Even US govt faces trouble selling buildings

Procedural barriers and moving costs make it difficult for the government to unload properties it no longer wants

For more than six years Akridge,a developer in Washington,had its eye on a 10-story office building in Bethesda,which had been vacant since the US National Institutes of Health moved out in 2002.

But the federal government did not put the building on the market until November 2009. By then,of course,the real estate market had slumped. Akridge and its partner,Rockwood Capital,a real estate investment fund in White Plains,finally bought the building last October,paying $12.5 million,less than the $14 million asking price.

In a report last October,Republicans in the US Congress pounced on the long delay in selling the Bethesda building and the discounted price as an example of how the federal government has been mismanaging its real estate holdings.

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The US government owns or manages more than 900,000 buildings or other structures across the country office buildings,courthouses,warehouses and other property types making it the nations largest landlord. But like the former NIH building,about 14,000 are no longer needed and are costly to maintain. An additional 55,000 are regarded as underutilised.

The report was also harshly critical of government spending to operate surplus and underused buildings,including $6.5 million for the Old Post Office Building at 12th Street and Pennsylvania Avenue in Washington. The administrations own figures estimate the annual operating expenses for those buildings at more than $1.8 billion.

Last June US President Barack Obama ordered executive agencies to accelerate efforts to dispose of unneeded buildings,and set a goal of saving $3 billion by the end of 2012. Yet various obstacles make it difficult for the government to unload buildings it no longer wants.

For one thing they must first be offered to other federal,state and local agencies. Officials also have to ascertain if the building has a community use say,for a homeless shelter.

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At times an agency may want to sell an obsolete building but cannot afford the moving costs,Jeffrey D Zients,a deputy director of the office of management and budget,said in a telephone interview. Then,too,political considerations may come into play. Politicians love to hold a ribbon-cutting for a new building, Zients said. Getting rid of a building is less rewarding.

The Obama administration has determined that if the barriers to selling were removed,he said,the savings could be much higher $15 billion over five years. The sum includes the dollars not spent on maintenance and energy costs as well as sale proceeds.To speed up the disposal process the Obama administration wants to create an independent commission modeled after the Base Realignment and Closure Commission,or BRAC,a process begun in 1988 to review Defense Department recommendations for closing military bases. The proposed commission,the Civilian Property Realignment Board,would cut through much of the existing red tape,establish new procedures and come up with recommendations for selling property in bulk,Zients said.

The commission would also recommend ways the government could use its space more efficiently by,for example,consolidating space or getting agencies to move into one building.