Federal Real Property: Vacant and Underutilized Properties at GSA, VA, and USPS
Published: 2003-08-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The federal government has many vacant and underutilized properties that are no longer needed. Retaining unneeded real properties presents federal agencies with significant potential risks for (1) lost dollars because such properties are costly to maintain; and (2) lost opportunities because the properties could be put to more cost-beneficial uses, exchanged for other needed property, or sold to generate revenue for the government. The General Services Administration (GSA), the Department of Veterans Affairs (VA), and the U.S. Postal Service (USPS) hold a significant number of real property assets. GAO was asked to provide information on how these agencies identify vacant and underutilized real properties and the numbers, types, and locations of these properties.
section_title: What GAO Found
paragraphs: GSA, VA, and USPS primarily rely on field office officials to identify vacant and underutilized properties. These officials make on-site property visits, communicate with tenant agencies about lease renewals, and examine agency program requirements that will affect agencies' real property needs. These three agencies also have ongoing nationwide initiatives to realign their real property portfolios. GSA officials are reviewing all of its properties to identify and remove all assets from its real property inventory that are not financially self-sustaining or for which there is not a substantial, long-term federal purpose. VA officials are in the process of identifying unneeded real property assets to reduce VA's large inventory of vacant and underutilized buildings. USPS officials are reviewing and modifying its postal real property infrastructure so that USPS can enhance customer service and control costs through the closing and consolidation of unneeded facilities, such as some post offices. As of October 1, 2002, these agencies reported a total of 927 vacant and underutilized real properties--including facilities and land--located throughout the United States and Puerto Rico in 294 cities. VA reported the most properties--577; GSA reported 236 properties, and USPS reported 114 properties. Most of these properties--807 of 927--were facilities that represented about 32.1 million square feet and ranged from office buildings to hospitals to post offices. Although VA reported the highest number of facilities, GSA facilities made up more than half of this square footage. The remaining 120 properties were vacant lands reported only by VA and USPS, most of which were 10 acres or less. GSA said that 236 properties is an overstatement because 43 properties are committed to future use, and 37 small properties support occupiable space. GAO did not change GSA's total number of properties because they were vacant or underutilized as of October 1, 2002. However, GAO reflected GSA's concern in the text and in the list of GSA's properties. VA and USPS generally agreed with the information in this report.

section_title: Letter
paragraphs: This report responds to your request for information on vacant and  underutilized real property controlled by three federal agencies—the  General Services Administration (GSA), the Department of Veterans Affairs  (VA), and the U.S. Postal Service (USPS).  As discussed in our January  2003 high-risk report on federal real property, over 30 agencies control  hundreds of thousands of real property assets worldwide that are worth  hundreds of billions of dollars. However, many of these assets, which  include vacant and underutilized properties, are no longer needed because  of significant changes in the size and mission needs of federal agencies.  Unneeded assets present significant potential risks to federal agencies not  only for lost dollars because such properties are costly to maintain but also  for lost opportunities because the properties could be put to more cost- beneficial uses, exchanged for other needed property, or sold to generate  revenue for the government. In addition, continuing to hold real property  that may no longer be needed does not present a positive image of the  federal government in local communities. Instead, it can present an image  of waste and inefficiency that erodes taxpayers’ confidence and can have a  negative impact on local economies if the property is occupying a valuable  location and is not used for other purposes, sold, or used in a public-private  partnership if such a partnership provides the best economic value for the  government.
As of September 30, 2000, the federal government owned about 3 billion  square feet of building floor space worldwide. You asked us to provide  information on (1) how GSA, VA, and USPS—the largest nondefense  holders of federally owned space—identify vacant and underutilized  properties; and (2) the numbers, types, and locations of these properties.  To meet the first objective, we discussed and documented real property  procedures and practices with federal officials at the three agencies,  including how they identified these properties. For the second objective,  we obtained and analyzed information on GSA’s, VA’s Veterans Health  Administration, and USPS’s vacant and underutilized properties. A more  detailed discussion of our objectives, scope, and methodology is included  in appendix I.
subsections: section_title: Background
paragraphs: The federal real property environment has many stakeholders and involves  a vast and diverse portfolio of assets that are used for a wide variety of  missions. Real property is generally defined as facilities; land; and anything  constructed on, growing on, or attached to land. The U.S. government’s  fiscal year 2002 financial statements show an acquisition cost of more than  $335 billion for real property assets held by the federal government on  September 30, 2002. In terms of facilities, GSA data indicated that as of  September 30, 2000, the federal government owned about 3 billion square  feet of building floor space worldwide and that GSA, VA, and USPS are the  largest nondefense holders of this federally owned space. GSA provides  real estate services for itself as well as for other federal agencies and owns  such facilities as office buildings, courthouses, and border stations. VA  provides health care services to veterans and owns such facilities as  hospitals, medical centers, research laboratories, and nursing homes and  structures that support these facilities, such as garages and storage  buildings. USPS provides mail delivery services and owns such facilities as  post offices and mail processing plants. Also, the three agencies own tracts  of land that may have been acquired for various purposes. For example, in  some cases, USPS acquires land adjacent to a postal facility in anticipation  of a possible need for future expansion of the facility.
