Two Approaches to Property Dispositions

Rep. Jeff Denham (left) and Sen. Tom Carper (right)

Congress has been busy this year working on bills meant to pave the way for the disposition of thousands of unneeded or underutilized properties. This is one of those rare instances where the Republican House and the Democratic Senate fundamentally agree. They both concede that the federal government has done a poor job of managing its real estate assets and, in particular, it has been ineffective in disposing of excess properties. This issue has been highlighted in numerous GAO reports including a February, 2011 report entitled “The Government Faces Challenges to Disposing of Unneeded Buildings” and a report issued just last month entitled “National Strategy and Better Data Needed to Improve Management of Excess and Underutilized Property”.

In response, both the House and Senate have launched legislation to tackle the problem. In February of this year, the House passed the Civilian Property Realignment Act. Meanwhile, the Federal Real Property Asset Management Reform Act was recently approved by the Senate Homeland Security and Government Affairs Committee and should be headed to a full vote later this year.

The two legislative efforts share similar themes: both bills express the need to reduce operating and maintenance costs, consolidate the federal inventory and, of course, facilitate and expedite the sale of unneeded properties. If there is a primary point of difference, it comes in their proposed approach to disposing of these properties. The House proposes to create a civilian version of DoD’s BRAC process, establishing an independent committee to evaluate and approve properties for disposition. The Senate approach calls for development of an asset management plan and related performance measures, against which properties are identified as excess.

The following table compares the two bills:

House Senate
The Bill Civilian Property Realignment Act (H.R 1734) Federal Real Property Asset Management Reform Act of 2012 (S. 2178)
The Sponsor Rep. Jeff Denham (R-CA) Sen. Tom Carper (D-DE)
The Authority A 9-member Civilian Property Realignment Commission (“Commission”) is established, comprised of public- and private-sector real estate professionals. A Federal Real Property Council (“FRPC”) is established, comprised of members from OMB, GSA and the senior real property officers of each federal agency.
The Process Within 120 days from enactment of the Act (and annually thereafter) each federal agency will submit to GSA and OMB a list of properties that can be sold. Within 60 additional days OMB and GSA will then submit their recommendations to the Commission. The Commission reviews these submissions, conducts public hearings and generates its own recommendations (to include the identification of at least 5 properties with an aggregate value in excess of $500 million) to the President, who must approve of the recommendations before they are finally sent to Congress to be approved by joint resolution. Within 90 days from when the FRPC is formed it will develop an asset management plan and deliver a report to Congress. Within 120 days from its formation the FRPC will deliver an asset disposal plan to OMB. This report will be updated annually and each year OMB will require agencies to dispose of the assets identified in the FRPC asset plan.
The Timing Dispositions must be initiated within 2 years and completed within 6 years. Dispositions are to begin within two years.  Annual asset management and disposition goals are established.
The Carrot Agencies enjoy reduced operating and maintenance costs but do not share in sales proceeds, except to defray the costs of property dispositions and associated space realignment. 18% of the sales proceeds shall be retained by the agencies to fund activities related to asset management and disposal.
The Stick No specific penalties are outlined, except that the Commission may decide on its own which of the agencies’ properties will be sold. Agencies that don’t comply within 18 months may not acquire (by lease or purchase) any new property. Agencies that don’t comply within 2 years will be subject to a 1-time sequester of their budgets equal to 80 percent of the value of their underutilized property.

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