US Federal properties for sale or lease

In order to reduce overhead and generate income to fund programs, U.S. federal agencies are seeking to sell or lease unused properties to private developers. The federal government's real-estate portfolio has an estimated value of $335 billion, and the properties under discussion amount to billions of dollars.

Earlier this year the General Accounting Office (GAO) put federal property on its "high-risk" list, which identifies problems that are creating at least $1 billion in wasteful spending, among other things. Maintaining under-utilised properties is a significant federal expense. For example:

  • The Defence Department is spending $3 billion to $4 billion annually to maintain facilities that aren't needed, according to the GAO.

  • Maintaining vacant properties owned by the Department of Veterans Affairs is costing as much as $35 million a year.

  • And the Department of Energy is paying more than $70 million a year in maintenance and security costs for its vacant facilities.

    Previously, federal agencies transferred ownership of surplus properties and buildings to local jurisdictions for redevelopment. Now the Department of Veterans Affairs, for instance, is reviewing nearly half of its 375 facilities to figure out which ones would generate the most money if they were leased to private developers.

    And the U.S. General Services Administration, which manages a big portion of the government's real estate, is pushing for legislation that will allow it to enter into long-term leases with private developers and pocket any profit.

    Source: Sheila Muto, U.S. Squeezes Its Real Estate To Generate Needed Revenue, Wall Street Journal, October 15, 2003.

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    RSA Comment:
    Governments should not own any commercial property whatsoever. Hiring offices from property-owning companies would allow government to sell off property and retire debt, get out of the property management business which is not one of its core functions, improve space utilisation and thereby reduce expenditure, and even get a discount in the form of taxes on profits made by its landlords.

    Eustace Davie, Director, FMF.

    FMF Policy Bulletins/ 21 October 2003

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