Federal real property managers operate in a complex and dynamic  environment. Numerous laws and regulations govern the acquisition,  management, and disposal of federal real property. The Federal Property  and Administrative Services Act of 1949, as amended (Property Act), and  the Public Buildings Act of 1959, as amended, are the laws that generally  apply to the acquisition, use, and disposal of real property held by federal  agencies. GSA is responsible for implementing the Property Act and the  Public Buildings Act. Agencies, including GSA and VA, are subject to the  requirements of these acts unless they are specifically exempted from  them. USPS, which is an independent establishment in the executive  branch, is exempt from the Property Act and from most federal laws  dealing with real property and contracting. USPS is authorized to sell,  lease, or dispose of real property under its general powers.
In addition to the Property Act, Executive Order 12512, dated April 29,  1985, required GSA to, among other things, provide governmentwide policy  oversight and guidance for federal real property management. In response  to Executive Order 12512, GSA published regulations that established  governmentwide guidelines that agencies can use to identify vacant and  underutilized real property. Among other things, these guidelines  provided general definitions of vacant and underutilized real properties and  established a process that agencies can use to review real property  holdings and determine the actions that may be needed to better use or  dispose of vacant and underutilized properties.
section_title: How GSA, VA, and USPS Identify Vacant and Underutilized Real Property
paragraphs: GSA, VA, and USPS rely primarily on their real property officials in field  office locations to identify vacant and underutilized properties. According  to agency officials and current agency policies and procedures, field office  officials identify such properties through the daily management and  oversight of their real property portfolios. Some specific steps for  identifying vacant and underutilized properties include observations that  these officials make during on-site property visits, communications the  officials have with tenant agencies about lease renewals, and examinations  of agency program requirements that will affect agencies’ real property  needs. In addition, each agency has initiated a special nationwide effort to  identify unneeded properties and develop an effective strategy for better  aligning its real property assets with each agency’s changing mission.
In examining their real property portfolios, GSA and VA officials told us  that they generally rely on GSA’s governmentwide regulations concerning  vacant and underutilized property as their guide for identifying such  properties. USPS officials told us that although USPS is exempt from these  regulations, they continuously strive to identify any real property assets  that are vacant or underutilized as part of their ongoing real property  oversight and management responsibilities. The regulations, among other  things, include various questions that agencies could consider in examining  their real property portfolios. For example, the questions involve such  matters as whether contemplated agency program changes will alter  property requirements or whether all of the property is essential for  program requirements. GSA officials said that each agency has unique  properties that serve different missions and has significant discretion in  interpreting these regulations as to when and how best to identify vacant  and underutilized properties. GSA officials also said that although there are  no governmentwide data on vacant and underutilized properties, each  agency is responsible for maintaining its own information on such  properties.
subsections: section_title: Identifying Vacant and Underutilized Properties Is a Decentralized Process
paragraphs: GSA headquarters officials are primarily responsible for monitoring the use  of space in all of its properties to ensure that such space is efficiently used.  GSA headquarters officials also work with field officials to develop plans  for enhancing the use of space in vacant and underutilized properties or  disposing of them. However, identifying vacant and underutilized  properties in GSA is largely a decentralized process and considered an  integral part of the routine real property management activities that GSA  headquarters expects its field officials to implement. Asset management  teams in GSA’s 11 regional offices are primarily responsible for real  property management activities, which include identifying vacant and  underutilized properties. The members of GSA’s regional office asset  management teams include various real property management officials,  such as portfolio directors, asset managers, realty specialists, and property  managers, who are usually located at or near specific properties. According  to GSA officials, these team members work together on a regular basis to  manage the real properties for which they are responsible to ensure that  the properties are well maintained and that property occupants are  provided with space that will adequately meet their needs. Team members  also work together to manage the property so that, to the extent possible,  the property’s income, usually received from property tenants, covers or  exceeds the property’s expenses. GSA officials said that asset management  team members generally identify vacant and underutilized properties while  carrying out their day-to-day real property management responsibilities.  For example, a realty specialist, who is responsible for monitoring tenant  leases in a facility, will apprise other asset management team members of  any tenants who do not plan to renew their leases, which may cause the  facility to become vacant or underutilized. Also, other means may be used  to identify vacant and underutilized properties. For example, an asset  manager may periodically visit a property to make first-hand observations  about the overall condition of the property and the extent to which space in  the property is occupied. These asset managers also examine program  requirements and changing agency mission needs to determine if existing  space is adequate.
Like GSA, VA’s process for identifying vacant and underutilized properties  is decentralized. VA headquarters relies primarily on field staff to  continuously oversee and manage its real properties, which involves  identifying vacant and underutilized properties. In each of VA’s 21 regional  offices, referred to as Veterans Integrated Service Networks (VISN), the  VISN director is the key individual responsible for overall real property  management activities at VA locations. To identify vacant and underutilized  properties, the VISN director relies on various VA personnel, such as chief  facility engineers, who are usually located at or near the properties and are  most knowledgeable about them. According to VA officials, these  individuals generally work together with occupants of the VA property,  including medical center directors, hospital administrators, and chiefs of  medical departments, to ensure that the property is well maintained and  meets their needs for providing veterans with quality health care services.  At VA locations, vacant and underutilized properties are identified through  various methods. For example, a chief facility engineer may periodically  walk through a VA property to identify unoccupied space or solicit  information from property occupants about the extent to which space in  the property is being used. Also, some VA locations have strategic planning  committees that, among other things, are responsible for ensuring that  space in VA properties is well used and effectively responds to changing  mission needs. Members of these committees, most of which include the  associate medical center director and the chief facility engineer as well as  medical staff representatives such as the medical center’s chief of surgery,  work together on a regular basis to review the utilization of space in VA  properties and identify specific properties or portions of properties that  may be vacant or underutilized.
