[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
        DISPOSAL OF FEDERAL REAL PROPERTY: LEGISLATIVE PROPOSALS
====================================================================

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT

                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 27, 2011

                               __________

                           Serial No. 112-82

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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                      http://www.house.gov/reform




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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 27, 2011....................................     1
Statement of:
    Gullo, Theresa, Deputy Assistant Director, Budget Analysis 
      Division, Congressional Budget Office; David Foley, Deputy 
      Commissioner, Public Buildings Service, U.S. General 
      Services Administration; Maria Foscarinis, executive 
      director, National Law Center on Homelessness and Poverty; 
      F. Joseph Moravec, former Commissioner, Public Buildings 
      Administration, U.S. General Services Administration.......    30
        Foley, David.............................................    40
        Foscarinis, Maria........................................    48
        Gullo, Theresa...........................................    30
        Moravec, F. Joseph.......................................    59
    Quigley, Hon. Mike, a Representative in Congress from the 
      State of Illinois; Hon. Jason Chaffetz, a Representative in 
      Congress from the State of Utah; and Hon. Jeff Denham, a 
      Representative in Congress from the State of California....     9
        Chaffetz, Hon. Jason.....................................    13
        Denham, Hon. Jeff........................................    17
        Quigley, Hon. Mike.......................................     9
Letters, statements, etc., submitted for the record by:
    Chaffetz, Hon. Jason, a Representative in Congress from the 
      State of Utah, prepared statement of.......................    15
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland:
        Letter dated July 26, 2011...............................    27
        Prepared statement of....................................     7
    Denham, Hon. Jeff, a Representative in Congress from the 
      State of California, prepared statement of.................    19
    Foley, David, Deputy Commissioner, Public Buildings Service, 
      U.S. General Services Administration, prepared statement of    42
    Foscarinis, Maria, executive director, National Law Center on 
      Homelessness and Poverty, prepared statement of............    50
    Gullo, Theresa, Deputy Assistant Director, Budget Analysis 
      Division, Congressional Budget Office, prepared statement 
      of.........................................................    32
    Issa, Chairman Darrell E., a Representative in Congress from 
      the State of California, prepared statement of.............     3
    Moravec, F. Joseph, former Commissioner, Public Buildings 
      Administration, U.S. General Services Administration, 
      prepared statement of......................................    62
    Quigley, Hon. Mike, a Representative in Congress from the 
      State of Illinois, prepared statement of...................    11
    Towns, Hon. Edolphus, a Representative in Congress from the 
      State of New York, prepared statement of...................    73


        DISPOSAL OF FEDERAL REAL PROPERTY: LEGISLATIVE PROPOSALS

                              ----------                              


                        WEDNESDAY, JULY 27, 2011

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m., in 
room 2154, Rayburn House Office Building, Hon. Darrell E. Issa 
(chairman of the committee) presiding.
    Present: Representatives Issa, Mica, Platts, Lankford, 
Amash, Gosar, Labrador, Kelly, Cummings, Towns, Maloney, 
Norton, Kucinich, Connolly, Quigley, and Murphy.
    Staff present: Robert Borden, general counsel; Will L. 
Boyington, staff assistant; Lawrence J. Brady, staff director; 
Ashley H. Callen, counsel; John Cuaderes, deputy staff 
director; Adam P. Fromm, director of Member services and 
committee operations; Linda Good, chief clerk; Ryan Little, 
professional staff member; Justin LoFranco, deputy director of 
digital strategy; Rebecca Watkins, press secretary; Peter 
Warren, legislative policy director; Beverly Britton Fraser, 
minority counsel; Kevin Corbin, minority staff assistant; 
Ashley Etienne, minority director of communications; Jennifer 
Hoffman, minority press secretary; Carla Hultberg, minority 
chief clerk; and Mark Stephenson, minority senior policy 
advisor/legislative director.
    Chairman Issa. The hearing will come to order.
    Gentlemen, thank you for being here today. We will do 
opening statements and then go to your testimony with all of 
you who have been promptly here.
    The Oversight Committee's mission: We exist to secure two 
fundamental principles. First, Americans have a right to know 
that the money Washington takes from them is well-spent. And, 
second, Americans deserve an efficient, effective government 
that works for them.
    Our duty on the Oversight and Government Reform Committee 
is to protect these rights. Our solemn responsibility is to 
hold government accountable to taxpayers, because taxpayers 
have a right to know what they get from their government. We 
will work tirelessly, in partnership with citizen watchdogs, to 
deliver the facts to the American people and bring genuine 
reform to the Federal bureaucracy.
    Today's hearing centers around the Federal Government's 
current holding of over 10,000 excess properties and the way we 
spend hundreds of millions of dollars annually just to maintain 
these facilities, many of them in poor condition. Congressional 
Research Service says, by any measure, the Federal Government 
has approximately 14,000 too many buildings and structures and 
approximately 76,000 properties that the Office of Management 
and Budget say are underutilized.
    Our committee, with jurisdiction over the disposal of these 
assets, takes seriously our responsibility. Additionally, we 
will take seriously the record of property disposal, both under 
BRAC for the military and civilian disposal, which has had an 
abysmal failure to recoup any significant dollars.
    It is regrettable that we now have an administration that 
spends over $1 billion per year to operate properties that are 
empty or unnecessary. It is more of interest to this committee 
that CBO's interpretation of the amount of money that is 
presently scored in the billions by this administration, as 
though it will happen, turns out to be anywhere from the 
millions or possibly--and I repeat, possibly--could actually 
score an additional loss to the Treasury in its disposal.
    Making sure the American people continue to pay only for 
what we use--or pay only for what we use and stop paying for 
unused space is bipartisan. Republicans and Democrats on this 
dais are united in trying to dispose of property. Today, our 
witnesses are both Republicans and Democrats, each with good 
ideas of how we can do better next time.
    Our committee is dedicated to hear all ideas and to 
recognize that if we keep doing what we have done in the past, 
we will simply have the same abysmal results, which is: no net 
savings to the Treasury; no net elimination; and, in many 
cases, assets which are more valuable being sold to the highest 
bidder being let to users of convenience, who ultimately would 
be better off receiving the money than receiving the housing.
    This and other areas need to be looked at as in our 
jurisdiction.
    Mr. Chaffetz, who chairs our National Security 
Subcommittee, has proposed a program that would incentivize 
agencies to use space efficiently and dispose of what is 
unneeded by letting agencies retain 20 percent of net proceeds 
of their sale while the Treasury would receive 80 percent for 
debt reduction.
    Mr. Quigley, the ranking member on the Financial Services 
Subcommittee, has proposed allowing the GSA to more efficiently 
coordinate the sale of Federal properties and to establish a 
greater level of transparency for data on Federal real property 
holdings.
    Additionally, Mr. Denham has taken his learning and 
experience in the State of California and has proposed a 
commission to identify and submit disposal recommendations to 
OMB that would be subject to congressional approval.
    I look forward to all of these ideas and more. It is clear 
that business as usual must be behind us, not in front of us.
    And, with that, I recognize the ranking member for his 
opening statement.
    [The prepared statement of Chairman Darrell E. Issa 
follows:]
[GRAPHIC] [TIFF OMITTED] T1985.001

[GRAPHIC] [TIFF OMITTED] T1985.002

    Mr. Cummings. Thank you very much, Mr. Chairman. And I 
thank you for calling this hearing.
    The efficient management of government real property has 
long been of interest to this committee, the Government 
Accountability Office, and the administration. While some 
improvements have been made over the last decade, much more 
remains to be done.
    The Federal Government has a vast real-property portfolio 
of more than 900,000 buildings and structures, with a combined 
area of over 3 billion square feet. The administration recently 
estimated that 14,000 of these facilities were excess and 
76,000 were underutilized, costing American taxpayers up to 
$1.7 billion in maintenance costs every year.
    Some have estimated that the sale of excess Federal 
properties might generate significant revenue--as much as $15 
billion. Personally, I am somewhat skeptical of these 
estimates. They rely on property values estimated using 
replacement value or the cost to build another similar 
structure rather than the more reliable appraisal method of 
using fair market value.
    Nevertheless, improvements in Federal real-property 
management are clearly needed. In 2004, the previous 
administration, led by the General Services Administration and 
the Office of Management and Budget, created the Federal Real 
Property Council, which made significant progress in creating 
an accurate inventory of the government's property holdings.
    The current administration has continued this effort. In 
June 2010, the President issued a memorandum directing OMB and 
Federal agencies to seek cost savings of $3 billion by the end 
of fiscal year 2012 by increasing sales and reducing operating 
and maintenance costs for surplus properties. Earlier this 
year, the administration proposed legislation to create a 
commission to speed the disposal of unneeded, underutilized 
Federal property similar to the BRAC process used for military 
facilities.
    Today, we are honored to have three distinguished Members 
of the House testifying on the first panel about bills they 
have introduced to improve the management of unneeded and 
underutilized Federal properties.
    Representative Quigley's legislation would make 
improvements to help speed disposals, require greater 
transparency in the reporting on Federal property, allow 
agencies to retain the proceeds of property sales, and give GSA 
the authority to pay certain disposal costs on a reimbursable 
basis.
    Mr. Denham's bill closely resembles the proposal put 
forward by the administration. And I understand he worked on 
these issues at the State level before coming to Congress.
    Finally, Mr. Chaffetz's legislation would create a pilot 
program run by OMB to require that selected properties be sold 
for cash. Under this bill, OMB would be directed to find $19 
billion in sales proceeds over the life of the pilot program.
    I look forward to hearing from all of our colleagues, as 
well as the witnesses on the second panel.
    Finally, as we consider these various proposals, I hope we 
pay careful attention to the current rules allowing nonprofits 
and local and State governmental entities to obtain surplus 
Federal property at a discount. These narrowly constrained 
rules allow for such conveniences for the public's benefit. And 
although they represent only a small percentage of disposals, 
they are important to the entities that receive them and to the 
public.
    With that, Mr. Chairman, I yield back and look forward to 
hearing from our witnesses.
    [The prepared statement of Hon. Elijah E. Cummings 
follows:]
[GRAPHIC] [TIFF OMITTED] T1985.003

[GRAPHIC] [TIFF OMITTED] T1985.004

    Chairman Issa. I thank the ranking member.
    All Members will have 7 days to submit their opening 
statements and extraneous material for the record.
    With that, we now go to our first panel of witnesses. The 
Honorable Mike Quigley, a member of the committee, represents 
the Fifth District of the State of Illinois. The Honorable 
Jason Chaffetz represents the Third District of the State of 
Utah.
    Since you are both members of the committee, you know we 
don't swear members of the committee.
    So, with that, Mr. Quigley, I would love to have your 
opening statement, which, by the way, is the only way you can 
guarantee an opening statement over and above the chairman and 
ranking member. I think it was very clever for both of you to 
get your opening statements.
    The gentleman is recognized.

