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

Letter

Background

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.

How GSA, VA, and USPS Identify Vacant and Underutilized Real Property

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.

Identifying Vacant and Underutilized Properties Is a Decentralized Process

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.

GSA, VA, and USPS Have Begun Nationwide Initiatives to Realign Their Real Property Portfolios

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.

Numbers, Types, and Locations of GSA, VA, and USPS Vacant and Underutilized Real Properties

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.

Vacant and Underutilized Properties Pose Challenges for Federal Agencies

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.

Agency Comments and Our Evaluation

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.

Objectives, Scope, and Methodology

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.

List of Vacant and Underutilized Real Properties Reported by the General Services Administration as of October 1, 2002

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.

List of Vacant and Underutilized Real Properties Reported by the Department of Veterans Affairs as of October 1, 2002

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)

List of Vacant and Underutilized Real Properties Reported by the U.S. Postal Service as of October 1, 2002

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)

List of Locations with 5 or More GSA, VA, and USPS Vacant and Underutilized Real Properties as of October 1, 2002

Comments from the General Services Administration

GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

In addition to those named above, William Dowdal, Anne Hilleary, and Jessica Lundberg made key contributions to this report.

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