GSA follows a prescribed process for the disposal of federal properties that are reported as excess by federal agencies—a process that can take years to complete. GSA first offers excess property to other federal agencies. If no federal agency needs it or homeless provider expresses an interest in it, the property becomes surplus and may be made available for other uses through a public benefit conveyance, when state and local governments, and certain nonprofits, can obtain the property at up to 100 discount of fair market value when it is used for public purposes, such as an educational facility. Ultimately, the property may be disposed of by a negotiated sale for public use or public sale based on GSA’s determination of the property’s highest and best use. GSA collects rent from tenant agencies, which is deposited in the Federal Buildings Fund (FBF) and serves as GSA’s primary source of funding for operating and capital costs associated with federal real property. Congress exercises control over the FBF through the appropriations process, which designates how much of the fund can be obligated for new construction and maintenance each fiscal year. According to GSA, capital funding has not kept pace with GSA’s need to replace and modernize buildings in its federal real property portfolio, which includes about 1,500 buildings. We have recently found that GSA and other federal agencies have pursued alternative approaches to address challenges with funding federal real property projects. One alternative approach is a swap-construct exchange between the federal government and a nonfederal entity, such as a private developer. GSA has several authorities to exchange federal property for constructed assets and, in 2005, was specifically authorized to exchange federal property for construction services. Swap-construct exchanges can be proposed by a nonfederal entity, such as a private developer or local government, or by GSA. GSA’s process for proposing and conducting a swap-construct exchange includes either proposing a swap-construct exchange to a nonfederal entity that has expressed an interest in acquiring a specific federal property or soliciting market interest through an initial proposal, often an RFI, followed by more detailed proposals. These more detailed proposals include requests for qualifications (RFQ) to identify qualified developers and requests for proposals (RFP). In a swap-construct exchange, the federal government transfers the title of the federal property to a developer or other property recipient after receiving a constructed asset or the completion of construction services at a different location. Swap-construct exchanges can involve swapping property and constructed assets or construction services that are of equal value or can include cash to compensate for a difference in value between the federal property and the asset or services to be received by the government. According to GSA, highest priority is assigned to swap-construct exchanges that involve exchanges of federal property of equal or greater value than the asset or services provided by the property recipient because these scenarios do not require appropriation of federal funding. Figure 1 describes GSA’s decision- making process for proposing swap-construct exchanges and the three scenarios that can result from an agreement for a swap-construct exchange. According to GSA, once the agency has decided to pursue an exchange for a newly constructed asset or services, it follows GSA’s 1997 guidance for real property exchanges of non-excess property. The guidance lays out a number of steps, including: obtaining a property appraisal; using, if possible, one appraiser for all properties involved in an analysis and documentation of all benefits and costs of the exchange to show why the exchange is in the best interest of the government. In November 2013, the GSA Inspector General issued a memo noting that GSA’s 1997 guidance is not specifically applicable to exchanges of real property for services. In responding to the memo, GSA stated that it was in the process of preparing guidance specific to exchanges for services. Since 2000, GSA has completed two swap-construct exchanges initiated by companies—Emory University Hospital Midtown (then called Emory Crawford Long Hospital) and H. E. Butt Store Property Company No. One (HEBSPC)—that were interested in acquiring specific federal properties in Atlanta, GA and San Antonio, TX, respectively. A now-retired representative of Emory University Hospital Midtown and representatives of HEBSPC told us that they were satisfied with the end result of the exchanges, but added that there were challenges in the process that may affect future swap-construct exchanges. Specifically, the representatives told us that the exchanges took longer than anticipated, about 3 years in Atlanta and over 5 years in San Antonio, and that, consequently, less motivated parties may avoid or withdraw from future exchanges. GSA officials told us that both exchanges were a good value for the government because the properties and services received by the government were of equal or greater value than the federal properties disposed of in the exchanges. GSA