Federal Real Estate Sales on Track

Danny Werfel, Controller of the Office of Management and Budget

The Office of Management and Budget (OMB) announced today that the Obama administration is on track to meet or exceed two major real estate–related goals. In June 2010, President Obama directed agencies to eliminate billions of dollars in real estate costs by consolidating or selling off excess federal properties. As of the end of the first quarter of FY2012, agencies already have achieved more than $5.6 billion in real estate savings and are on track to exceed the president’s directive to save $8 billion by the end of this year.  That directive included two parts: $5 billion in savings through the Base Realignment and Closure Commission (BRAC) process and $3 billion in non-BRAC savings. With $3.25 billion in BRAC savings and $2.4 billion in non-BRAC savings to date, the administration currently is on track to exceed both goals.

These savings are the result of federal agencies reducing office space, encouraging wider use of telework opportunities, providing alternate workspace configurations, reducing operating costs and consolidating data centers. According to an OMB blog post by Controller Danny Werfel, Through these efforts, agencies have generated millions of dollars in savings from selling or consolidating properties, on top of numerous examples of lease cancellations, improved space management, and reductions in operating costs that are driving greater returns for the taxpayer.” His post offers two examples of property sales: the GSA Nome Federal Building in Nome, Alaska (a 27,000-square-foot, two-story, 1950s-era office building in downtown Nome that was sold for $1.68 million and is slated for continued office use) and a 1,425-acre former Air Force radar site in Moscow, Maine, that sold for about $750,000. He added that the federal government is continuing to “put more properties into the pipeline for disposal,” noting that it is “moving aggressively to sell the Portland Custom House in Portland, Oregon,” a property that is expected to be sold as early as this summer, at a price of $4 million or more.

Werfel also cited the IRS’s plans, announced last week, to close 43 smaller offices and reduce space in many larger facilities over the next two years, cutting total IRS office space by more than 1 million square feet—a move that is expected to save more than $40 million—and the Department of Agriculture’s January 2012 announcement that it will close 259 offices, facilities and labs across the country, saving about $150 million annually. His post concludes with a call for Congress to approve the president’s proposed Civilian Property Realignment Act (CPRA) to help increase the pace of the property disposition process.

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