

have to have transparency over that and accountability mechanisms. But the fact that the agency doesn’t get to keep any of the

proceeds, in most circumstances, and sometimes it actually costs

money to dispose of the land means it is a double negative potentially.

Mr. JOHNSON. My answer to that is similar, but I don’t believe

agencies need incentives to do the right thing. I think they have

never been held accountable for doing this, which is the primary

issue; and I think we are all taking care of that.

But I think, as I mentioned in my remarks, there are two parts

of this issue. One of them is we have property we don’t need and

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the other part of it is we have property that we need, but it needs

to be better maintained. And we have trouble finding funding for

this, and this is a source of funding over here for this. So to deal

with the entire problem, I think funds from the disposition of properties we don’t need can be, should be made available for our other

real property needs, so that means agencies will be retaining use

of proceeds.

Ms. BROWN-WAITE. Let me ask you a question also about the

management of properties, particularly in my area we have a lot

of forest land. Did you, in your testimony, either of you, indicate

how much is actually spent on management? And if we do change

the model that we use, where funding actually goes back to the

agency, what percentage generally would you say should be used

for management? Because I found that usually there isn’t enough

money spent on management.

Mr. JOHNSON. One of the things that the Real Property Officers

and Real Property Officers Council will do is develop standards—

what are good standards to use for management, environmental,

utilities, utilization; all those things. We don’t have good benchmarks to use, and we are in the process of developing that, and we

will establish some good operating principles and guidelines to use

by the entire Government.

Ms. BROWN-WAITE. Am I to understand that the Federal Government did not have best management practices?

Mr. JOHNSON. That is true.

Ms. BROWN-WAITE. Thank you for your candor.

Mr. JOHNSON. I hope that is true.

Mr. WALKER. It is definitely true. It has not utilized best practices. It is still working on trying to develop an inventory of all the

property that we own, the condition of that property, what is excess. You can’t manage something until you know what it is. And

then how you go about managing it, once you know what it is, obviously is an important part. So a number of positive steps have been

taken in that regard within the last couple of years, but we have

a long way to go.

Ms. BROWN-WAITE. You know, as much as people would like to

beat up on the Federal Government for not knowing precisely what

it owns in various parts of our great country, I can just tell you

that from the State of Florida perspective, the State of Florida had

the same problem; it didn’t know what it owned, really didn’t know

what the boundaries were. So I know misery sometimes loves company. So the Federal Government is not alone, and I think many

States find themselves in exactly the same situation.

Thank you. I yield back my time.

Chairman TOM DAVIS. Thank you very much.

Mr. Shays.

Mr. SHAYS. Thank you both for coming before this committee. I

have a tremendous amount of respect for obviously both of your

agencies and your leadership, both of your leaderships. I would like

to know where the two of you may disagree.

Mr. JOHNSON. Where we disagree?

Mr. SHAYS. Yes. Are there any subtle points of disagreement or

emphasis?

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Mr. WALKER. Candidly, Mr. Shays, we haven’t had an opportunity to compare notes on that. I can tell you, if it would help you,

very briefly to tell you what I see as the four positive things and

the four areas I would ask you to think about in this legislation,

if that would help, and then he might be able to comment.

Mr. SHAYS. That would help.

Mr. WALKER. The positive things in the draft legislation is you

are codifying the Executive order—that is a positive—you are defining underutilized property, which needs to be defined; you are

establishing incentives for agencies to dispose of property; and you

are also using a centralized management process, which I think is

a positive. The areas that I would ask you to think about would

be, No. 1——

Mr. SHAYS. Think about, in other words, additions to?

Mr. WALKER. Additions, that is correct, or potential enhancements or modifications.

First, whether or not you should require a comprehensive transformation plan along the lines of what we recommended for the

Federal Government; second, whether or not there should be more

transparency—we believe there should be—over the use of the proceeds, the 20 percent that the agency gets to keep.

Mr. SHAYS. Stated in the legislation?

