Dorothy Robyn, a former deputy undersecretary of defense for installations and environment, makes the case for reforming the way the federal government treats real estate leases and public-private ventures for budgetary purposes, in a commentary in the Washington Post.
“The budgetary rules that govern investment in these assets are a blunt instrument that does serious collateral damage. Reforming these rules would allow the government to shrink its real estate footprint, modernize its legacy infrastructure for the 21st century and save billions of dollars,” writes Robyn, who left DOD in 2012 to head the Public Buildings Service in the General Services Administration (GSA).
The rules, Appendix B of Circular A-11 issued by the Office of Management and Budget (OMB), treat any lease that results in government ownership as a capital lease, ending the long-standing use of “lease-purchases” by GSA, Robyn writes. In addition, OMB and the Congressional Budget Office have extended the reach of A-11 to preclude most public-private ventures aimed at financing federal acquisition of capital assets, limiting the real estate tools available to the federal government.
Because agencies cannot afford to book the total cost of a lease in a single year, Robyn writes, the rules have forced agencies to employ more costly approaches, including relying on short-term operating leases. She cites the example of the 2008 lease for the new Transportation Department headquarters in Southeast D.C., which will cost the government $675 million over 15 years. A-11 barred GSA from negotiating a longer-term lease, a lease that would have given the government ownership of the building at its conclusion or one that would have discounted the building’s end-of-lease market price.
“With agencies desperate to address their facility needs, a cottage industry has emerged in search of ways to get around the A-11 rules,” she states. What is needed is a more sensible approach to scoring.