Similar to GSA and VA, USPS has a decentralized process in which USPS  headquarters expects its field staff to be responsible for continuous  oversight and management of real properties, which includes identifying  vacant or underutilized properties. USPS officials told us that although  USPS is not subject to GSA’s governmentwide guidelines related to such  properties, field staff continuously strive to identify vacant and  underutilized properties as part of their day-to-day real property oversight  and management responsibilities. The vice presidents in charge of USPS’s 8  area offices and the Capital Metro office have overall responsibility for real  property operations in 85 district offices throughout the country. District  managers, who are in charge of district offices and report to area office  vice presidents, are responsible for the oversight and management of real  properties within their jurisdictions. District managers are usually located  at or near USPS properties and rely on various staff, including facility  engineers, facility specialists, and architect-engineers, for day-to-day  oversight and management of real properties, which includes identifying  properties or portions of properties that are vacant or underutilized.  According to USPS officials, USPS field staff may use various methods to  identify these types of properties, such as periodic site visits to observe  how space in properties is used and annual real property reviews to  identify future space needs. Also, USPS field staff may receive information  from occupants about space utilization changes. For example, a postmaster  in charge of a post office may notify a facility specialist in the district office  that changes to mail delivery routes have reduced the post office’s  workload, thus creating some vacant space in the post office that may no  longer be needed.
section_title: GSA, VA, and USPS Have Begun Nationwide Initiatives to Realign Their Real Property Portfolios
paragraphs: All three agencies have recognized the importance of realigning their real  property portfolios by identifying and disposing of unneeded real property.  Recently, each agency has initiated a special nationwide effort to identify  unneeded properties and develop a strategy for better aligning its real  property assets with each agency’s changing mission. GSA has recognized  that it has many buildings in its portfolio, including vacant and  underutilized properties that are not financially self-sustaining—not  generating sufficient income to cover expenses—or for which there is not a  substantial, long-term federal purpose or predominant federal need. In  June 2001, GSA initiated an overall effort—commonly referred to as the  portfolio restructuring initiative—to restructure and reinvest in the  portfolio. The objective of this initiative is to better align GSA’s properties  with its mission of providing quality space and services at a cost that is  competitive with the private sector. According to GSA officials, GSA is  currently developing plans for enhancing the utilization of its buildings or  disposing of them. GSA plans to complete implementation of the portfolio  restructuring initiative by 2007 and expects by that time to have a portfolio  of strong, income-producing properties that is much more responsive to  changing agency mission needs.
In August 1999, we reported that VA could enhance veterans’ health care  benefits if it reduced the level of resources spent on underused or  inefficient buildings and used these resources instead to provide health  care more efficiently in existing locations or closer to where veterans   live. We recommended that VA develop asset-restructuring plans for all of  its health care delivery markets to, among other things, help guide future  decision-making about capital real property investments. In responding to  this recommendation, VA recognized the need to strategically realign its  real property assets to better serve veterans’ health needs and began a  process in October 2000 known as the Capital Asset Realignment for  Enhanced Services (CARES). VA initiated the CARES process to, among  other things, reduce its large inventory of vacant and underutilized  buildings and the significant costs required to maintain them. Many of the  buildings became vacant and underutilized when VA began shifting its role  in the mid-1990s from being a traditional hospital-based provider of  medical services to an integrated delivery system that emphasizes a full  continuum of care with a significant shift from inpatient to outpatient  services. To get a better perspective on the extent to which vacant and  underutilized properties existed nationwide, VA headquarters developed a  database that identified these properties and that was used in the CARES  process to identify space conditions in these properties. Through CARES,  VA expects to develop a nationwide strategic plan that identifies the capital  real property assets needed to meet veterans’ health care needs as well as  those assets that are no longer needed.
In August 2002, VA announced the results of its CARES pilot test—a plan to  realign capital real property assets in its Great Lakes network, which  involves restructuring inpatient facilities and opening new outpatient  clinics in community settings to provide health care to veterans. As part of  this plan, VA identified 31 buildings that are no longer needed to meet  veterans’ health care needs, including 30 that were vacant, and has  developed or implemented alternative use or disposal plans for most of  these buildings. Currently, VA is conducting CARES studies in its 20 other  health care networks. VA’s goal is to make property realignment decisions  by the end of 2003; at that time, given its extensive inventory of buildings  nationwide, VA expects that many additional buildings will have been  identified as not needed for use in providing health care to veterans.