 STATEMENTS OF HON. MIKE QUIGLEY, A REPRESENTATIVE IN CONGRESS 
      FROM THE STATE OF ILLINOIS; HON. JASON CHAFFETZ, A 
  REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH; AND HON. 
  JEFF DENHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
                           CALIFORNIA

                 STATEMENT OF HON. MIKE QUIGLEY

    Mr. Quigley. You caught us.
    I want to thank the chairman and the ranking member for 
holding this hearing, and the panel for joining me in this work 
on this vital issue.
    As you suggested, the Federal Government is the largest 
property owner in the world, with an inventory over 900,000 
buildings and structures and 41 million acres of land. Yet we 
waste billions of dollars each year maintaining properties we 
no longer need. The Federal Government currently maintains 
14,000 buildings and structures deemed excess and over 76,000 
properties identified as underutilized.
    In fiscal year 2009, these underutilized buildings cost us 
$1.7 billion to operate, and we spent hundreds of millions more 
on buildings we simply don't need. The GAO has continuously 
found that many properties are no longer relevant to their 
agencies' missions and that agencies could do a better job of 
identifying and disposing of unneeded properties. So why are we 
paying billions to sit on thousands of unneeded properties?
    To address these problems, I have introduced H.R. 1205, the 
Federal Real Property Disposal Enhancement Act. The bill 
addresses three major hurdles to disposing of thousands of 
unneeded Federal properties and generating much-needed revenue.
    First, administrative burdens. Agencies are often deterred 
from disposing of unneeded property due to a variety of 
screening processes, which take up to 2 years and cost millions 
in maintenance during the process. My bill establishes a pilot 
program that would exempt certain properties unlikely to be 
used as homeless shelters under McKinney-Vento from a 
requirement to screen properties for homeless use before 
disposal.
    Second, budgetary disincentives. Currently, agencies avoid 
disposing of excess property because of the high upfront cost 
of disposal. Paying for environmental cleanup can cost 
millions. My bill would allow all agencies to retain the 
proceeds from the disposition of the property and use those 
funds, as authorized by Congress, to maintain, repair, and 
dispose of other excess properties. Any funds not used to 
repair and dispose of property will be paid back to the 
Treasury for debt reduction.
    The third and final obstacle is the lack of transparency 
and oversight of Federal property. All Federal property 
information is currently maintained in an extensive data base 
managed by GSA, but this information is not available to the 
public, Federal workers, or most congressional staff. Our bill 
would require GSA to submit an annual report to Congress that 
includes information on the number, value, and maintenance 
costs of all Federal properties. This information would also be 
made available to the public at no cost in an online data base.
    The transparency my bill will provide is absolutely 
imperative because, as things stand today, we are flying blind.
    Let me give you just one example. When I learned about all 
these valuable excess properties, my staff decided to go take a 
look at a few of them in my home State of Illinois. After 
spending 8 months going back and forth with various agencies to 
get the information, we visited a property that was reportedly 
worth over $8 million and cost more than $80,000 per year to 
maintain. The USDA data base said the property was in excellent 
condition, but the reality was quite different. The $8 million 
storage facility was in shambles, complete with peeling paint 
and deteriorated siding, the exterior overtaken by vegetation 
and the interior looted by vandals. And so it was with scores 
of other buildings on the site.
    What the USDA spreadsheet represented as in excellent shape 
and receiving thousands annually in maintenance was, in fact, a 
dilapidated mess. As my staff learned when we toured the site, 
no money had been spent on maintaining these structures since 
the mid-1990's. The USDA explained that a formula was used to 
arrive at the estimates for annual maintenance costs and 
replacement value but that the numbers had no relation to 
reality.
    Clearly, there is a serious disconnect between what is on 
our books and the reality on the ground. We can't possibly know 
what our assets are worth or make a plan to capitalize on them 
without accurate data. Without better, more transparent data, 
we are flying blind.
    I thank the chair and my colleagues again for their work on 
this issue. I look forward to continuing to bring transparency 
to our Federal properties, selling what we don't need and 
generating revenue when we need it most.
    Thank you.
    [The prepared statement of Hon. Mike Quigley follows:]
    [GRAPHIC] [TIFF OMITTED] T1985.005
    
    [GRAPHIC] [TIFF OMITTED] T1985.006
    
    Chairman Issa. Thank you.
    Mr. Chaffetz.

                STATEMENT OF HON. JASON CHAFFETZ

    Mr. Chaffetz. Thank you to Chairman Issa and Ranking Member 
Cummings for addressing this important topic, and other members 
of the committee.
    I appreciate being here and allowing me to testify on 
behalf of my bill, H.R. 665, the Excess Federal Building and 
Property Disposal Act of 2011. Today's topic is important, and 
I look forward to working with the committee to find solutions 
to excess-property disposal issues facing our country.
    The Federal Government is the largest single holder of real 
property in the United States. The Federal Government owns more 
than 900,000 buildings and structures. Republican and 
Democratic administrations and various government entities have 
identified many of these properties as excess and 
underutilized. Yet tens of thousands of unneeded properties 
remain in the Federal Government's possession today. This is 
not acceptable.
    Congress must work to streamline the Federal Government's 
real-property management strategy. President Bush and President 
Obama both identified excess properties and structures that, if 
sold, could generate billions in revenue and savings. The 
fiscal commission said, ``Federal agencies operate and maintain 
more real-property assets than necessary, often raising costs 
to the taxpayer.''
    The Government Accountability Office [GAO], estimated that 
the Federal Government holds underutilized properties that cost 
nearly $1.7 billion annually to operate. More recently, the 
Office of Management and Budget controller, Daniel Werfel, 
testified that the government controls 14,000 excess buildings 
and 76,000 underutilized properties.
    Clearly, the Federal Government's disposal track record is 
subpar. In fact, since 2003, and more recently in 2011, the GAO 
designated Federal real-property management as a high-risk area 
of the Federal Government.
    The status quo is no longer an option. The fiscal 
challenges facing this country are deep and severe. Effective 
Federal property management requires unique opportunities for 
the Federal Government to right-size its real-estate portfolio, 
reduce costs, and achieve savings through public sale of 
unneeded properties.
    The current disposal process is flawed for two reasons. 
First, agencies lack the necessary incentives to initiate the 
disposal process. Second, a myriad of requirements throughout 
the process prevent properties from even being offered for 
sale.
    Under current law, the disposal process begins when a 
Federal agency reports an excess property to the General 
Services Administration [GSA]. Agencies lack the know-how, 
funds, and incentives to simply report these excess properties 
to GSA. For most agencies, doing nothing is more economical 
than engaging in the disposal process.
    The next step in the disposal process is laden with 
obstacles and limitations. Current law and regulations handcuff 
GSA's disposal abilities. Excess properties first must be 
offered to other Federal agencies. In the absence of other 
Federal needs, surplus properties must then be made available 
for other uses, which includes homeless shelters, parks and 
recreation facilities, and State and local government use. Once 
those requirements have been exhausted, buildings are finally 
then offered to the public for sale.
    Taxpayers lose under this current disposal process. A 
variety of alternative-use and conveyance requirements prevent 
properties from being sold at fair market value. According to 
GAO, these requirements denote that, ``GSA's underutilized or 
excess properties may remain in the agency's possession for 
years and continue to accumulate maintenance and operations 
costs.''
    My bill would establish a pilot program designed to 
expedite the selling of unneeded Federal property. The pilot 
program would be managed by the director of OMB, which is in 
line with the 2007 GAO report in which GAO recommended that OMB 
assist agencies in the disposal process. The bill establishes 
an aggressive disposal goal that would require OMB and others 
to effectively and efficiently identify and dispose of unneeded 
properties.
    The bill provides Federal property managers with tools 
designed to maximize disposals and taxpayer returns.
    The first tool provides agencies with incentives to engage 
in the disposal process. By directing 20 percent of the 
proceeds to agencies, agencies are empowered to quickly 
identify and report excess properties. The other 80 percent 
would be used for debt reduction, something this country 
desperately needs.
    Second, properties considered under the pilot program are 
not subject to the onerous disposal provisions described 
earlier. Once a property is identified for disposal, the 
property would be immediately eligible for public sale. 
Property disposed under the pilot program is exempt from normal 
transfer requirements, public-use conveyance requirements, and 
other no-cost conveyance provisions.
    Finally, by empowering OMB, GSA, and other Federal agencies 
with the tools provided in the Excess Federal Building and 
Property Disposal Act, the Federal Government can finally rid 
itself of deadweight and demonstrate to the American public 
that Congress is serious about streamlining government and 
becoming more fiscally responsible.
    I thank the committee for allowing me this opportunity on 
this important subject, and I yield back.
    [The prepared statement of Hon. Jason Chaffetz follows:]
    [GRAPHIC] [TIFF OMITTED] T1985.007
    
    [GRAPHIC] [TIFF OMITTED] T1985.008
    
    Chairman Issa. Thank you, Mr. Chaffetz.
    Mr. Denham.

