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DEFENSE COMMUNITIES 360

Hearing Reaffirms Broad Support for Initiative to Shrink Excess Federal Property

  • May 12, 2011
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Thursday’s hearing intended to explore the differences between competing proposals for slashing thousands of unneeded federal properties via a civilian BRAC commission was free of tension, allowing lawmakers to focus on the issues critical to the success of a new mechanism for consolidating the government’s real estate holdings.

The two bills discussed by the Economic Development, Public Buildings and Emergency Management Subcommittee of the Transportation and Infrastructure Committee were introduced last week; one by the panel’s chairman, Rep. Jeff Denham (R-Calif.), and the other by the White House. Each is called the Civilian Property Realignment Act.

The Obama administration’s principal witness, Daniel Werfel, controller for the Office of Management and Budget (OMB), said the differences between the two proposals — each is estimated to save taxpayers more than $15 billion — are bridgeable.

Denham and the witnesses both emphasized the important role the private sector should play throughout the process being considered for selecting properties for elimination and, ultimately, disposing of them.

“Given the federal budget conditions, there should be increasing focus on public-private partnership to provide workplace solutions, agency consolidations and federal real property redevelopment,” said David Winstead, a real estate attorney and former General Services Administration commissioner of public buildings.

Denham stated that he plans to form a working group of private sector representatives to advise the subcommittee and the proposed commission.

Witnesses also focused on the potential for significant savings through the sale of high-value properties, redevelopments and more efficient use of property, agreeing that the savings that can be achieved through selling unneeded surplus properties will be a very small fraction of the overall savings.

Beyond the immediate benefit of unloading expensive properties and lowering the federal deficit, selling high-value assets should be a priority after the commission is established as a way to immediately start creating a revenue stream for the commission’s activities, the chairman said.

One witness urged the panel to empower a civilian BRAC commission to identify opportunities outside the scope of individual agencies. “Many undervalued properties or sites with excess density or alternative value-add opportunities are likely to be overlooked by government agencies, which do not possess real estate expertise,” said Michael Glosserman, managing member of JBG Cos.

Glosserman said that if the private sector sees progress with a civilian BRAC process and the opportunity to work with the federal government, “you will see folks coming out of the woodwork” with proposals to better utilize federal properties and save taxpayers money.

The Details

Much of the hearing was devoted to reconciling differences between the two bills. One variation, for example, concerns the lifespan of the commission — the administration’s proposal calls for a 12-year life, while Denham’s bill would terminate the commission after six years. Werfel noted that if the duration of the commission is too short, it may prematurely rush to sell excess properties when waiting could yield a larger payday for the government, a point echoed by Anthony Principi, who chaired the 2005 BRAC Commission. Still, Werfel was confident a compromise could be reached.

A discussion of OMB’s role in the process under consideration produced some disagreement, as it did during last month’s hearing. Denham and Ranking Member Eleanor Holmes Norton (D-D.C.) believe OMB should not be directly involved in the selection of properties. The administration’s proposal calls for the Civilian Property Realignment Board to forward its recommendations to OMB for review before they are submitted to Congress. If the OMB director rejects the recommendations, they go back to the commission which would be given a second opportunity to revise the list.

Denham’s version removes OMB from the process. His version closely follows the BRAC process in which the commission’s recommendations are sent directly to the president and, if approved, to Congress.

For more details on the hearing, including a webcast and the witnesses’ testimony, visit the subcommittee’s website.

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