VA officials told us that in addition to CARES, VA has initiated other actions  to address vacant and underutilized real properties. For example, under its  enhanced-use leasing program, VA has entered into various public-private  partnerships to help improve the use of some of its vacant and  underutilized facilities. Also, in July 2001, VA established the Office of  Asset Enterprise Management, which provides oversight of VA’s real  property assets by evaluating the effectiveness of the implementation of  real property asset management policies, principles, standards, and  guidelines that govern the acquisition, management, and disposal of such  assets. In addition, VA officials said that VA (1) has established 7 capital  portfolio goals that are designed to help VA better manage its real property  assets—3 of these goals focus on reducing the amount of vacant and  underutilized space in its facilities; and (2) is developing a portfolio  management information system known as the Capital Asset Management  System that will enable VA to measure performance and monitor progress  in attaining these goals.
USPS has also recognized the need for addressing problems associated  with vacant and underutilized properties. Faced with such challenges as  changing customer needs, declining mail volumes, rising costs, and  increasing security concerns, USPS issued a transformation plan in April  2002. In the plan, USPS discussed the need for a comprehensive  transformation of USPS to ensure that it will be financially viable and can  adequately fulfill its mission of providing the nation with postal services in  the 21st century. USPS also discussed the need to review and modify its  infrastructure of postal facilities so that it can enhance customer service  and control costs. Among other things, USPS identified various actions it  plans to take regarding the process for closing and consolidating unneeded  postal facilities. For example, USPS stated that it will lift the self-imposed  moratorium on post office closings and consolidations. In addition, USPS  plans to work with the Postal Rate Commission to streamline the post  office closing process to minimize the amount of time it takes to reach  decisions about post office closures. According to USPS officials, USPS  will be continuously reviewing its entire postal infrastructure to, among  other things, develop plans for realigning postal facilities to ensure that the  facilities will adequately fulfill USPS’s mission needs. The officials told us  that as these reviews are completed, USPS will publicly announce its plans  for realigning postal facilities.
section_title: Numbers, Types, and Locations of GSA, VA, and USPS Vacant and Underutilized Real Properties
paragraphs: As of October 1, 2002, GSA, VA, and USPS reported having a total of 927  vacant and underutilized real properties—including a wide range of  facilities and land—located throughout the 50 states and in the District of  Columbia and Puerto Rico. Of the 3 agencies, VA reported having the  highest number of vacant and underutilized real properties—a total of 577  properties. GSA was second with 236 vacant and underutilized properties;  and USPS was third with 114 vacant and underutilized properties. Table 1  shows a breakdown of the total numbers of vacant and underutilized  facilities and land at the 3 agencies.
In commenting on a draft of this report, the Commissioner of GSA’s Public  Buildings Service said that the report overstated the number of vacant and  underutilized properties in GSA’s inventory. He said that the 236 GSA  properties cited in the report include 43 properties representing about 8  million square feet of space that are already committed to being used and  37 small, unoccupiable support properties, such as pump houses, that are  necessary to the functioning of occupiable space. We did not change the  total number of GSA’s properties as GSA suggested because the 236  properties met our criteria of being vacant or underutilized as of October 1,  2002. Furthermore, most of the 43 committed properties remain vacant or  underutilized, and most of the 37 support properties have vacant or  underutilized rentable square feet. However, to reflect GSA’s concern, we  modified appendix II—the list of GSA’s vacant and underutilized properties  as of October 1, 2002—to specifically identify those properties that GSA  said were committed to being used and small properties that support  occupiable space.
GSA, VA, and USPS data showed that of the 927 properties, 600, or about 65  percent, were vacant properties; and 327, or about 35 percent, were  underutilized properties. As shown in figure 2, VA and USPS reported  having more vacant than underutilized properties, whereas GSA reported  having more underutilized than vacant properties.
Table 2 provides more detailed information on the numbers of vacant and  underutilized properties at each of the 3 agencies.
As table 2 shows, most of the vacant and underutilized properties were  facilities—807 of 927 properties, or about 87 percent—and these facilities  included a wide range of structures. Most of GSA’s vacant and underutilized  facilities included office buildings, warehouses, and storage facilities. VA’s  vacant and underutilized facilities were buildings that were generally  located on medical complexes in campus-like settings. These facilities  typically included various medical buildings, such as hospitals, medical  centers, and nursing homes along with structures that supported the  medical buildings, such as garages and storage buildings. Most of USPS’s  facilities included post offices, stations, and branches. The 807 facilities  represented a total of about 32.1 million square feet of space. Although VA  reported having the highest number of facilities, GSA’s facilities had the  highest amount of square footage. Specifically, GSA reported that its  facilities had about 18.4 million square feet, or 57 percent of the total  square footage belonging to the 3 agencies; VA reported that its facilities  had about 9.4 million square feet, or 29 percent, of the total square footage;  and USPS reported that its facilities had about 4.3 million square feet, or 13  percent, of the total square footage.
In addition, the sizes of the facilities ranged from less than 10,000 square  feet to over 100,000 square feet, with about half of the facilities under  10,000 square feet. Of the 63 properties that were over 100,000 square feet,  6 were over 500,000 square feet, with 1 of the 6 facilities having about 2.5  million square feet of space. Table 3 shows the ranges of facility sizes.