                 STATEMENT OF HON. JEFF DENHAM

    Mr. Denham. Thank you, Mr. Chair. I appreciate you holding 
this hearing today. I commend the gentlemen on this committee 
and my fellow colleagues on this panel for working toward real-
property reform.
    In May, I introduced H.R. 1734, the Civilian Property 
Realignment Act, to establish a civilian BRAC-like commission 
to help shed waste in the management of Federal buildings and 
properties. I have been pleased to work closely with the 
administration in this effort, as they similarly released a 
proposal along with a list of 14,000 properties already in the 
disposal process. By OMB's estimates, our proposals could save 
the taxpayer more than $15 billion. I actually believe that 
number is much, much higher.
    I believe our efforts may truly produce a bipartisan 
solution to significantly alter the manner in which Federal 
property is managed. As a member of the Committee on 
Transportation and Infrastructure, I am fortunate enough to 
chair the Subcommittee on Economic Development, Public 
Buildings, and Emergency Management. This subcommittee has 
jurisdiction over Federal buildings and improved grounds 
generally, and we have made significant progress in bringing 
this issue to the public by holding several public hearings and 
a subcommittee markup on my legislation.
    I first proposed a civilian BRAC commission at our 
subcommittee's first hearing in February, and the President 
proposed a commission in his 2012 budget. It was clear then, as 
it is now, that just having a fire sale of surplus property in 
a bad real-estate market is not going to generate significant 
savings for the taxpayer. Instead, redeveloping, consolidating, 
or selling certain high-value assets can unleash huge cost 
savings for taxpayers. For example, it makes little sense for a 
few hundred Federal workers to be sitting in an underutilized 
asset that could generate hundreds of millions of dollars if 
redeveloped or sold.
    As I have often stated and continue to maintain, to achieve 
significant savings, any solution must incorporate these key 
principles: First, it must consolidate the footprint of Federal 
real estate. It must house more Federal employees in less 
overall space. It must reduce our reliance on leased space for 
long-term requirements. It must sell or redevelop high-value 
assets that are underutilized or too valuable for housing 
Federal employees. And we must dispose of surplus property 
much, much quicker.
    Disposal is part of the process of streamlining; that 
process is important. CBO mentioned in its letter to this 
committee about previous failures in the disposal process. We 
have seen high-value property, like Governors Island in New 
York and the Presidio in San Francisco, fall by the wayside, 
when significant taxpayer savings could have been realized. The 
commission will be tasked with creating value out of excess and 
surplus properties so the taxpayer isn't continually 
shortchanged.
    However, to truly reform our asset portfolio in a way that 
generates significant and lasting savings to the public, we 
must ensure that government also takes steps to realign and 
consolidate its footprint. And we must ensure--agencies are 
sitting on valuable assets that would give the taxpayers a 
greater return if sold or redeveloped.
    We have an opportunity to achieve comprehensive reform, and 
I look forward to working with my colleagues to that end. I 
doubt most government agencies would recognize a good real-
estate opportunity if it stared them in the face. It is 
important that we get this right.
    After receiving input from experts and key stakeholders, 
one thing became abundantly clear: The commission will need to 
leverage the expertise and market knowledge of the private 
sector on behalf of the taxpayer in order to achieve real 
savings. I believe this is an important point, and I look 
forward to hearing the testimony of the second panel to see if 
they agree that Congress must leverage the private-sector 
expertise.
    We also must ensure this process incorporates the right 
incentives and tools to maximize the return to taxpayers and 
require that agencies not conduct business as usual. That is 
why a process that includes an independent commission similar 
to BRAC is needed. Real savings will require a commission to 
look across government and identify ways to unlock the value in 
our properties without turf battles and red tape stalling the 
process.
    I believe the potential to save billions of dollars is 
real, and our challenge is to create a system where it will 
happen. Again, I thank the chairman for holding this hearing 
today and inviting me to testify. I hope that our two 
committees can work together toward a solution that delivers 
real savings to the American taxpayer.
    [The prepared statement of Mr. Denham follows:]
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    [GRAPHIC] [TIFF OMITTED] T1985.014
    
    Chairman Issa. Thank you.
    I want to thank all of our witnesses. It is not a normal 
policy to ask questions of Members, but would you take a short 
series if people have specific questions?
    Also, Mr. Denham, you are invited to sit on the dais, if 
you would like to, for the second panel. Our rules allow for 
you to sit. You will be recognized last, but, as you see, that 
won't be all that late.
    If I could ask you just two short questions.
    All of your bills deal in some small way with the homeless. 
Each of them seems to reduce the ultimate benefit to the 
homeless. Hopefully, each of you, as you are looking at your 
bills and bringing them before the committee, will recognize 
that it is unlikely that any bill will leave this committee if 
there is not an equivalent benefit to homeless in each of your 
bills.
    If any of you would like to comment on whether you think 
you have already achieved that or whether you can make 
amendments to ensure that the ultimate benefit that has 
historically occurred, which is about 2 percent of 
liquidations, would be retained in your bills.
    Mr. Quigley.
    Mr. Quigley. Well, I think it is a fair question. My bill 
establishes a program that would exempt certain properties that 
are very unlikely to be used for the homeless to go through 
that screening process. But we are open to any amendments and 
suggestions as to make sure that we cover all the bases and 
protect those.
    Chairman Issa. Mr. Chaffetz.
    Mr. Chaffetz. I would say a very similar thing. This takes 
the 14,000 properties that have previously been identified. I 
would hope that if the homeless program--that would be 
accelerated under that, that those properties would be 
identified and accelerated. But I am open to suggestions from 
Members on either side of the aisle about how we can make sure 
that we are helping in that regard.
    Chairman Issa. Mr. Denham.
    Mr. Denham. This is not something we have been negotiating 
with the administration on, but, certainly, we would be open to 
looking at amendments.
    The goal of this is to save taxpayer dollars. We want to 
get rid of as much red tape as possible so that we can actually 
sell these properties. I mean, I think CBO has a great point. 
Do you really have evidence that you are going to sell 
properties or not? And the more red tape that we have out 
there, the more things that we hold up the reason for selling 
these properties, the less savings we are going to see for 
taxpayers.
    So, you know, again, our goal is to consolidate, to make 
sure we are getting the right use for the taxpayers on this, 
and to sell off as much as possible during a huge debt crisis.
    Chairman Issa. Well, I appreciate that.
    And I won't phrase the next one as a question, but, from 
the standpoint of the committee staff, we are also concerned 
that we are going to have to add to one or all of your bills, 
as we go through the process, some equally more efficient way 
to ensure that if property has real value to another sector of 
government, that there be an efficient way to do it.
    And I know each of you is trying to deal with the legacy of 
the BRAC process, where the FBI takes one building and NSA 
takes another, and pretty soon you have a hodgepodge of things 
that can't be sold.
    But there is, in fact, a legitimate concern from within 
government that we have an efficient way for a willing buyer, 
willing seller, if they happen to both be government, to do it 
efficiently. And as you look at your legislation, that is 
something you may want to, sort of, add as something that the 
committee can see.
    Yes, Mr. Denham.
    Mr. Denham. And we actually have that addressed by 
consolidating the leasing authority. What we saw with the SEC 
was beyond a mistake; what they did was illegal. We have to 
make sure that not only do they give up their leasing authority 
but that we consolidate our leasing authority between all 
agencies, have it go under one agency, and be able to hold that 
agency accountable. So that if there are other government uses, 
if you have two agencies that can occupy the same building, 
then we are doing that, that we are making the best decisions 
based on one agency that can oversee all of that.
    Mr. Quigley. And I do not believe there should be any pride 
of ownership here. If there is more than one bill here, we 
should all work together toward putting together the final best 
product to serve the use here.
    Toward that end, though, I do think the element in my 
legislation of putting everything online will help. I think 
other governments and people outside government don't even know 
what is available. So that centerpiece of information helps us 
from flying blind and moves forward more appropriately.
    Mr. Chaffetz. I would just add that we are relying upon the 
executive branch that has already identified 14,000 properties 
as excess, that they have gone through a lot of these gyrations 
and assessments along the way, and these are truly excess 
properties.
    Chairman Issa. Thank you.
    And, Mr. Cummings, you had something short also?
    Mr. Cummings. Yes, thank you, Mr. Chairman.
    First of all, Mr. Chairman, I want to thank you for raising 
the question with regard to homelessness. It is a tremendous 
problem in our country.
    Just yesterday, the Pew Trust released a report that showed 
that, between 2005 and 2009, Americans took a real hit with 
regard to their wealth. As a matter of fact, Hispanics' wealth 
decreased by some 60-some percent, I think it was 66 percent; 
African Americans, more than 50 percent; and others, 
substantial. A lot of people are ending up who never thought 
that they would be in a homeless shelter or walking the streets 
without a home, they are there today.
    And so, Mr. Chairman, we have gotten a letter from the 
homeless advocates dated July 26, 2011. It is addressed to you 
and me. And I would ask that it be admitted into the record.
    Chairman Issa. Without objection.
    [The information referred to follows:]
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    Chairman Issa. And we will work on a joint response.
    Mr. Cummings. Thank you very much.
    There is one thing I just want to read from this, so that 
our guests will be aware. In this letter, it says, ``In their 
current forms, property disposal bills H.R. 665 and H.R. 1734 
pose serious concerns for homeless service providers. For 
example, unlike the Base Realignment and Closure process, the 
bills do not require the civilian property realignment boards 
involve homeless service providers in the decisionmaking 
process. They also contain certain timelines that are too short 
for homeless service providers to identify appropriate 
properties. Additionally, a majority of the board members are 
required to consider property for homeless service use. This 
requirement is unduly burdensome and would significantly reduce 
the likelihood that homeless service providers' needs would be 
considered.'' And I hope that you all will take that into 
consideration.
    With that, Mr. Chairman, I yield back.
    Chairman Issa. I thank the gentleman.
    We will take a short recess to set up for our second panel.
    [Recess.]
    Mr. Kelly [presiding]. The committee will come back to 
order, please.
    At this time, we are going to recognize the second panel of 
witnesses. Ms. Theresa Gullo is here. She is the deputy 
director, assistant director of the Budget Analysis Division 
for the Congressional Budget Office. Mr. David Foley is the 
deputy commissioner of the Public Building Service for the U.S. 
General Services Administration. Mrs. Maria Foscarinis is the 
executive director of the National Law Center on Homelessness 
and Poverty. And Mr. F. Joseph Moravec is the former 
commissioner of the Public Buildings Service for the U.S. 
General Services Administration.
    Thank you all for being here.
    Pursuant to committee rules, all witnesses will be sworn in 
before they testify, so if you would please rise and raise your 
right hands.
    [Witnesses sworn.]
    Mr. Kelly. And let the record show that all witnesses 
answered in the affirmative.
    Thank you, and please be seated.
    Now, in order to allow time for discussion, please, if you 
could, limit your testimony to 5 minutes. And your entire 
written statement will be part of the record.
    Ms. Gullo, if you would, please.