Mr. WALKER. Yes, to provide that in the legislation, more transparency. And then the other thing I think that ought to be thought

about—and it may not have to go into the legislation, but I would

ask Clay to think about—is whether or not, as part of the ongoing

management process, there ought to be more transparency over

things like what is the fair market value of space that agencies

own; what is the average number of square feet per person of property that agencies own or lease.

We need more transparency on that because I think, frankly,

there may be a lot more underutilized properties than otherwise we

may know about if we had some decent benchmarking data and

provided more transparency on that in order to try to make sure

that we are identifying all the areas of opportunity.

Mr. SHAYS. I would like to ask you, Mr. Johnson, to respond to

what you have heard. Anything that you disagreed with or would

want to qualify?

Mr. JOHNSON. You are asking me?

Mr. SHAYS. Yes. Of what Mr. Walker said, anything that you

would disagree with or want to emphasize in a different way?

Mr. JOHNSON. No disagreement. But in terms of emphasize,

David talks about a transformation plan. We have to have data, information with which to base our plan on, and we don’t have that

inventory information now.

Mr. SHAYS. OK, let me just ask it and you can define it any way

you want. But in several GAO reports they recommend the development of an integrated transformation strategy for real property

to buildupon the requirements of the Executive order. So explain

to us why OMB hasn’t initiated this process. Do you have concerns

about the process? Are you implementing other processes that will

attain the same result? Would you consider establishing a committee of the Federal Real Property Council to explore this issue?

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Mr. JOHNSON. Well, every agency is charged to come up with a

real property plan for its agency, and that plan will be based on

the facts about what it owns, what it wants to own, what it doesn’t

want to own, and what it needs to do with the property it would

like to keep but make better.

Mr. SHAYS. But the key is that there be an integrated plan for

all of the agencies.

Mr. JOHNSON. True. But you can’t come up with an integrated

plan until you have information upon which to base it.

Mr. SHAYS. So while that information is being prepared, are you

working on an integrated plan?

Mr. JOHNSON. No, sir.

Mr. SHAYS. OK. And that is what I am having trouble understanding. You don’t need all that data in order to begin to know

certain principles that you want to establish.

Mr. JOHNSON. The principles are being developed. We are working on principles, and the format and the template and the issues

that any agency will be developed, yes, sir. And we would be glad

to come up and brief you specifically on any component part of the

Federal Real Property Council’s work or the work of the individual

Federal Real Property Officers.

Mr. SHAYS. So when you get the data you will be ready to just

move forward with an integrated plan? When your agencies report

to you and you have an inventory and so on, can we expect that

we will see an integrated plan?

Mr. JOHNSON. I am not sure what you mean by an integrated

plan. Agencies are individually challenged to come up with a plan

for their agencies.

Mr. SHAYS. Right. But isn’t there a general principle, some guidelines to all agencies that they need? I mean, we don’t want one

department——

Mr. JOHNSON. The guiding principles, sure, we have that. We can

share that with you.

Mr. SHAYS. OK. Maybe you can respond to my question, Mr.

Walker, because GAO has made recommendations. Do you feel that

you are getting a response or do you feel that you are yelling into

the wind?

Mr. WALKER. I think what I hear Clay saying is that they need

to develop the comprehensive inventory before they believe they

are going to be in a position to develop a comprehensive and integrated plan. I think there is a need for a comprehensive integrated

plan, because there are certain issues and activities that you need

to deal with across the various silos of Government that will not

be dealt with if you just look at the individual agencies.

Mr. SHAYS. Does that have to wait until the data is built?

Mr. WALKER. I think there are things that you can do before you

have the data, and you should do before you have the data.

Mr. SHAYS. Give me an example.

Mr. WALKER. For example, one of the things that was addressed

earlier by Ms. Norton was the fact that we need to determine

whether or not there is a need in agency B, where we have excess

property, and agency A. There needs to be a coordination mechanism between the two of those to make sure we are considering

that.

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Second, to the extent that the Congress decides that there ought

to be a right of first refusal or a preference for State and local governments for certain public interests, then we need to make sure

that there is a mechanism to ensure that happens on a Government-wide and integrated basis.

So those would be a couple of examples.

Mr. SHAYS. Thank you.

Mr. JOHNSON. Can I make one comment?