It should be noted that the three agencies have taken actions or have  planned actions to improve the use of some of these facilities or dispose of  them. For example, through its portfolio restructuring initiative, GSA has  developed plans to do repair and alteration work at 46 buildings and use  the space in these buildings to house other federal agencies. In addition,  GSA anticipates that 44 other buildings will ultimately be candidates for  disposal. By the end of 2003, VA expects that its CARES process will result  in a nationwide strategic plan that, among other things, will not only help  VA improve the use of space in its facilities but also identify those real  property assets that are no longer needed. Also, USPS has ongoing efforts  to sell unneeded properties. For example, during 2002, USPS generated a  total of $25.5 million in revenue from the sales of unneeded properties,  which was an increase over similar sales in 2001 that totaled $22.7 million.
Of the three agencies, only VA and USPS reported having vacant land. As of  October 1, 2002, VA and USPS identified a total of 120 tracts of vacant land,  which amounted to a total of about 2,000 acres. The land tracts ranged in  size from less than 1 acre to 174 acres. As shown in table 4, 80, or about 67  percent, of the tracts of land owned by VA and USPS fell into the category  of less than 1 acre to 10 acres. Only 9 properties fell into the category of  more than 50 acres, with VA having most of these properties.
As previously mentioned, our analysis of GSA, VA, and USPS data showed  that the 927 vacant or underutilized properties were located throughout the  50 states and in the District of Columbia and Puerto Rico. GSA’s vacant and  underutilized properties were located in 42 states and the District of  Columbia, and VA’s vacant and underutilized properties were located in 47  states and the District of Columbia. USPS’s vacant and underutilized  properties were located in 33 states and Puerto Rico. These 927 vacant and  underutilized properties were located in 294 cities in the United States and  Puerto Rico. Some of these vacant and underutilized properties were  located in large metropolitan cities, such as Los Angeles, California;  Chicago, Illinois; and Dallas, Texas; others were in smaller cities, such as  Newington, Connecticut; Marion, Indiana; and Canton, Ohio. The data also  showed that 49 locations had 5 or more of these properties. The highest  numbers of vacant and underutilized properties were reported for Los  Angeles, California, which had a total of 54 properties; and Fort Howard,  Maryland, which had a total of 43 properties. A list of GSA’s vacant and  underutilized real properties is included in appendix II. Lists of vacant and  underutilized real properties for VA and USPS are included in appendixes  III and IV, respectively. Appendix V identifies the 49 locations that had 5 or  more vacant and underutilized properties.
GSA, VA, and USPS officials explained that each vacant or underutilized  property has a unique history that, among other things, involves how long  the property has been vacant or underutilized and the reasons why the  property became vacant or underutilized. The officials told us that real  property staff in field locations who have direct responsibility for oversight  and management of vacant and underutilized properties would be in the  best position to provide detailed information on the history of these  properties. The officials explained that in all likelihood, changing agency  mission needs along with other problems, such as the advanced age of  various vacant and underutilized properties and their deteriorated  condition, were the most common factors that led to the properties  becoming vacant or underutilized.
GSA, VA, and USPS officials said that although some vacant and  underutilized federal properties have potential for alternate uses, the  properties have for various reasons remained vacant or underutilized for  years. For example, as discussed in our July 2001 report on public-private  partnerships, the GSA-held property that is shown in figure 3—the L.  Mendel Rivers federal office building in Charleston, South Carolina—has  been vacant for about 4 years. According to GSA officials, this facility—a  7-story, 100,000-square-foot building on just over 2 acres—has no rentable  square footage. The facility is contaminated with asbestos and has been  unoccupied since it sustained damage in 1999 from Hurricane Floyd. We  reported that although there was a weak federal demand for space where  the property is located, the property is located in a highly desirable location  where land values are high, and there was a strong potential for private  sector demand. GSA officials estimated that in fiscal year 2002, a total of  about $28,000 was spent to cover various building operations and  maintenance expenses, such as fire protection and utilities. A GSA official  told us that as of April 2003, GSA and the city of Charleston had developed  a memorandum of understanding, which states that the city of Charleston  will construct a new building for GSA and, in exchange, the city will take  control of the L. Mendel Rivers building. The official estimated that the city  should be able to proceed with the new GSA building project in the summer  of 2003.
Another example of a long-held vacant property involves a VA-owned  building at a health care facility campus in Milwaukee, Wisconsin. This  134,000-square-foot building, which is shown in figure 4, has been vacant  for about 14 years. The building had been used as the campus’ main  hospital but was vacated in 1989 primarily because a new main hospital  was built on the campus. VA officials told us that in June 1999, a consulting  firm—Economic Research Associates—issued a study in which it identified  various options for VA to consider in trying to enhance the use of various  vacant and underutilized buildings on the Milwaukee campus, including the  former main hospital building. On the basis of the study’s results, VA  officials told us that a substantial investment of capital would in all  likelihood be needed to convert this building for alternate use. For  example, to convert the building for use as housing for the elderly, the  study estimated that about $8.4 million to $9.3 million would be needed. VA  officials also mentioned that various organizations, such as the Salvation  Army and the Knights of Columbus, expressed some interest in leasing the  building; but thus far, VA has not received any firm offers from these  organizations. VA officials told us that in fiscal year 2001, VA incurred about  $348,000 in maintenance costs for this building, which included such  expenses as utilities, pest management, and security. Also, the officials said  that VA currently has no alternate use or disposal plans for this building.