STATEMENTS OF THERESA GULLO, DEPUTY ASSISTANT DIRECTOR, BUDGET 
 ANALYSIS DIVISION, CONGRESSIONAL BUDGET OFFICE; DAVID FOLEY, 
  DEPUTY COMMISSIONER, PUBLIC BUILDINGS SERVICE, U.S. GENERAL 
SERVICES ADMINISTRATION; MARIA FOSCARINIS, EXECUTIVE DIRECTOR, 
  NATIONAL LAW CENTER ON HOMELESSNESS AND POVERTY; F. JOSEPH 
MORAVEC, FORMER COMMISSIONER, PUBLIC BUILDINGS ADMINISTRATION, 
              U.S. GENERAL SERVICES ADMINISTRATION

                   STATEMENT OF THERESA GULLO

    Ms. Gullo. Thank you, Congressman Kelly, Congressman 
Cummings, other members of the committee. Thank you for 
inviting me here to discuss CBO's analysis of the President's 
proposal to dispose of civilian real property. I will also 
offer you some thoughts about other actions you might consider 
to increase the proceeds from property sales.
    Under the President's proposal, an independent board would 
expedite the process of identifying unneeded property and 
present recommendations for disposal. Unless the Congress 
disapproves, the administration would implement those 
recommendations and agencies would be allowed to retain and 
spend some of the proceeds from sales.
    CBO concludes that this proposal would induce some agencies 
to sell property that would not be sold under current law and 
bring in a modest amount of additional receipts. But the 
proposal would allow the spending of those receipts and, also, 
of some of the receipts that will be collected but not spent 
under current law. The net result, CBO estimates, would be an 
increase of about $60 million in direct spending over the next 
10 years.
    The proposal also would result in additional discretionary 
spending of about $400 million over the next 5 years, assuming 
future appropriations were provided to implement the program. 
Finally, some savings in maintenance costs would probably 
accrue as the stock of properties declined, but they would be 
realized only if future appropriations were reduced.
    CBO's conclusions are based on the experience of the Base 
Realignment and Closure program, an analysis of the stock of 
unneeded properties, and on the outcome of previous efforts.
    The BRAC program, upon which the President's proposal is 
based, was not structured to maximize the return from selling 
unneeded assets. In fact, less than $2 billion from three sales 
have been collected since the process began in the 1980's. 
BRAC's goal is to consolidate operations and reduce O&M 
expenditures. It has undoubtedly led to such savings, although 
they are very hard to identify precisely.
    In addition, previous attempts to sell civilian property 
have had mixed results. Several high-profile attempts, 
including Governors Island in New York, the Presidio in San 
Francisco, and the old Chicago Main Post Office, took years to 
complete and did not result in anywhere close to the receipts 
initially expected.
    The proposed civilian board would have goals similar to 
BRAC's, but it would not offer many agencies sufficient new 
financial incentives to part with valuable properties. Some 
agencies that manage large stocks of real property can already 
retain and spend the proceeds from the sale of excess 
properties, so the President's proposal would not offer an 
incentive for them to increase the number or pace of sales. 
Moreover, some have the authority under current law to enter 
into other types of arrangements, such as enhanced-use leases, 
which often prove more lucrative for them.
    Similar property-holding--smaller, I should say, property-
holding agencies would probably consider the opportunity to 
retain proceeds as an incentive to sell additional properties, 
and those sales would bring in more receipts. But because 
agencies would be able to spend some of the receipts that will 
accrue to the Treasury under current law, the net impact would 
be a cost.
    Part of the problem is that much of the property identified 
as unneeded does not appear to be particularly valuable. The 
administration recently released information about 12,000 
unneeded Federal buildings and structures. CBO reviewed that 
information and concluded that gaining billions of dollars from 
their disposal is unlikely. Most of the property is either 
owned by the Defense Department and not covered by the 
proposal; is already in the process of being disposed of under 
current law, largely through demolition; or is likely to be 
conveyed for little or no return.
    If the proposal is to generate significant additional 
proceeds, more properties will have to be identified, and they 
will have to be far more valuable in the private marketplace 
than the properties currently listed. In many cases, they would 
be facilities that the government is currently using, and that 
would be--and that they would only be made available for sale 
by relocating ongoing activities.
    CBO has identified three approaches to consider if the 
Congress' goal is to increase the proceeds from real-property 
sales: One, creating clear incentives not just to dispose of 
property but to maximize proceeds; two, where appropriate, 
exempt some properties from existing laws that slow the 
disposal process down or require that properties be donated or 
given away; and, three, specify in law exactly which valuable 
properties must be sold.
    Even with those steps, however, the government's ability to 
sell land, as well as that land's market values, often depend 
on local zoning. Disposing of properties and maximizing sales 
proceeds will be difficult as long as local stakeholders oppose 
such efforts. Making changes could have unintended 
consequences, however, and the Congress and the administration 
will have to weigh the relative benefits and costs of various 
impacts.
    Thank you. I am more than happy to talk more about CBO's 
research in this area and answer any questions you have.
    [The prepared statement of Ms. Gullo follows:]
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    Mr. Kelly. Thank you, Ms. Gullo. Appreciate it.
    Mr. Foley.

                    STATEMENT OF DAVID FOLEY

    Mr. Foley. Thank you. Good morning, Chairman Kelly and 
Ranking Member Cummings and members of the committee. My name 
is David Foley, and I am the deputy commissioner of GSA's 
Public Buildings Service. I am honored to join you today to 
discuss our asset management strategies and our governmentwide 
role in disposition, as well as the unique challenges of the 
Federal real-property disposal process and how a civilian 
property realignment initiative can help address those 
challenges to meet our obligation to taxpayers to reduce costs 
and spend every dollar as effectively as possible.
    As the Federal Government's landlord, we have a robust 
asset management program to accurately track the utilization of 
our inventory, strategically invest in our assets, and 
aggressively dispose of unneeded property. When we find 
underutilized space, we evaluate whether there is a Federal 
need in that location. If not, we immediately begin the 
disposal process. GSA leads the industry and government with 
low vacancy rates and high utilization. Less than 3 percent of 
our portfolio is considered under- or not utilized.
    An underutilized asset must be distinguished from an 
unneeded asset. It may still be in the taxpayers' best interest 
to retain an underutilized asset. For example, in the national 
capital region, GSA has 1.9 million square feet of 
underutilized space, but 1.7 million square feet is currently 
categorized as underutilized because it has been vacated to 
undergo a major renovation. These buildings will provide highly 
utilized, modern, and cost-effective space when the renovations 
are complete.
    In 2002, under Commissioner Moravec, GSA began a portfolio 
restructuring. Since then, we have disposed of more than 200 
GSA properties, valued at $467 million, covering more than 9\1/
2\ million square feet. Since 2005, GSA has had the authority 
to retain sales proceeds. This authority has returned almost 
$227 million to the Federal Buildings Fund. Beyond the proceeds 
the government received, those dispositions and demolitions 
also eliminated an estimated $484 million in future repair 
needs, and millions more were saved in operating costs. Similar 
incentives are contemplated for all agencies in the 
administration's proposal.
    In addition to managing our own inventory, GSA has 
authority to dispose of properties for other Federal agencies. 
The Property Act disposal process and guiding environmental and 
historic statutory requirements create some unique challenges 
for agencies. These congressionally mandated requirements are 
intended to strike a balance between social and economic policy 
objectives.
    Each individual land-holding agency is responsible for 
determining if they have an ongoing mission for the asset. If 
not, they report the unneeded property, which may be one or 
more assets excess to their needs. When GSA accepts a report of 
excess for a property, we take 30 days to survey other Federal 
agencies to determine if there is another Federal use for the 
property.
    If no other agency needs the property, it is considered 
surplus to the government's needs and offered to public 
organizations, primarily State, county, and city entities. 
These entities can acquire the property through a public 
benefit conveyance or negotiated sale at fair market value. If 
there is no viable public interest for a benefit or negotiated 
sale, then GSA conducts a public sale of the property. This 
process can be as short as 60 days or take up to 6 months.
    Every property is unique, and GSA develops disposal 
strategies specific to each asset's characteristics within the 
existing statutes. One of the most common delays in the process 
results from competing stakeholder interests and community 
expectations. The administration civilian property realignment 
initiative would streamline the process while minimizing 
external stakeholder influences that could delay or interfere 
with effective strategic asset management.
    Based on our experience, we believe that reform to real 
property asset management must address three central 
challenges: one, incentivizing disposals by enabling agencies 
to realize the benefit of proceeds; two, addressing the upfront 
costs associated with disposals and consolidations; and, three, 
resolving competing stakeholder interests that can slow down or 
prevent good asset management decisions.
    The administration's efforts anticipate working with 
Congress to create a successful initiative, and we welcome the 
efforts of OMB, this committee, and other Members of Congress 
to successfully reform and improve real-property management. 
Given GSA's expertise in asset management and our experience 
partnering with other Federal agencies to dispose of real 
property, we are well aware of the challenges in domestic 
Federal disposition process. We welcome the opportunity to be 
part of the ongoing dialog and can help inform the process of 
establishing a successful civilian property initiative.
    Thank you for the opportunity to appear here today before 
you, and I welcome any questions you may have.
    [The prepared statement of Mr. Foley follows:]
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    Mr. Kelly. Thank you, Mr. Foley.
    Ms. Foscarinis.