Mr. SHAYS. Sure.

Mr. JOHNSON. David Walker loves me.

Mr. SHAYS. Well, we all love you. [Laughter.]

Mr. WALKER. I object.

Mr. JOHNSON. GAO loves the management agenda. We are the

best thing that ever happened to them, and vice versa.

Mr. SHAYS. So you love him too.

Mr. JOHNSON. Of course.

Mr. SHAYS. OK. Thank you. [Laughter.]

Mr. WALKER. Can I revise and extend my remarks for the record?

Chairman TOM DAVIS. It is when the cameras aren’t here you

hear a lot of funny things in this room. [Laughter.]

Mr. SHAYS. Thank you, Mr. Chairman.

Chairman TOM DAVIS. Mr. Ruppersberger.

Mr. RUPPERSBERGER. Well, first, I think it is really important

that we focus on this issue, and I applaud the President for passing

the Executive order creating a Senior Real Property Officer to deal

with these issues.

But I think the fact that we have created that situation, now we

have to hold them accountable for doing the job. And that is what

I really think we need to focus on and we need a system. And as

far as a system is concerned, we have talked about it and I know

the chairman has a bill in to attempt how we identify these properties and sell them.

I want to talk a little bit about the issue of the maintenance of

properties that we might sell or might not sell. You know, if we

spend $100,000 on maintenance, it might save $1 million down the

road. And the Senior Real Property Officer in each major department, where is their focus as it relates to maintenance of these

buildings?

Mr. JOHNSON. Maintenance is one of the metrics that will be required to be presented and made transparent for each of these

properties. So we can start looking at maintenance cost per whatever the reference point is—number of employees, square foot,

whatever—and come up with best practices and guidelines and so

forth so we can have more responsibly and more professionally

manage our maintenance expenses.

Mr. RUPPERSBERGER. But my point is, are we really doing this?

Where is the accountability factor? If we have a problem and we

don’t fix it, and then it becomes a million dollar problem because

it is an older building or whatever, does that go on the list? Do we

have a system that will provide——

Mr. JOHNSON. We are not doing that now, no, sir. But we are getting to the point where we can hold Real Property Officers accountable for managing their maintenance cost to within desired limits.

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Mr. RUPPERSBERGER. My suggestion, if you are not doing it now,

that is a very important aspect of the system in saving money. And

I think a lot of times we talk about getting rid of buildings, but

some people that we keep we need to make sure that we focus on

that. And I would hope that we could get those people—what are

they called, the Senior Real Property Officers—to talk about the

maintenance issue.

Mr. JOHNSON. We agree that owning what we want to own and

not owning what we don’t want is part of it. But operating and

maintaining and running the lights and HVACs on the properties

we own is important, and we need to do a better job of managing

those properties.

Mr. RUPPERSBERGER. Well, it is not about the lights, it is about

fixing things that need to be fixed.

Mr. JOHNSON. I realize that, sir. What I am saying is we are in

the process of setting ourselves up to hold Real Property Officers

accountable for doing exactly what you are calling for.

Mr. WALKER. In addition to what you are talking about, I think

there could be some circumstances in which we have deferred

maintenance for properties that we do want to sell, and we ought

to be making a decision about whether or not we want to do some

of that deferred maintenance before we sell it in order to get more

value. As we all know, many times before we sell our home we

might fix up some things in order to enhance the fair market value

before we actually dispose of it.

Mr. RUPPERSBERGER. How about the issue of September 11th and

the fact that we have new requirements for security in a lot of our

buildings? Is that part of the process that is used to determine

whether or not we sell a building, whether or not we retrofit a

building? And how much more money is that costing us generally?

Mr. JOHNSON. It has not been taken up formally, but the Federal

Real Property Council intends to.

Mr. RUPPERSBERGER. So a lot of the things we are talking about

haven’t been implemented, but we are working on the implementation, is that what you are saying?

Mr. JOHNSON. Yes, sir.

Mr. WALKER. I think that is a critically important element. I

mean, I would argue that given the additional security threats that

we face, all the more reason why we need to rationalize and

downsize our infrastructure so that we can focus our dollars on protecting and securing those facilities that we are going to use and

that we truly need.