An example of a vacant USPS facility is the former Chicago Main Post  Office located in downtown Chicago, Illinois, which is shown in figure 5.  This 2.5-million-square-foot former post office and mail processing facility  has not been used as the main post office since 1997—about 6 years—when  it was replaced with a new postal facility. According to USPS officials,  annual holding costs for this property exceed $2 million. The officials also  told us that although USPS has received various offers to purchase this  facility, attempts to complete the sale have thus far been delayed due  mainly to (1) an overall weakness in the Chicago real estate market, which  has raised concerns about whether a sufficient number of tenants could be  found to occupy the facility; and (2) the inability of potential developers  and the city of Chicago to agree on real estate tax abatement issues.  According to USPS, there will have to be a breakthrough in current market  conditions, together with an agreement between potential developers and  the city of Chicago, before this project can move forward.
subsections: section_title: Vacant and Underutilized Properties Pose Challenges for Federal Agencies
paragraphs: As noted in the above examples, the efficient use or disposal of unneeded  real property, including vacant and underutilized property, poses  significant challenges for federal agencies. As discussed in our January  2003 high-risk report on federal real property, disposal of unneeded real  property is a complicated issue influenced by various laws as well as  budgetary limitations. The high-risk report pointed out that in the disposal  area, a range of laws intended to address other objectives challenges  agencies’ efforts to dispose of unneeded property. For example, USPS is  specifically precluded from closing small post offices solely for economic  reasons. Furthermore, agencies are required under the National  Environmental Policy Act to consider the environmental impact of their  decisions to dispose of real property. Generally speaking, agencies are  responsible for environmental cleanup of any hazardous substances  associated with the properties prior to disposal, such as medical wastes,  asbestos, and lead paint. Despite the importance of this, cleanup costs can  be considerable and can involve years of study. For property with historic  designations—which is common in the federal portfolio—agencies are  required by the National Historic Preservation Act to ensure that historic  preservation is factored into how the property is eventually used.
The high-risk report also pointed out that most agencies cannot retain the  proceeds from the sale of unneeded property. Given that agencies are  required to fund the costs of preparing property for disposal, the inability  to retain any of the proceeds acts as an additional disincentive. The report  further pointed out that public-private partnership arrangements can be a  viable option for redeveloping obsolete federal property when they provide  the best economic value for the government, compared with other options,  such as federal financing through appropriations or sale of the property.  However, most agencies are precluded from entering into such  arrangements. The high-risk report recommended the development of a  comprehensive and integrated real property transformation strategy that,  among other things, could identify how best to realign and rationalize  federal real property and dispose of unneeded real property assets.
Continuing to hold unneeded vacant and underutilized properties is costly  to the government and can present an image of waste and inefficiency that  erodes taxpayer confidence. Given this, we plan to continue monitoring  federal agencies’ efforts to realign their real property portfolios. These  efforts can help the agencies respond to changing mission needs and  reduce the large number of vacant and underutilized properties in their real  property inventories.
section_title: Agency Comments and Our Evaluation
paragraphs: We received written comments on a draft of this report from GSA’s  Commissioner of the Public Buildings Service on June 23, 2003 (see app.  VI). He said that the report overstates the amount of underutilized space in  GSA’s inventory. He said that the current list of GSA properties in the report  includes vacant space that was not available for assignment because it is  already committed, such as space being renovated for a customer agency.  He stated that revising our list of vacant and underutilized properties to  recognize properties committed to being occupied would reduce the total  number of properties by 43—from 236 to 193—and the square footage from  18.2 million to 10.3 million. In addition, he said that the number of vacant  and underutilized properties is inflated by the inclusion of 37 small support  properties that were unoccupiable, such as a pump house or a parking lot  booth, but necessary to the functioning of occupiable space. The  Commissioner went on to say that support properties are small and have  little impact on the square footage of underutilized space reported, but the  inclusion of these properties does disproportionately affect the number of  underutilized properties. He stated that as of March 2003, the vacant  assignable space in GSA’s owned inventory, which he said was the  commonly accepted private sector measure of vacancy, was 10 million  square feet, which was only 5.5 percent of GSA’s owned inventory. He also  said that this percent is well below industry averages. He went on to say  that as GSA implements its portfolio restructuring initiative, which is  discussed earlier in this report, it will further improve the performance of  its real property portfolio. For example, phasing out GSA’s warehouses will  reduce the current list of vacant and underutilized properties by 48  buildings.
We did not change the total number of GSA’s vacant and underutilized  properties in the report. One of our objectives was to identify all vacant and  underutilized properties in GSA’s inventory as of October 1, 2002, so that  we could provide an overview of these types of properties at a given point  in time. According to GSA data, the 43 properties, which GSA said were  committed to future use, and the 37 properties, which GSA said were  support properties, met our criteria as vacant or underutilized properties as  of October 1, 2002. Furthermore, based on updated information that we  obtained from GSA, 37 of the 43 properties that GSA said were committed  to future use remained vacant or underutilized as of May 1, 2003. In  addition, 30 of the 37 support properties that GSA cites as unoccupiable  had rentable space that GSA reported as vacant or underutilized.