                 STATEMENT OF MARIA FOSCARINIS

    Ms. Foscarinis. Thank you. And good morning, Chairman Kelly 
and Ranking Member Cummings, members of the committee. Thank 
you for holding this important hearing and for inviting my 
testimony. I am Maria Foscarinis, executive director of the 
National Law Center on Homelessness and Poverty.
    In 1987, Title V of the McKinney-Vento Act put in place a 
commonsense, cost-effective provision to help homeless people. 
Under the law, nonprofit service providers have a right of 
first refusal to acquire at no cost excess Federal real 
property to provide housing and services to people who are 
homeless. Providers take on maintenance expenses, alleviating a 
cost otherwise borne by the Federal Government. My organization 
assists these providers to acquiring used property, receiving 
no financial gain for our work.
    More than 2.4 million Americans each year receive 
assistance through Title V, which has provided access to nearly 
500 properties, like the New England Center for Homeless 
Veterans in Boston, which serves over 1,000 homeless vets per 
year. Surplus Federal properties now provide shelter, 
transitional and permanent housing, case management, food 
pantries, job training, mental health and substance abuse 
treatment, and child care. As homelessness continues to 
increase across the country, this is not the time for Congress 
to weaken or eliminate this vital program.
    The Law Center understands the concerns of this committee 
and OMB that surplus Federal real property is languishing, but 
Title V is not the cause of delays in Federal property disposal 
process. Indeed, the Title V process takes only a few months, 
and it should not be harmed or eliminated in the name of 
procedural reform.
    The Law Center has consistently worked with Congress, HUD, 
and other Federal agencies to improve and streamline Title V. 
As detailed in our written testimony, we recommend 
improvements. These include: excluding properties that are not 
useful to homeless service providers; publishing available 
properties online rather than in the Federal Register; 
requiring HUD, GSA, and HHS to provide meaningful outreach and 
support to streamline the process; and making additional HUD 
properties, such as the HUD homes now in foreclosure, available 
to address dramatic increases in homelessness and cut costs.
    I will briefly now address the proposals before the 
committee.
    The Civilian Real Property Alignment Act, H.R. 1734, like 
the OMB proposal, would waive Title V rights and create a, 
``BRAC-like board'' to decide whether surplus property should 
be disposed of or sent to HUD for homeless use screening.
    We oppose both proposals in their current form. We are 
concerned that the proposed board would not fully consider the 
needs of homeless persons. We recommend requiring that the 
board include at least two members with homeless advocacy or 
direct service experience.
    We are also concerned that the proposals would eliminate 
Title V's most critical feature, the requirement that Federal 
surplus properties be offered for homeless assistance. We 
recommend that a property must be offered to homeless service 
providers if a single member of the board requests it.
    Finally, we are concerned about the deadlines. They would 
not offer enough notice to allow public comment to be well-
informed nor enough time for homeless service providers to 
apply. We recommend a fairer, more reasonable timeline.
    H.R. 665 would create a pilot program granting the OMB 
director sole discretion over disposal of excess Federal real 
property for a 10-year period, waiving much of the existing 
legal framework, including Title V. We oppose the bill in its 
current form.
    We are concerned by the level of discretion granted to the 
OMB director in this proposal. The statutory incentive for-
profit sale of the director would be at direct cross-purposes 
with the needs of homeless service providers seeking Title V 
properties at no cost. There is no reason to believe a 
significant number of providers would have any meaningful 
access to any properties that become surplus during the 10-year 
period.
    H.R. 1205 would create a pilot program that exempts a 
narrow set of properties from Title V. Because it would cover 
only a very limited number of properties, such as national 
security properties, H.R. 1205 would not be harmful to homeless 
persons, and we do not oppose it. But we recommend the bill be 
expanded to include our recommendations for Title V reform.
    Homelessness is now increasing at dramatic rates across the 
country. Family homelessness increased by 9 percent in 2010 
alone. This is not the time for Congress or the administration 
to reverse its commitment to the lowest-income Americans.
    Thank you for allowing me to testify, and I look forward to 
your questions.
    [The prepared statement of Ms. Foscarinis follows:]
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    Mr. Kelly. Thank you, Ms. Foscarinis.
    Mr. Moravec, please.