Mr. RUPPERSBERGER. Now, when we put these buildings up for

sale, is part of the evaluation process to find out where the building is located? I mean, a lot of times the property is worth a lot

more than the building itself. Is that a part of the process? If we

are going to get money back and we are going to sell these buildings, is the fact that a building is in an area where the property

is worth a lot, is that an indicator of whether we sell it or not?

Mr. JOHNSON. Well, the fair market value, use of the——

Mr. RUPPERSBERGER. You have a building in downtown Washington, DC, that is worth a lot more, the property—maybe the building isn’t—versus somewhere in Virginia.

Mr. JOHNSON. Yes, sir.

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Mr. RUPPERSBERGER. Now, is that part of the process, to evaluate

where these buildings are, that if we are going to sell them, that

we are going to get more money back?

Mr. JOHNSON. Yes, sir.

Mr. RUPPERSBERGER. OK. And who administers that or who evaluates that?

Mr. JOHNSON. Well, the standard by which that would be looked

at have been or will be established. Federal Real Property Officers

will be held accountable for looking at that. That will be addressed.

They will be held accountable. All assets are not the same, not created equal; they have different values, different potential uses, and

all those aspects will be addressed.

Mr. RUPPERSBERGER. Have we evaluated what our total inventory is and the worth of our total inventory of all Federal office

buildings throughout the country, just in the United States?

Mr. JOHNSON. No.

Mr. RUPPERSBERGER. I see my time is up, so I can’t ask anymore

questions.

Chairman TOM DAVIS. But the answer is no.

Mr. Walker, you have got a couple more minutes. If we can just

get a couple more questions in from Members I think who are

chomping at the bits.

You wanted to ask one more question?

Mr. RUPPERSBERGER. No, I just wanted to followup on the fact

of what we are dealing with from a fiscal point of view and if we

really have a total inventory. It is very difficult, it is voluminous,

but if we are going to get a hand on it, we are going to have to

be able to find out what we have and evaluate all of that as it relates to security, as it relates to the value of where the property

is.

Also, I haven’t heard the other questioning here today, but I really feel we have to focus on the maintenance side of this, too, and

how much money do we invest in maintenance. Because if you

don’t invest in maintenance, that can create tremendous problems

down the road.

Chairman TOM DAVIS. Thank you.

Mr. JOHNSON. We are addressing the issues that you have raised.

I think we are doing more now, the Government is doing more now

to professionally manage its real property than ever before. You

will be proud, we will all be proud of where we will be a year from

now, and prouder still a year from then, and prouder still a year

from then.

Mr. RUPPERSBERGER. Good. Thank you.

Chairman TOM DAVIS. Thank you. You can tell Mr.

Ruppersberger was a county executive. Of course, at the county

level—and I was the head of the county government in Fairfax—

it is a lot easier to take your inventory.

Mr. JOHNSON. Oh, no question.

Chairman TOM DAVIS [continuing]. Than it is nationally.

They are still trying to get an inventory for the District of Columbia, of all of their land and get it to the city where we can work

together to put maybe some property back on the tax rolls and

make some other needs as well.

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I just had one other question. This is, Clay, to you. Your testimony referred to 23 commonly defined data elements for those inventories, such as operating cost, condition, utilization. Can you

provide the committee—we don’t need this today, but in your briefing or whatever—a complete list or matrix of these data elements

and how they will be used to assess performance?

Mr. JOHNSON. Yes, sir.

Chairman TOM DAVIS. And what are the most important elements? I think that would be very, very helpful to us.

And we appreciate very much what GSA is doing in terms of getting this inventory of Federal properties in the District. It seems

to me that one of the long-term needs of the District is to establish

that independent tax base, and some of these properties can be utilized for the city through redevelopment; some may need other city

needs. But we appreciate the administration’s willingness to come

forward on that. I know Ms. Norton is looking forward to having

that conversation as we move forward.

Ms. Norton, you had a couple of other questions?

Ms. NORTON. Just a couple questions.