In the report, we provided specific information on the types, sizes, and  vacancy rates for all properties reported by GSA, including committed and  support properties, which provides transparency and context for  understanding the nature of these properties. In addition, we stated in the  report that the identification and disposal of vacant and underutilized  property is an ongoing process, with the numbers of properties thus  subject to constant change. Also, we recognized in the report that GSA (1)  has developed plans to do repair and alteration work at 46 buildings and  use the space in these buildings to house other federal agencies and (2)  anticipates that 44 other buildings will ultimately be candidates for  disposal. However, we reflected GSA’s concern in the report and modified  appendix II—the list of all GSA vacant and underutilized properties as of  October 1, 2002—to specifically identify those properties that GSA  identified as committed to being used and as support facilities necessary to  the functioning of occupiable space. We did not verify the data that GSA  provided on committed space and support properties.
We applaud GSA’s efforts to restructure its real property portfolio and its  current progress in reducing vacant assignable space. GSA’s current  portfolio restructuring initiative, if implemented effectively, can go a long  way toward better aligning GSA’s properties to provide quality space and  services at a cost that is competitive with the private sector and to reduce  the number of vacant and underutilized properties in its real property  inventory. GSA also provided technical comments that were incorporated  in the report where appropriate.
On June 23, 2003, we received oral comments from VA’s Assistant Secretary  for Management and USPS’s Managers of Facilities Program Management  and Realty Asset Management. They generally agreed with the information  in the report and provided technical comments that were incorporated in  the report where appropriate.
We will send copies of the report to the appropriate congressional  committees, the Director of the Office of Management and Budget, the  Administrator of GSA, the Secretary of the Department of Veterans Affairs,  and the Postmaster General. Copies will also be made available to other  interested parties on request. In addition, the report will be available at no  charge on our Web site at www.gao.gov.
Contacts and staff acknowledgments for this report are included in  appendix VII. If you or your staff have any questions, please contact me at  (202) 512-2834 or at goldsteinm@gao.gov.
section_title: Objectives, Scope, and Methodology
paragraphs: To meet the first objective, which was to provide information on how the  General Services Administration (GSA), Department of Veterans Affairs  (VA), and U.S. Postal Service (USPS) identified vacant and underutilized  real properties, we reviewed, analyzed, and discussed with GSA and VA  officials governmentwide real property management laws, regulations, and  executive orders, which established criteria for most federal agencies to  follow in accomplishing their responsibilities regarding vacant and  underutilized real property. Also, because USPS is exempt from most  federal laws dealing with real property, we reviewed appropriate legislation  that authorizes USPS to sell, lease, or dispose of property under its general  powers and discussed this legislation with USPS headquarters officials  responsible for real property management operations. In addition, we  reviewed various internal GSA, VA, and USPS documents, such as manuals,  handbooks, and bulletins, which provided guidance on the agencies’  procedures for identifying vacant and underutilized real property under  their control. We also discussed these procedures with various  headquarters and field officials from GSA, VA, and USPS who were  responsible for and most knowledgeable about their agencies’ real property  management operations involving vacant and underutilized property.
To meet the second objective, which was to provide information on the  numbers, types, and locations of vacant and underutilized real properties at  the three agencies, we obtained data from agency headquarters officials at  GSA, VA’s Veterans Health Administration, and USPS on their owned vacant  and underutilized real properties—facilities and land—as of October 1,  2002. In addition to identifying the numbers, types, and locations of such  properties, we also examined, analyzed, and formatted the data to obtain  some perspective and context about the characteristics of the properties,  including size and vacancy rate. GSA suggested using a property’s vacancy  rate as the basis for determining whether a facility could be considered  vacant or underutilized. GSA officials told us that they considered a facility  as underutilized if it had a vacancy rate of 26 percent or more.
To establish a clearer distinction between vacant and underutilized  facilities in this report, we considered a facility with a 100 percent vacancy  rate to be vacant and a facility with a vacancy rate of 26 percent to 99  percent to be underutilized. Using vacancy rates that GSA, VA, and USPS  provided to us, we categorized the three agencies’ facilities as either vacant  or underutilized. For the purposes of this report, all land properties were  considered 100 percent vacant.
The real property data provided by GSA, VA, and USPS were the only  centralized data available that could provide some indication of the  numbers, types, and locations of the three agencies’ vacant and  underutilized properties nationwide. We did some limited testing of the real  property data by discussing with agencies’ headquarters database  managers any apparent inconsistencies or inaccuracies we found with the  data. On the basis of those discussions, we adjusted the data to ensure that  the inconsistencies and inaccuracies we found were corrected or clearly  explained. We did not perform a detailed review of the three agencies’  computer systems that generated these data to determine the extent to  which significant errors or incompleteness in the key real property data  elements might exist. Also, we did not consider in our analysis the  appropriateness of how space was used in the agencies’ real properties. In  addition, we did not examine the extent to which agencies used GSA’s  governmentwide guidelines to identify vacant and underutilized properties.  As part of the initial request, we were also asked to develop information on  the impact that GSA, VA, and USPS vacant and underutilized properties had  on their real property operations and the local communities where the  properties are located. As agreed with congressional staff, it was decided  that this issue would be best pursued under a separate engagement.