officials added that the exchanges were a good value for the government because both of the assets disposed of were underutilized. However, these officials noted their lack of experience with swap-construct exchanges at the time. Atlanta Swap-Construct—In 2001, GSA exchanged a federal parking garage (the Summit Garage) in Atlanta with 1,829 spaces on a 1.53-acre parcel with Emory University Hospital Midtown for a newly constructed parking garage (the Pine Street Garage) with 1,150 spaces on .92 acres (see fig. 2). GSA also received a commitment from the hospital to lease and manage the operations and maintenance of the Pine Street Garage for 16 years and to lease spaces in it to federal employees. According to GSA, at the time of the exchange, the Summit Garage was underutilized because it included more parking spaces than GSA needed. Although GSA utilized some of the extra spaces through a lease agreement with the hospital, which is located nearby, the garage was, GSA added, in deteriorating condition and was not it compliance with the Americans with Disabilities Act (ADA). According to GSA, the swap-construct exchange was in the best interest of the government because GSA received a new ADA-compliant garage with a direct covered connection to both the Peachtree Summit Federal building and a Metropolitan Atlanta Rapid Transit Authority (MARTA) subway station in exchange for a garage that was underutilized and in deteriorating condition. GSA added that the exchange was beneficial to the government because it included the hospital’s commitment to lease spaces not needed by the government for 16 years, with proceeds deposited into the FBF, and to cover operations and maintenance work typically covered by GSA. According to the now-retired representative of Emory University Hospital Midtown who was involved with the swap-construct exchange, the acquisition of the Summit Garage was crucial to accommodating a hospital renovation and expansion project. However, the hospital was aware that GSA needed parking spaces to accommodate federal tenants in the Peachtree Summit Federal Building, so it proposed the swap- construct approach to GSA. The representative added that, although the hospital was pleased with the end result of the transaction, the exchange took about 3 years to complete, a time that was longer than anticipated for the hospital and that may lead less motivated parties to avoid or withdraw from future exchanges. GSA officials noted that the agency had limited experience with this type of exchange, which may have contributed to the length of time required to complete it. The representative added that the exchange was also complicated in that the appraised value of the new garage and any additional services had to be equal to the appraised value of the Summit Garage. The now-retired representative added that to address concern that the new and smaller garage might appraise for less than the Summit Garage, the hospital agreed with GSA to continue leasing spaces in the new garage and cover operations and maintenance costs. As a result, the two parts of the exchange—the garages and lease agreements—were equally appraised at $6.6 million. According to GSA, although the hospital’s lease in the new garage expires in 2017, the size of the garage allows the agency to meet continued demand for federal parking in the vicinity of the Peachtree Summit Federal Building. San Antonio Swap-Construct—In 2012, GSA exchanged an approximately 5-acre federal property (the Federal Arsenal site) in San Antonio, TX, with HEBSPC for construction of a parking garage on existing federal land for the recently renovated Hipolito F. Garcia Federal Building and U.S. Courthouse (see fig. 3). According to GSA, at the time of the exchange, the Federal Arsenal site was an underutilized asset because of historical covenants limiting the ability to redevelop the land and its buildings and because it was located on the periphery of the city away from other federal assets. Although the property was partly utilized by GSA’s Fleet Management and through a lease agreement with HEB Grocery Company (HEB) for parking spaces, GSA officials told us that there was no anticipated long-term government need for it. According to GSA officials, the swap-construct exchange was in the best interests of the federal government because the government received a new federal parking garage for the Hipolito F. Garcia Federal Building and U.S. Courthouse in exchange for a property that was underutilized. HEBSPC representatives told us that the company was interested in acquiring the Federal Arsenal site to accommodate existing space needs and potential expansion of HEB’s corporate headquarters, near the site and expressed this interest to GSA. The representatives added that although the historic covenants on the property presented some potential challenges, the company had prior experience renovating and utilizing historic properties on HEB’s headquarters property. The representatives also told us that the company had a long-standing interest in acquiring the Federal Arsenal site prior to 2005, but during that time, the property could not be sold because it was being partly used by GSA’s Fleet Management.