                 STATEMENT OF F. JOSEPH MORAVEC

    Mr. Moravec. Good morning, Mr. Chairman and Ranking Member 
Cummings and members of the committee. My name is Joe Moravec. 
I have spent most of my career in the commercial real-estate 
industry as a broker, manager, and owner of commercial property 
and commercial real-estate services companies.
    From June 2001 through July 2005, I had the privilege of 
serving my country as the commissioner of GSA's Public 
Buildings Service, a position----
    Mr. Kelly. Mr. Moravec, I am sorry, is your mike on? Or 
maybe just move closer. We are not hearing you.
    Mr. Moravec. From June 2001----
    Mr. Kelly. Thank you.
    Mr. Moravec [continuing]. Through July 2005, I had the 
privilege of serving my country as the commissioner of GSA's 
Public Buildings Service, a position for which I was well-
prepared professionally. As public buildings commissioner, my 
goal was to apply well-proven, private-sector asset-management 
practices to improving our agency's performance as a real-
property manager.
    Prior to 2002, GSA did not have, by private-sector 
standards, a consistent, comprehensive, or measurable approach 
to investing appropriated funds in the repair and alteration of 
its inventory of owned properties. In simple terms, capital 
improvement funds were spread yearly over the entire portfolio 
without adequate consideration of whether buildings were 
capable of meeting the long-term programmatic needs of the 
agencies they housed or, indeed, whether they were viable as 
financial assets. Buildings of marginal utility were improved 
to perfection, and buildings housing critical functions were 
often neglected. The backlog of deferred maintenance, in the 
absence of a disciplined resource allocation process, continued 
to swell.
    Our team developed detailed profiles of every single 
property in GSA's portfolio. We determined whether there was a 
long-term Federal need for the property and assessed whether 
the rent our agency customers were paying us justified 
reinvesting in it and, if so, at what level of investment.
    What emerged was a triage ranking of GSA's entire 
inventory, which divided the portfolio into three tiers of 
assets. The top tier was comprised of buildings for which there 
was a clear long-term Federal need. Investment in these 
buildings would result in a sustainable rental income, 
providing GSA with capital for continued reinvestment in their 
upkeep. These buildings merited reinvestment; they could stand 
on their own.
    The middle tier were buildings which could be made into 
sustainable financial assets by judicious reinvestment as 
outlined in individually approved asset management plans. The 
lowest tier consisted of buildings which were beyond hope. 
These went immediately into the disposal process.
    This new discipline of looking at buildings as financial 
assets, just as a private-sector owner would, had a profound 
impact on the Public Buildings Service organization and the 
behavior of our professional managers. Our people understood 
the new rules, and an agency-wide consensus informed by a sense 
of urgency developed around what separated valuable assets from 
those ready for disposal. Property disposals accelerated, and, 
since then, GSA has disposed of hundreds of its own buildings, 
representing millions of square feet and translating into 
hundreds of millions of dollars of savings to the taxpayer. 
Today, GSA has very few empty buildings in its inventory.
    The moral of this success story is that good disposal 
policy grows out of good, disciplined lifecycle asset 
management. Moreover, even without any statutory reform, the 
disposal mechanism which GSA administers for itself and across 
government can produce results once bureaucracy understands the 
rules and is motivated to put individual functionally or 
physically obsolescent properties serving no programmatic 
purpose into the disposal process.
    The chief impediments to timely and aggressive disposal of 
surplus Federal properties are these: One, Federal executives 
have inadequate financial incentive to declare properties 
excess and turn them over to GSA for disposal. Agencies incur 
front-end costs which are often not reimbursed. And in the 
absence of special legislative authority, they do not get to 
retain sales proceeds even if their property makes it to the 
open market and has any market value.
    Two, a disposal process itself is attenuated and Byzantine. 
Statute and regulation, including adherence to rigid 
environmental standards, community benefit criteria, and 
historic preservation considerations, all of which are all 
desirable from a social perspective, obviously, virtually 
ensure that disposals become public-benefit conveyances or 
negotiated sales with little or no economic benefit to the 
Federal Government as seller.
    Three, politics and truths--or as they say in government, 
external shareholders, including Members of Congress, special 
interest and advocacy groups and State, county, and local 
officials--have ample opportunity to intervene, slow down, and 
redirect the process to achieve lots of results, except 
returning money to the Federal Treasury.
    A BRAC-style approach to Federal property disposal such as 
the administration and Representative Denham have proposed 
would have several distinct advantages over the present system. 
It would require by law that agencies produce real lists of 
excess properties. It would provide the framework for 
intergovernmental dispute resolution and administering the 
process so often lacking now. It would insulate the process 
from extraneous and unproductive political interference, and it 
would be measurable, requiring a specific outcome within a 
finite timeframe. These are all salutary results.
    I would add only a few cautionary notes. First, keep 
expectations real. With rare exceptions, most of the 
government's disposable property, as CBO has correctly 
reported, has limited market value. This is particularly true 
if the property must be offered to public entities at little or 
no cost.
    Second, ensure that agencies have enough upfront money to 
participate and to discourage malicious compliance. This means 
not only providing funds to defray the cost of bringing 
properties to market, but the related and potentially much 
larger costs of replacing through consolidation and colocation 
Federal workplaces eliminated by disposal.
    Third, do not underestimate the challenges of applying a 
BRAC-like discipline, which was created to serve one agency, 
albeit a huge agency, with one mission to the entire 
government. Across dozens of agencies with very diverse 
missions and constituencies.
    Fourth, remove to the greatest extent supportable or 
feasible, the many statutory and regulatory roadblocks to 
bringing properties to the market. If a private sector result 
is expected, constraints on the Federal Government that would 
not constrain a private seller need to be modified, replaced, 
or suspended, as proposed in Representative Chaffetz's bill.
    And finally, know that the implementation by law, the 
wholesale approach to disposal of surplus Federal property will 
have, I believe, the undesirable practical effect of slowing 
down or even stopping other ongoing disposal activity under 
present law, until it can take effect. So once implemented, it 
really needs to work.
    Thank you for the opportunity to provide testimony on this 
critical subject, so very timely as we as a country struggle as 
never in modern times to reduce the cost of government. I am, 
of course, available to answer your questions.
    Mr. Kelly. Thank you, Mr. Moravec.
    [The prepared statement of Mr. Moravec follows:]
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    Mr. Kelly. At this time, the chair recognizes the gentleman 
from Oklahoma, Mr. Lankford.
    Mr. Lankford. Thank you, Mr. Chairman. Thank you all for 
being here and allowing us to have some input into this and 
some conversation back and forth on it. I just want to have 
some conversation on it.
    On an independent board set up to be able to take these 
issues on, my question is: Is that needed, or what I am hearing 
from your conversation, do we really need to clean up the rules 
that GSA has to function under already? And anyone can start 
taking that on. But I'm hearing some say the whole process is 
very slow because of--I love the term--the Byzantine rules that 
are in place to be able to deal with this.
    So are we creating some independent agency which will at 
some point have its own Byzantine rules at some point, or do we 
need to just clean up the GSA process to streamline this?
    Mr. Moravec. Speaking for myself, I am skeptical, like 
apparently you are, about creating a new bureaucracy to do the 
work----
    Mr. Lankford. That we have an existing bureaucracy to do.
    Mr. Moravec [continuing]. That often fails and costs a lot 
of money. BRAC works because it was one agency and really had 
one challenge, and that worked reasonably well. The BRAC 
process, by taking the workings of this outside of the 
framework of government in a sense, does in fact insulate it 
from many of the things that impede its efficient function.
    Mr. Lankford. Politics.
    Mr. Moravec. Politics being the principal one.
    Mr. Lankford. Right. But do you think that is the principal 
issue here is the politics of it? Or is the principal issue 
here how slow and difficult and tenuous it is to go through all 
the requirements that GSA is now having to labor under?
    Mr. Moravec. The latter.
    Mr. Lankford. That is what I'm asking. An independent board 
seems to be solving the wrong problem here.
    Mr. Moravec. I think that what is needed, as has been 
previously testified by three of the four witnesses on this 
panel, are incentives for Federal managers to declare property 
excess and to move it into the--swiftly into the disposal 
chute. I think the law needs to be either suspended or modified 
or streamlined to an extent that it--in a way that is, 
obviously, not irresponsible, when it is deemed to be impeding 
the process.
    And finally, we really do need to insulate it from 
interference. I mean, right now it is a very open process and 
it is not unlike procurement. Once the government decides to 
procure something and enters into a formal procurement process, 
it is insulated from politics in my opinion.
    Mr. Lankford. Right. I understand.
    Several of you mentioned the incentive issue, and you can 
respond in your answer, but my first question is--well, if you 
choose to. The incentive issue also brings up its own dynamic 
as well. I'm not interested in having agencies hold onto 
properties in case there is a lean year, when at some point 
Congress cuts their budget and so they are banking properties 
over here, saying if it ever gets lean, I've got my own 
stockpile of money basically in real property that I can sell 
and then have more money at that point, if you understand what 
I mean.
    So how do we deal with incentives without creating a 
property bank for different agencies to be able to have and 
sell at their whim?
    Mr. Foley. I would like to just step back to the first 
question. I think the disposal process as it is set up now, 
there are a lot of steps, and it can take some time. But at GSA 
we have figured out how to navigate that process. And many of 
the screenings we do simultaneously while we are doing other 
due diligence to prepare----
    Mr. Lankford. How long does that take? Not counting listing 
it, getting it out, how long does that take to go through that 
process?
    Mr. Foley. Right now it is comparable with private sector. 
And so it depends on the type of disposal. And it can be--you 
know, when we get to the point of sale, as I mentioned in my 
opening statement, anywhere from 60 days all the way to, you 
know, as much as 6 months. But where we tend to hit the pause 
button is where we get a lot of those competing stakeholder 
interests, and there are discussions back and forth of is it 
eligible for this, you know, public benefit, or should it go 
for this use or that use. And so that is really what the board 
was designed to try and help do, is insulate from that.
    On your second question in regards to the retention and 
proceeds, I think at this point the majority of the work we do 
at GSA happens to be for agencies that can retain proceeds. And 
as CBO pointed out, many agencies find it cheaper to hold onto 
a property in a given year and pay the minimal operating cost 
as opposed to prepping something for sale where there could be 
significant upfront investment.
    So something like the administration's proposal or some of 
the other bills that provide a way to cover some of those 
upfront costs and provide an incentive for agencies to--where 
they can get some of the benefit back--to recover those costs 
they may have to make in those properties to get them ready for 
sale it is critical to, I think, getting many of these 
properties broken loose. I don't see it as a big land bank 
right now. I think there is really an economic disincentive to 
agencies disposing of property.
    Mr. Lankford. Okay. Thank you. You're going to make a 
comment on that as well?
    Ms. Foscarinis. Congressman Lankford, I would like to 
address your question as well.
    Mr. Lankford. Sure. Yeah. I just have a few seconds left, 
so----
    Ms. Foscarinis. On the first point, I think the answer is 
not to create a new board or a new bureaucracy but to 
streamline the current process. And on the comment that was 
just made, it is not because of competing stakeholders, 
certainly not because of Title V, which is our concern here, 
that the process is Byzantine or takes a long time. Title V 
adds a matter of mere months, and what it does is ensures that 
public resources, Federal properties, are used for what is a 
public need and a growing public need and a national priority, 
which is addressing homelessness. That is not the cause of the 
delays. The 14,000 properties have not--have already gone 
through Title V, almost all of them have, and they are not 
holding up the process.
    Mr. Lankford. Okay. Thank you. Thank you. I need to yield 
back my time.
    Mr. Kelly. Thank you, Mr. Lankford. The chair now 
recognizes my colleague and friend from Virginia, Mr. Connolly.
    Mr. Connolly. I thank the chair and I want him to know that 
my Great Grandfather Kelly would be so proud to know there is a 
Kelly in the chair. He might even be proud if his great 
grandson were in that chair, but that is--at any rate.
    And I want to thank the ranking member, Mr. Cummings, for 
being so gracious in letting me go. And welcome, all of you. 
And I particularly want to thank Ms. Foscarinis for being here, 
because you're a great witness to the fact that there are 
considerations other than maximizing our profit when we talk 
about the disposal of excess property.
    In Northern Virginia, we have examples of incredible 
positive results by careful disposal of a property, an excess 
property; namely, the old Lorton Federal Prisonsite. And then 
we have examples where it didn't work out so well, the GSA site 
in Springfield, which is where the MARC Center should have been 
put, and unfortunately it wasn't, and we are now going to face 
catastrophic results in terms of transportation on the I-95 
corridor here in the National Capital Region.
    And if you look at Lorton, one of the things that created 
unbelievable economic energy, an arts foundation in the prison 
workhouse, a new world-class golf course, lots of new open 
space and playing fields and new trails, the preservation of 
almost 2,000 acres. Nonetheless, it generated in the immediate 
vicinity enormous economic activity: new town centers, new 
residences, new commercial centers. It is now the fastest 
growing part of my community. Ten years ago it was the--it was 
losing population and it was lagging behind any other part of 
Fairfax County in terms of economic activity.
    But what gave us that energy? It was the fact, the 
willingness of the Federal Government to sell that property to 
the local government at below market rate. It generated jobs 
and economic activity and it had incredible positive 
externalities. But had we stuck to a rigid standard, that 
sorry, that property has to be disposed of at market rates, it 
absolutely would have had to have been developed in ways that 
were not consistent with community goals and, frankly, would 
have done economic harm.
    And so my question to you all is--and I noticed the Quigley 
bill sort of has a provision, and I think this is a 