We received written comments on a draft of this report from the  Commissioner of GSA’s Public Buildings Service and oral comments from  VA’s Assistant Secretary for Management and USPS’s Managers of Facilities  Program Management and Realty Asset Management. The comments we  received are discussed near the end of the letter, and GSA’s written  comments are included in appendix VI. We performed our work from  November 2002 through June 2003 in accordance with generally accepted  governmentwide auditing standards.
section_title: List of Vacant and Underutilized Real Properties Reported by the General Services Administration as of October 1, 2002
paragraphs: Property size  (square feet) (percent)
Property size  (square feet) (percent)
Property size  (square feet)
Property size  (square feet)
Property size  (square feet) (percent)
Property size  (square feet) (percent)
Property size  (square feet) (percent)
Property size  (square feet) (percent)
500 S Barstow Commons Fed bldg/courthouseBuilding size is in rentable square feet. Some buildings, such as those scheduled for demolition, have  no rentable square feet.
This table includes all GSA buildings that had a vacancy rate of 26 percent or higher.
According to GSA officials, this property is a support structure necessary to the functioning of  occupiable space.
According to GSA officials, this property includes vacant space that is committed for use. For  example, in some cases, such space is being renovated for a customer agency.
section_title: List of Vacant and Underutilized Real Properties Reported by the Department of Veterans Affairs as of October 1, 2002
paragraphs: feet) (acres) (percent)33 feet) (acres) (percent)100 feet) (acres) (percent)63 feet) (acres) (percent)100 feet) (acres) (percent)
5th St & Roosevelt Ave 5th St & Roosevelt Ave 5th St & Roosevelt Ave 5th St & Roosevelt Ave 5th St & Roosevelt Ave 40 feet) (acres) (percent)
5th St & Roosevelt Ave 5th St & Roosevelt Ave 31 feet) (acres) (percent)
4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 100 feet) (acres) (percent)
4101 S 4th St Trafficway 4101 S 4th St. Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 4101 S 4th St Trafficway 53 feet) (acres) (percent)
VAMC Perry Pt, MD Division 100 feet) (acres) (percent)
VAMC Perry Pt,  MD Division 32 feet) (acres) (percent)
Hwy 12 & William St Hwy 12 & William St Hwy 12 & William St 100 feet) (acres) (percent)
1501 San Pedro Dr SE 622 Albany Post Rd Route 9-A 622 Albany Post Rd Route 9-A 622 Albany Post Rd Route 9-A VAMC Castle Pt,  NY Division New York-Kings 800 Poly Place 622 Albany Post Rd Route 9-A VAMC Castle Pt,  NY Division 84 feet) (acres) (percent)
622 Albany Post Rd Route 9-A 622 Albany Post Rd Route 9-A VAMC Castle Pt,  NY Division 622 Albany Post Rd Route 9-A 622 Albany Post Rd Route 9-A 622 Albany Post Rd Route 9-A VAMC Castle Pt,  NY Division 100 feet) (acres) (percent)100 feet) (acres) (percent)
1400 Black Horse Hill Rd VA building 1400 Black Horse Hill Rd Administrative bldg 1400 Black Horse Hill Rd 30 feet) (acres) (percent)69 feet) (acres) (percent)
White River Jctn 215 N Main St White River Jctn 215 N Main St 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 100 feet) (acres) (percent)
1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 1601 E 4th Plain Blvd 29 feet) (acres) (percent)
section_title: List of Vacant and Underutilized Real Properties Reported by the U.S. Postal Service as of October 1, 2002
paragraphs: feet) (acres) (percent)
16825 S Desert Foothills  Pkwy Northwest Corner,  McDowell Rd & 36th St South side of Central Rd Federal Way & Ave K Liberty & Aliso Creek Rd Farwell Ave & League St East side of Lansing St,  between Palette Dr Loop Northwest corner, Parker  Rd and Old Rd Corner of Airport Way,  First & Pilgrim 100 feet) (acres) (percent)
Baltimore/Brooklyn 1500 Cherry Hill Rd 100 feet) (acres) (percent)
Hicksville/Plainview 1475 Old Country Rd W Reno Ave, between  Meridan & Portland Rice St, between Battan &  Maple 100 feet) (acres) (percent)
North Myrtle Beach 621 Sixth Ave S 417 N Sam Houston St Southeast corner,  Saunders and Main 100 feet) (acres) (percent)
section_title: List of Locations with 5 or More GSA, VA, and USPS Vacant and Underutilized Real Properties as of October 1, 2002
section_title: Comments from the General Services Administration
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, William Dowdal, Anne Hilleary, and  Jessica Lundberg made key contributions to this report.
section_title: GAO’s Mission
paragraphs: The General Accounting Office, the audit, evaluation and investigative arm of  Congress, exists to support Congress in meeting its constitutional  responsibilities and to help improve the performance and accountability of the  federal government for the American people. GAO examines the use of public  funds; evaluates federal programs and policies; and provides analyses,  recommendations, and other assistance to help Congress make informed  oversight, policy, and funding decisions. GAO’s commitment to good  government is reflected in its core values of accountability, integrity, and  reliability.
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section_title: Public Affairs