This post first appeared on Federal News Network. Read the original article.
The disposition of federal buildings is much on the minds of the Washington, D.C. real estate community these days (among other things). This column focuses on those properties long known to be unneeded and/or underutilized, rather than federally owned buildings that are, and are expected to remain, fully occupied.
Although efforts to rightsize the government’s real estate portfolio has waxed and waned over the years, and the government has tried periodically to streamline the disposal process, most recently with 2016’s Federal Asset and Sales Transfer Act, in my 35 years in federal real estate there has never been as much focus on, and political will for, optimizing the government’s real estate portfolio as exists today. Coupled with the poor state of repair of so many buildings and the lack of capital, the time appears ripe for the government to focus on real property disposal and to do so in a manner that truly benefits the communities in which they are located.
Here in the District of Columbia, recent public meetings hosted by the D.C. deputy mayor for planning and economic development, the Public Buildings Reform Board (PBRB), and the Federal Real Property Association (of which I am a board member), and participation by the Urban Land Institute, the National Capital Planning Commission, and other stakeholders, are building momentum to seize this opportunity to ensure that the future uses of these properties best serve the interests of their neighborhoods and municipalities.
Of course, planning for any federal buildings to come to market presumes that many other challenging and complicating factors have been addressed: the portfolio analysis to determine which buildings to retain versus dispose, deciding which agencies will relocate where, and identifying funding for the necessary consolidations and relocations. But even once these hurdles are overcome, it is no simple matter to get from being ‘identified for disposition’ to landing on the auction block. The following are a few ideas for how the government can facilitate and expedite these processes.
Historically, and assuming no federal interest in a particular property, the disposition process can take from one to five years to complete. Most steps are statutorily mandated, such as McKinney-Vento homeless assistance, other discounted public benefit conveyances, and environmental and historic preservation reviews.
Perhaps the best way to expedite these processes is simply to focus more attention and resources on the effort. For the primary agencies involved in the disposal process — the General Services Administration and the departments of Housing and Urban Development and Health and Human Services — the offices which handle disposals are very small and unfortunately getting smaller. These offices will need either additional federal employees or private contractors to handle the growing list of properties tagged for disposition and to prepare them for sale as quickly and efficiently as possible.
Another opportunity lies in simply getting started sooner. For most of the big federal buildings under consideration for disposal, the salient facts about each property (from site surveys, plat maps, title searches, environmental assessments and the like) are known. Assembling the required documentation for likely candidates could start now and occur with much greater alacrity than past practice would suggest.
The longest pole in the tent usually belongs to historic preservation. By law, federal agencies must consider the effects on historic properties of any project they carry out. Disposition with potential demolition certainly fits this definition (and most federal buildings meet some definition of ‘historic’). GSA’s typical practice for addressing historic preservation has been to attempt to satisfy preservation goals to avoid any ‘adverse effects’ on the property. Unfortunately, this can render a particular building unsellable, as the costs of preservation can make redevelopment infeasible. GSA’s recent experience in Laguna Niguel, California, is instructive. The PBRB recommended the Chet Holifield Federal Building for sale in December 2019. After first trying to sell it with a covenant requiring the buyer to fully restore and maintain the building (and receiving no offers), GSA was forced to make a determination of adverse effect and restart the process, finally culminating in a sale in late 2024, five years later. Recognition that a particular property’s future value is in the land rather than the building (for example), would enable negotiations to mitigate those ‘adverse effects’ to begin immediately.
Another typical constraint in the disposition of government real estate is lack of information regarding the local municipality’s expectations for the future use of the property. Without greater knowledge of future entitlements, buyers must assume more risk. This reduces private sector interest, lengthens the redevelopment timeline, and reduces the sales price for the government. More coordination with local municipalities and stakeholders prior to sale can reduce entitlement uncertainty for buyers and increase the property’s value. As the PBRB has been advocating since its inception, recognition of likely future use should play a greater role in the government’s disposal calculus.
Streamlining and accelerating the disposition process can be done while still meeting the letter and spirit of applicable legislation. Stakeholders in the federal real property sphere should capitalize on the political will that now exists to transition these properties out of federal ownership to the benefit of their respective communities.
Adam Bodner is a principal at ABodner Consulting. He is vice president of the Federal Real Property Association, and previously was the executive director of the Public Buildings Reform Board. The views expressed are his own.
The post Federal real estate disposition — Means and methods first appeared on Federal News Network.