conservative principle, Mr. Chairman, not just a Democratic or 
Republican principle. Let's take into account the realities on 
the ground and the needs and wishes of the local governments, 
because they know their communities best. Because we can be a 
force for good in the disposal of excess property and we can 
also, frankly, unwittingly be a factor of not so good.
    So I just open that up to the panel and would welcome your 
reactions to that proposition.
    Mr. Foley. Sure, Congressman. We certainly appreciate the 
local community interests. And my experience has shown that 
successful property disposition requires a ton of outreach and 
partnership with the local community entities. And I think in 
any of these proposals you would still have to have that for a 
successful property disposition. I think even in instances 
where a property, you know, could go to a homeless use, or you 
might not see the proceeds from the sales, there are tremendous 
benefits to the government in terms of reduced operating costs 
and maintenance for many of these facilities where there is no 
longer a need, and from the consolidation and different uses of 
those properties.
    So, for instance, the government has thousands of 
properties across the country where they have locations for 
field offices in every community. There are different ways of 
doing business now, and a lot of the work can be done on line 
and through different mechanisms. So, looking at does it make 
sense to still have all those properties across the country, or 
is there a way to consolidate that or do it differently that 
could free up many properties for disposal? And even if they 
did go for a homeless use or another public benefit conveyance, 
there would still be significant cost savings for the Federal 
Government and the taxpayer.
    Ms. Foscarinis. Yes, thank you for that comment, 
Congressman. I think you are absolutely right. It is not just 
about maximizing proceeds. It is also about a longer-term 
approach and how the properties can be used for the greater 
public good and also to generate savings. Because in the case 
of Title V, service providers who take the properties, who get 
the properties, take on the operations and maintenance costs, 
which are now or otherwise being borne by the Federal 
Government. So that is a cost saving, and they are also 
providing an important public good.
    And in Northern Virginia for example, there is also the 
Carpenter Shelter, which is providing services and a place to 
stay for working homeless men and women. That is incredibly 
important in helping people become productive members of 
society again.
    Mr. Connolly. I thank you. Mr. Chairman, my time is up. But 
while you were out of the room, I was just pointing out that 
your predecessor and my predecessor, Mr. Davis, and this 
committee have a great success story in working with GSA in the 
disposal of the Lorton property. And although we didn't 
maximize proceeds in the actual transfer to local government, 
the economic activity it generated more than made up for that. 
It is one of the great success stories of how to do it 
carefully, I think, as we proceed in this whole subject. And I 
thank the gentleman.
    Chairman Issa. I thank the gentleman. Would the gentleman 
yield?
    Mr. Connolly. Of course, Mr. Chairman.
    Chairman Issa. You know, this is one of the reasons early 
on in the hearing that I said to our three earlier witnesses 
how much I appreciated what was in their bills but questioned 
some of the things that were not in their bills. And clearly 
their desire for speed, because speed ultimately means we save 
money sooner, has to be offset with the consideration of the 
best good, not just the highest dollar. So that is part of 
where this committee is going to make sure we blend some of 
their suggestions with some ideas like yours.
    Mr. Connolly. I thank the chairman, and I couldn't agree 
with him more. And I look forward to working with him on this 
issue.
    Chairman Issa. Thank you. With that we go to the gentleman 
from Arizona, Mr. Gosar.
    Mr. Gosar. Thank you. I'm going to go across the board with 
this, and then I am going to kind of make a real brief 
statement. Arizona, as you know, is heavily laden with Federal 
inventory of not only lands but also buildings, okay, not only 
from a private sector but from a Native American sector, okay, 
for the BIA. I see a working relationship not just in 
capitalization of selling to the private industry, but also to 
local communities.
    I want to bring up that, you know, we have been underfunded 
with our secure programs, our PLL programs. It has been 
diminishing because of our restrictions on our national lands 
multiuse aspects. So I see this in a different perspective and 
actually have engaged in local communities, county governments, 
and city governments to inventory Federal buildings in which to 
take in lieu of. And I think this works extremely well, 
particularly in a State like Arizona, that the proceeds from 
our natural resources and from our Federal and State lands go 
to our schools and go to some of our health care issues--very 
similar to like Wyoming and Alaska.
    Tell me, how you would streamline, particularly in 
inventory, a first right-of-refusal to communities of interest, 
like cities and towns and counties? How would you streamline 
and what would you streamline in the situation so that we could 
have that aspect or further this process down? I'm not just 
interested in homeless people because, you know, I'm from 
Flagstaff. Very large amounts of Federal ground, very limited 
amounts of private ground. We need to have the working families 
being able to afford--the teachers. We need to have people 
being able to afford to stay and live there, maybe as a 
stepping stone to see generational kids that want to stay in 
towns, to be able to move into a segment that is maybe a lower-
rent district's Habitat for Humanity, whatever it may, be that 
is conditional with the local and State entities.
    Tell me how you would proceed and what do you see the 
roadblocks are? And how could we get that first--first from the 
private sector--not private sector, but with cities, counties? 
And second, from the BIA, which is even more important to me? I 
think it is even more streamlined and can be very much more 
quickly for the BIA because of the self-determination rules 
that exist. And we'll start with you, Mr. Moravec.
    Mr. Moravec. Thank you. I would say first I, like some of 
the members are, I'm skeptical of huge financial benefits 
coming out of this process. I mean, the real advantage to the 
Federal Government is savings in terms of expenditures for 
maintenance. But as a practical matter, there are things that 
need to be done to reform the process, and that is what I think 
your question is focusing on.
    I was very pleased to hear Ms. Foscarinis mention when 
talking about Title V that there needs to be--that one step 
might be to immediately exclude properties that were clearly 
not suitable for housing the homeless. I mean, that would be a 
great step in the right direction, rather than putting it 
through an intragovernmental, interagency process involving HUD 
and GSA and other shareholders. If there could be a way of 
focusing quickly and achieving consensus very quickly on 
whether a property was suitable for homeless, and then removing 
it from the process if it wasn't, would be a very big step in 
the right direction.
    I think another way would be to limit the time that 
external or local shareholders have to make their views known, 
to sort of cut off the debate when it wasn't leading to a 
fruitful or productive outcome. As Deputy Commissioner Foley 
testified, that really is where the delay is. The properties 
sort of get into this limbo land where there is no way of 
resolving the disputes or the competing interests of groups for 
claiming a property that has been declared surplus.
    Mr. Gosar. Could you see a hierarchical aspect, a first 
right-of-refusal, particularly when you look in lieu of taxes, 
particularly what we have seen from secured schools and PLLs, 
that the counties and cities have an advantage or a State has 
an advantage over or----
    Mr. Moravec. I think it would be very difficult to 
establish a template or an inflexible hierarchy. That is 
essentially what we have now. I think each individual asset is 
different and deserves to be treated as an individual problem; 
and the solutions can be very different, asset by asset.
    So I would be--I would be hesitant to--to establish a 
right-of-first-refusal protocol just that then again would be--
try to apply--would be applied in a wholesale way.
    Mr. Gosar. I'm running out of time.
    Ms. Foscarinis. We do suggest streamlining the process so 
that properties that are clearly not suitable are excluded. For 
example, national security properties, contaminated properties, 
properties inside secure facilities, military properties, or 
inside military facilities. We also suggest publishing the list 
of properties on line as opposed to in the Federal Register, 
and publicizing them through a LISTSERV and a data base 
electronically.
    We are also suggesting requiring the Federal agencies to 
provide greater outreach and support to applicants. Right now 
this is a very cumbersome and difficult process and the 
applicants are typically an unsophisticated shelter, or other 
service providers. Greater support would allow these providers 
to more quickly complete the process and would streamline it.
    Mr. Gosar. Don't you think--don't you think--I am sorry.
    Chairman Issa. The gentleman can have 30 additional 
seconds.
    Mr. Gosar. Okay. Don't you think that--a wonderful point to 
revolutionize it, it would be the Native Americans because of 
the unique treaty obligations that we share with them and the 
BIA constraints on that. To me it seems like it is a perfect 
fit to demonstrate ownership to the tribe in the Self-
Determination Act that actually is a first step of maybe 
revolutionizing how we look at these inventories, because you 
need to deal strictly with the tribe first and then the 
individual entities.
    I disagree that the homeless is the number one aspect 
because I think you also have to have the empowerment of 
economies for the tribes that associate both.
    And then I also think that you look at the veterans' 
aspects of empowerment as well. So those are my two cents worth 
and I'd like to get--you know, I have run out of time but I 
would love to have your additional comments for the record.
    Ms. Foscarinis. Okay. May I----
    Chairman Issa. You may have the time you need to respond.
    Ms. Foscarinis. Okay. Wonderful. Thank you very much. I 
like that.
    Congressman, I'm not familiar, unfortunately, with the 
specific constraints on tribes or requirements, but I do know 
that tribes certainly suffer from homelessness and poverty, and 
that is a very, very critical issue. Veterans as well--many 
homeless people are veterans, and so it is very important that 
we address that issue.
    I think the larger point is to allow these properties to be 
used for any kind of permanent housing, not just--right now it 
is limited to homeless shelters or services for homeless people 
or permanent supportive housing. But we are advocating for the 
expansion to permanent housing per se so that a broader swath 
of needs can be met.
    Chairman Issa. Thank you. Sorry, Mr. Labrador. But we are 
now going to the former chairman of the full committee, Mr. 
Towns.
    Mr. Towns. I would be delighted to yield a minute. Mr. 
Chairman, I would yield him 30 seconds.
    Chairman Issa. It is all yours.
    Mr. Labrador. Thank you, Mr. Chairman. I was just going to 
yield my time to Mr. Gosar, so we will wait.
    Mr. Towns. I reclaim my time. I reclaim my time.
    Chairman Issa. We--you understand, we have a lot of 
formality in our informality sometimes.
    Mr. Towns. Thank you very much.
    Mr. Connolly. And way too much comedy, Mr. Chairman.
    Mr. Towns. Thank you very much, Mr. Chairman. First of all, 
you know, I'm happy to see you, Ms. Foscarinis. I knew Stew 
McKinney, he was a very good friend of mine. Of course I 
remember the work in those days.
    And, of course, let me begin by we established that tens of 
thousands of properties are languishing in the Federal 
inventory without being sold, and some agencies may blame Title 
V, the process, for slowing down their ability to dispose of 
property.
    For example in 2008, the Department of Veterans Affairs 
reported that GAO--that the requirements for the McKinney Act 
can add as much as 2 years to the disposal process.
    Ms. Foscarinis, recognizing that you're one of the primary 
architects of the McKinney Act, I want to address a few 
questions to you. Does the screening process for Title V 
require that agencies screen Federal properties for use by 
nonprofits serving the homeless, even when the property is 
entirely unsuitable for the purpose?
    Ms. Foscarinis. Congressman Towns, it does not. But 
unfortunately the way--the language does not, but the way that 
the program has been interpreted, the screening process is, in 
our view, overly broad, so that properties come into the 
process that clearly are not suitable. And that is one of our 
recommendations. We think it could be streamlined.
    But I don't think that that is the main problem or that 
Title V is the cause of the delays or the reason why all those 
properties are now languishing. In fact, the majority of almost 
all of those 14,000 properties that are now languishing, that 
have been referred to by a number of witnesses, they have 
already been through the Title V process. Title V is not the 
problem.
    Mr. Towns. So what is the problem?
    Ms. Foscarinis. Well, I'm not an expert on the entire 
Federal property disposition process, but I am familiar with 
Title V and I know that Title V is not holding up the process. 
The process happens after Title V and the--and that is a 
process that--that is a question that needs to be addressed to 
the other pieces, the other--the agencies that deal with that 
process.
    Mr. Towns. Well, most people here today seem to agree that 
the current property disposal process is not working. What 
would you suggest we change to improve the disposal process and 
to make it work more efficiently? What are your ideas?
    Ms. Foscarinis. Well, Congressman, I think as far as Title 
V is concerned, much can be done to speed up and streamline the 
process so that properties that are potentially suitable to 
help homeless people are quickly identified, so that the agency 
support applicants in a process--which, as I mentioned, the 
applicants are often very unsophisticated, underresourced 
nonprofit organizations. Additional support from the Federal 
agencies to help them complete the process would be--would help 
streamline that process.
    I think as well that making available resources from the 
Federal Government--for example, we have proposed 5 percent of 
sales from all Federal property dispositions could be used to 
support the homeless service providers in applying for and 
operating their programs on the property. That would help 
expedite it.
    Mr. Towns. Mr. Foley, let me ask you the same question.
    Mr. Foley. Sure. I think as I testified, the three main 
areas that we need to do to improve the Federal disposition 
process for real property are: One, we need to provide 
incentive for agencies to dispose of unneeded and underutilized 
property; two, we have to have a way to help fund some of the 
upfront costs that are required, whether it is through 
consolidation or cleanup of property or just basic work to get 
it ready for sale; and then, three, we have to figure out how 
to deal with the competing stakeholder interests that can delay 
the process down the line.
    So again, it can be after screening and as you get down 
into figuring out what is going to happen to the property next. 
And so that is really, I think, the three areas where we can 
make a big difference and improve the process.
    Mr. Towns. Well, you know, I think that the three bills 
that have been put forward, you know, really, really could help 
in a lot of ways. But still I see some problems, you know, as 
we move forward, even with the three bills that we talked about 
earlier today. So, Mr. Chairman, I think we still have a lot of 
work to be done, but I think that is a framework that we could 
start from and that we can do a lot better than what we are 
doing. So thank you. I yield back.
    [The prepared statement of Hon. Edolphus Towns follows:]
    [GRAPHIC] [TIFF OMITTED] T1985.043
    