I would like to ask a question really stimulated by Representative Issa’s question, because I think I have a point of agreement

here. We haven’t had the experience as much on the east coast as

you may have had out west. But remember the use of free land by

the homeless came at the beginning of the whole homeless crisis.

We have had now a lot of experience under that, and I am not

sure there has ever been a re-evaluation. I understand that in the

beginning years that whoever represented the homeless, that there

were some feelers put out about proceeds rather than land.

Let me ask both of you this. It turns out that, so far as we know,

the homeless are interested in these bases or this Federal land

most often for the buildings. Now, many of these are unimproved,

run-down, you’re moving the homeless to places that no homeless

would even want to move in.

I am wondering whether or not, as you look at these properties—

and some of these would be old BRAC properties, so I am kind of

joining these BRAC properties—particularly with the new BRAC

process underway, whether or not your inventory would tell us how

many of these properties that have been offered to the homeless.

Because the law requires it simply have not proved useful to them,

which, it seems to me, would then re-stimulate the notion that

when such properties are disposed of in some way, some amount

of the proceeds might be used for the homeless, as opposed to getting stuck on the homeless and it never then moves forward.

Is there any way to break out not only which are the DOD properties, but which have had to be, as it were, rejected by homeless

organizations and therefore suggests, perhaps, that we have to look

again to see if there is another way to handle the homeless problem—we don’t want to cut them out by any means—without holding up a whole property. There we are talking about free land.

Representative Issa, I was talking about land that would never

have been for free. The local jurisdiction would have to buy the

property, albeit at a discount, and the only reason they got a discount is because they are going to use it for a public purpose that

is usually regarded as tax-exempt, like hospitals or schools.

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But I am asking whether or not we can move this homeless issue

along in the process, I guess, Mr. Johnson, of dealing with you inventory, so that we really know whether or not turning over or giving first dibs to the homeless has proved what they really want.

Mr. JOHNSON. Let me tell you what I think the answer is to that.

My understanding is that if we know whether a homeless organization has accepted or rejected properties because we have tried to

dispose of it, the vast, vast, vast majority of the properties we are

inventorying we have never tried to dispose of, so we don’t know

whether there is a potential need to address homeless opportunity.

Ms. NORTON. But you will know whether the homeless wanted it.

Mr. JOHNSON. Only once we begin the process of disposing of it,

because that is one of the things we have to do early on. But in

terms of here is a property we are thinking about getting rid of,

we won’t know whether it has potential use by the homeless or not.

But I think, again, once we define——

Ms. NORTON. See, I thought a BRAC property had to be offered

to local jurisdictions or to the homeless.

Mr. JOHNSON. Once you have decided that you are in fact going

to begin the process of disposing of it.

Ms. NORTON. So you mean they are just sitting on this property

and nobody is making the decision as to whether or not anybody

in the Federal Government might have use of it?

Mr. JOHNSON. Right.

Ms. NORTON. Because it is supposed to go does anybody in the

Federal Government want this? If you don’t want it——

Mr. JOHNSON. Once we decide that the owning agency doesn’t

need it——

Ms. NORTON. I see.

Mr. JOHNSON [continuing]. Then the process begins: is there anybody else that needs it; is there a local interest; is there a homeless

interest; or whatever the sequence.

Ms. NORTON. So there is a question of just getting off the dime

and making a decision as to whether you want it.

Mr. JOHNSON. Right. You have to first decide you don’t need it

and begin that process.

Ms. NORTON. Representative Shays asked if there was any disagreement between you. I don’t see any disagreement except that

your use, Mr. Walker, of the word incentives seems to be not as

broad as the use of Mr. Johnson, because in his testimony he does

talk about other Federal uses as being important for agencies to

take into account. I am on another committee where agencies come

all the time for space.

One of the things, it seems to me, you ought to say to an agency

before you go to the Federal Government and say pay for some new

space for our folks, is to say look at your inventory and see if any

of that space could be used instead of your asking the Federal Government for new space for your employees. Would you agree with

that? That the use of space for your own employees might be an

important fresh look at sites and buildings that Federal agencies

may own?

