Big Ticket Waste: Are Empty Federal Buildings Emptying the Taxpayers’ Wallets?”
Chicago, Illinois -- field hearing
February 6, 2006
Did you know that more than 30 federal agencies are wasting --at the very least--, $15 billion in unused real property assets worldwide? We don’t even know how big the number is because there is no definitive inventory of federally owned facilities and land, let alone an inventory of buildings and land that go unused. Taxpayers are losing billions each year as Congress keeps sending checks to pay holding costs for vacant buildings, instead of demanding that they be sold or demolished.
Location: the former Main Post Office in Chicago (433 West Van Buren Street), 2.5 million square feet of unused property. Holding costs for this facility exceed $2 million annually, and it has been vacant since 1997. Why has it taken so long to sell the property?? This field hearing will explore the reasons why so many agencies do not efficiently or effectively maintain and manage their real property portfolios.
The Federal government has no comprehensive database of properties that it owns and leases; how much space it needs and doesn’t need. President Bush issued Executive Order 13327 in February 2004 to improve real property asset management, and this EO requires an inventory; yet many agencies have still not reported their inventories of real property (both used and unused).
The Federal government owns about $328 billion in real estate assets worldwide (GAO, 2003) and 2.8 billion square feet of building space. This means that the Federal government maintains 683 square feet of space per federal employee. In stark contrast, the private industry standard of 250 square feet per employee.
The Department of Defense estimated in 2003 that it spends $3-4 billion each year maintaining unneeded facilities. This works out to $2,000-$3,000 per active duty soldier every year, spent on space DoD doesn’t need. This money could be spent on body armor and humvees, but is thrown away to pay for vacant buildings.
Getting rid of buildings is cumbersome; and agencies need incentives to get rid of property they don’t need. Retention of profits for agencies on the sale of unneeded property may give them incentive to get rid of buildings.
Impact on Taxpayers:
The Office of Management and Budget OMB has set a goal of reducing the inventory of all property by 5%, or $15 billion, by 2009. Based on this goal, it appears that OMB considers this amount-- at the very least—to be excess.
Taxpayers are losing billions each year as Congress keeps sending checks to pay holding costs for vacant buildings, instead of demanding that they be sold or demolished.
These Findings Demand a Response:
Transparency is the first step. The Executive Order has not accomplished the inventory it demanded. A statutory requirement is needed for annual reporting of real property inventories by agencies, including reporting of facilities that are underutilized or unneeded, into ONE centralized database. One person in the government needs authority for maintaining and ensuring the use of this database by all agencies.
Laws authorizing disposal of unneeded space need to be streamlined, and existing statutory and regulatory barriers to timely disposal need to be removed.