Chairman TOM DAVIS. That will have to be the last question, but

go ahead and answer.

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Mr. WALKER. I think that has to be part of the process. We need

to have a process that certain things are automatically done as an

integral part of the process. And I think what I heard Clay say was

that he believes that transparency and accountability are the most

important elements. He acknowledges that there is a need not just

for agency plans, but a Government-wide plan at an appropriate

point in time. And I thought I heard him say that, while he is not

opposed to incentives, he believes that the other elements are more

important.

I believe that you need all three. I believe that transparency is

critical, you have to have a plan, you have to have accountability

mechanisms. I think the incentives can help, because right now you

have a circumstance in which it costs money to save money, and

if you have to come up with the money out of your budget and you

don’t get to keep any of the proceeds, it is a net loss from the

standpoint of the agency. It is a net gain from the standpoint of

the taxpayers and the Federal Government. But we have some very

perverse incentives in our budget system, and I think we have to

recognize that reality.

Chairman TOM DAVIS. Thank you very much.

Any other questions? Mr. Issa.

Mr. ISSA. Mr. Johnson, particularly for you, because we are talking not just about this legislation, but about the administration’s

attempt to change how we deal with Federal property, I gather you

are very familiar with the PPV program that DOD is using?

Mr. JOHNSON. No, sir.

Mr. ISSA. Let me be brief, then. The Public-Private Ventures that

are going on primarily for housing and——

Mr. JOHNSON. Oh, yes. I know that, yes.

Mr. ISSA [continuing]. Seeks to deal with a fundamental problem

in our system—and I won’t say it is the most eloquent dealing with

it, but it works—which is for decades the military has always been

told here is your money and here is your mission, and then when

the mission runs out of money, they are told to go find it, and they

find it by not working on sewer systems, painting, and all the other

upkeep for our soldiers and sailors and Marines.

So as a result, those homeless shelters that are handed out, even

if they are military barracks or family housing units, to be honest,

we are not doing the homeless a favor, because these are usually

just terribly dilapidated; they haven’t even gotten rid of the asbestos problems, etc.

What PPV tries to do is to say, look, there is a cost, let us bid

it out. So now, instead of a triple net lease and we hope you do the

maintenance, it is really a gross lease. Is there a movement in the

administration—and it doesn’t have to include, of course, a private

contractor, but is there a movement as part of this reform to get

to where we go to the gross lease concept so that there is a rationalization of cost, but also maintenance in that rationalization, rather than breaking the two out separately, knowing that today’s manager’s job is to get today’s mission done, he is likely to rob Peter,

just as his predecessor did and his successor will, to pay Paul?

Mr. JOHNSON. I don’t know the answer to the specific question

about gross and net leases, but I do know that providing quality

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housing for members of the armed forces is a very high priority for

this President. And great strides have been made by DOD.

Mr. ISSA. Actually, Clay, I was saying that is a success story. I

am looking at the other part, all the other Federal buildings and

so on, because you have the same situation.

Mr. JOHNSON. Oh, I see, beyond the military.

Mr. ISSA. Right. And I am not saying that you do a privatization

and lease back the way the PPV worked, necessarily. That may or

may not be the model, depending upon other considerations. But in

order to keep from having deferred maintenance going forward, so

we leave the next administration a system in which the buildings

we retain do not become dilapidated buildings of tomorrow, do we

have a plan and can this committee help you in making that possible, that change in how you do business?

Mr. JOHNSON. Yes, this committee can help us in all these areas.

Our goal is to make sure that maintenance is adequate, that it is

within desired operating levels, and quality of end product levels,

and we welcome any and all input from the committee.

Mr. ISSA. Thank you, Mr. Chairman. I know my time has expired.

Chairman TOM DAVIS. Thank you very much, and I know, General Walker, that you have to leave.

Mr. Johnson, thank you very much. And I hope we can move this

legislation. I look forward to your input as we continue to move

through the legislative process.

Hearing is adjourned.

[Whereupon, at 11:33 a.m., the committee was adjourned.]

[The prepared statement of Hon. Elijah E. Cummings and additional information submitted for the hearing record follow:]

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