    [GRAPHIC] [TIFF OMITTED] T1985.044
    
    Chairman Issa. I thank you and very much agree we can. Mr. 
Labrador.
    Mr. Labrador. Mr. Chairman, I yield my time to Mr. Gosar.
    Chairman Issa. I'm shocked. The gentleman is recognized.
    Mr. Towns. I don't object to that.
    Chairman Issa. Sure.
    Mr. Gosar. I want to continue my line down to hear your 
ideas.
    Mr. Foley. Absolutely. First BIA. They do have standing in 
the current Federal disposal process. And I believe it happens 
at the Federal screening. So Department of the Interior would 
express an interest on behalf of the tribe. So they do have an 
opportunity before it even gets to the point of the public 
benefits.
    Mr. Gosar. Unfortunately that doesn't work because there is 
not--there is not an outlined procedural aspect to allow them 
to debate--to actually challenge that ruling. It is almost an 
absolute ruling, and that can't work. So there is something 
wrong. So keep going.
    Mr. Foley. Sure. And I think, you know, a lot of the items 
that my colleagues here on the panel mentioned are critical. I 
think determining upfront which properties really are suitable 
for which entities, so you don't have a rigid process that 
requires screening of properties we all agree may not be 
suitable. And we do have some flexibility with many of the 
screening processes. So, for instance, if it is not near an 
airport, we wouldn't do an airport screening. So figuring out 
how we determine which properties are most suitable, putting 
more strict time limits on. I think the actual limits for the 
screening process for homeless is only about 60 days, and 30 
days for many of the others.
    So it is not really the process itself. As you mentioned, 
it is when there is a dispute or a discrepancy and then trying 
to sort through and figure those pieces out.
    I think, third, as Ms. Foscarinis mentioned, clearly 
anything we can do to improve transparency in community 
outreach and outreach to our partners is critical so that they 
understand which properties are available, they understand what 
the uses are. And we have a better understanding upfront which 
screenings and which uses would be most appropriate for that 
type of property.
    Mr. Gosar. Ms. Gullo.
    Ms. Gullo. I don't know much about the BIA's role in this 
process, but it sounds to me that we are talking bureaucratic 
issues that could potentially be solved through changing the 
existing process, and you wouldn't necessarily need a new 
civilian board or something to address and resolve some of 
those issues.
    But as Mr. Foley pointed out, a lot of the problems end up 
coming in terms of local stakeholder interests that sometimes 
conflict with what other people want to do with the land. And 
that can often slow things down and even prevent property from 
getting exchanged or given to people.
    Mr. Gosar. Well, don't you--I mean, to me--look, I am a 
business guy. And, you know, I'm also from the nonprofit arena 
as well. So there's--there's some risks that you take. And when 
you start looking at this in competing ventures, particularly 
when we are putting the handicap about the homeless--I've got a 
big heart, don't get me wrong. But you have to make this into a 
play that actually is competitive. And that is that if we are 
going to make sure that everything is--if I sell my house, 
okay, I have to look at--and somebody wants to buy it, we go 
through a negotiation, okay. Dr. Gosar, we don't like this 
about the house, we want you to give this in compensation for 
upgrades, da-da-da-da-da.
    We ought to be doing that at the Federal level, not 
adjudicating this thing where we are going to have to handicap 
it and put more additional money here. We want to allow the 
competing factors to bring assets to the table. We can't hold 
everybody's hand. We are in a financial crisis here and we have 
to empower people to fix things, to be at the bargaining table, 
to put risk in the game.
    Which brings me to my next point. It seems to me like we 
have a contractual hierarchy already, okay, because we have 
established--particularly in the Western States, because--you 
know, like in my State of Arizona, we have 60 percent--72 
percent in my district that is federally owned for multiple 
use. So it seems to me that the hierarchial aspect there is 
first for disposal, is to education, communities, State land, 
counties, cities, and smaller entities. That is how it has to 
go.
    That seems to me that we ought to be dialoguing first at 
the State level, and State by State, to include them into that 
risk pool, because we have had contractual obligations. And I'm 
not a lawyer, but I do understand something about contracts, is 
they are not subservient usually to other whims. They are 
contractually the hierarchal aspect. So I would hope that you 
would look at--and I may further some other questions to you--
look at it in that vein. How do we structure this maybe to 
expedite a contractual obligation not only to our States, but 
to our counties and cities in the expedition of these 
properties?
    So thank you. I have run out of time.
    Chairman Issa. I thank you. I recognize myself now for a 
round of questioning. Oh, I'm sorry. The gentleman is 
recognized.
    Mr. Cummings. Thank you very much, Mr. Chairman. The 
Congressional Budget Office and the White House have very 
different estimates of the potential revenue that could be 
generated through the President's proposed Civilian Property 
Realignment Act. The White House estimates the proposal would 
generate more than $15 billion in additional gross receipts 
over a 5-year period. Over that same 5-year period, CBO 
estimates that implementing the President's proposal would cost 
$420 million in additional. This is quite a large discrepancy.
    Mr. Foley, would you explain how you arrived at the $15 
billion estimate?
    Mr. Foley. Certainly. The administration's proposal, we 
looked at as broad a range of savings as we could possibly get. 
So everything from proceeds when we sell a property to 
eliminating operating costs when you no longer have a property 
in Federal use, to cost avoidance for future renovations that 
we would have to do. And then another component that I think is 
critical to that is consolidations as well.
    I mentioned previously where there are opportunities to, 
you know, downsize and get rid of three locations and move to 
one, or six locations and move to one potentially. And so when 
you look at all of those factors, there are--I think the 
potential for cost savings are enormous.
    Mr. Cummings. So you have--so you don't--you go beyond just 
what it would be sold for. You're going to all of those other 
things.
    Mr. Foley. Correct. When we are talking about the $15 
billion number, it is not just direct sales proceeds of dollars 
that would be received back from property that would be sold.
    Mr. Cummings. Well, why is the CBO's estimate so much 
different?
    Mr. Foley. We certainly respect CBO's opinion. And I think 
that, you know, the way they looked at the legislation, they 
even recognize that there would be cost savings to those. I 
think it gets down into the interpretation of what happens as a 
result of those cost savings. So, are the funds actually still 
given to agencies, or is there a change in the appropriations? 
And I don't want to speak for CBO----
    Mr. Cummings. She can speak for herself. But I'm just 
curious; what is the difference? Do you know?
    Ms. Gullo. Well, I think that Mr. Foley is correct; that 
our job is to look at the net effects on the Federal budget 
over a certain time period. And we do think that a proposal 
such as the President's proposal for the civilian board would 
increase receipts by a modest amount. The problem is that by 
allowing some agencies that currently are not allowed to keep 
their proceeds from sales--and that money goes 100 percent to 
the Treasury under current law--this proposal would allow those 
agencies to keep 40 percent of the proceeds. So right there you 
have a net cost to the Treasury. Again, we think that is fairly 
small because the bottom line is we don't see over the next 5 
years that there is a stock of properties that are going--that 
are valuable enough to produce a large enough receipt to the 
Treasury that is really going to net out against those types of 
costs.
    We do agree that there could be savings in operation and 
maintenance costs over time. Those costs are only going to get 
realized to the Treasury--to the government, however, if future 
appropriations are reduced. So again, from CBO's point of view, 
you have the difference between direct spending and 
discretionary savings, which--so it is just a matter of those 
different pots of money. It is very hard to see and calculate 
those types of O&M savings. We are not saying they would not 
accrue to the Treasury. But unless you can see in the future 
that total appropriations will be reduced by that amount of 
money, then the government hasn't really reduced the deficit at 
all.
    And we have seen that with the BRAC process. BRAC has 
surely resulted through consolidations in lower O&M costs, but 
you certainly can't see that by looking at O&M spending by the 
Defense Department. It has continued to go up. So in order to 
calculate those savings, you would have to know what the costs 
for O&M would have been without BRAC. And that is sort of a 
counter factual that is pretty hard to calculate.
    So we think that there are savings. I actually think that 
over the next 10 years, the idea that we would save $15 
billion, even in reduced O&M costs, if what we are talking 
about is getting rid of excess properties, is unlikely because 
the average maintenance costs of those excess properties is 
actually fairly low. The high costs come in those underutilized 
properties, and the underutilized properties are going to be 
harder to get ready for sale and dispose of. And that is where 
you could start seeing some significant O&M savings from 
consolidating and then getting rid of some of those 
underutilized properties. But that is going to be a harder 
thing to do.
    Mr. Cummings. I'm sure the economy is going to get better, 
but in Baltimore we have a dispute going on right now, right 
now, with regard to building some--a new State Center for all 
the State offices because there is so much vacant property 
downtown. So the vacant property owners downtown are saying, 
wait a minute, why are you building new buildings when we have 
all this vacant property? I mean, your estimates--do you take 
into consideration the fact that there is already a lot of 
private problems right now, particularly with commercial 
properties and things of that nature?
    Ms. Gullo. Well, I certainly think those issues go to 
estimates of what the value of a particular property is, 
absolutely. And that will--could sometimes depress the average 
values of properties, Federal properties that might be 
available in that area.
    Mr. Cummings. Okay.
    Mr. Foley. Can I just add one more thing? I think that, you 
know, another area of savings is in the lease inventory. So an 
example at GSA is our headquarters building that we are 
renovating and we intend to improve the utilization. Prior to 
the renovation, we had about 2,500 people assigned to the 
building. After the renovation, we are going to have 6,000 
people assigned to the building. So that is going to eliminate 
O&M costs in a few Federal facilities. It is going to eliminate 
lease costs that we are currently paying the private sector for 
space that we are occupying. And I think there are a lot of 
opportunities out there like that, that are contemplated under 
the administration's bill, that are hard to score what the 
direct benefits are. But there are potential tremendous 
millions and millions and billions of dollars' worth of savings 
that are out there, because that is one small example right 
here.
    Chairman Issa. Thank you. I'm going to continue with the 
ranking member's line in a number of ways. But, Ms. Foscarinis, 
I'm going to ask you--in one of your proposals, which would be 
for HUD to be required to develop a grant program for 
construction rehabilitation of Title V properties funded at 5 
percent, let me ask you the crux of sort of the program as it 
has been versus the program as it could be.
    If you received a percentage greater than your current 
percentage you actually historically received, a percentage 
either in cash or--obviously, you could use that cash--those 
chits to bid on properties, but you were simply a bidder, would 
that streamline your system? So you wouldn't look at a building 
unless you wanted a building. You wouldn't care if a tribe was 
picking up a piece of land, a city was picking up a piece of 
land, you would essentially get a commission out of the 
decommissioning process that would buildup a fund, probably 
administered by HUD, that would result in grants where you 
could go, or at least the homeless in general could apply for 
grants that would allow them to pick the location and the least 
cost and most efficient place to take care of homeless needs.
    Is that the system that if this was a perfect world, we 
would use this funding mechanism to provide you with options?
    Ms. Foscarinis. Chairman Issa, I appreciate the question. 
Our recommendation is for a fund in addition to----
    Chairman Issa. I know it is. And I am not going there.
    Ms. Foscarinis. Okay.
    Chairman Issa. And I'm not going there for a reason. That 
is subject to an appropriation that is easy to talk about and 
unlikely to be easy to achieve. And it is one of the reasons 
that as we are looking at property disposal, we are looking at 
you historically getting about 2 percent of property. And as 
you say, rightfully, you get the property, you get it late, you 
get it in sometimes not so great condition, certainly not in as 
good a condition as you looked at it at the beginning of the 
process, and then you take over maintenance and utilities and 
so on.
    I'm looking and saying if we in this process have an 
opportunity to streamline the system and to help the homeless 
be better off than they are from a dedicated pool of money, 
then we on this committee have the ability to do what we cannot 
do if we are subject to appropriation.
    We can have all the discussion we want, but if I author a 
bill, the ranking member authors a bill, it is going to be 
subject to appropriation and it is going to be subject to other 
committees' jurisdiction. That is one of the reasons I asked 
you a more focused question is, I'm looking, saying, What is it 
that we can do for you?
    Ms. Foscarinis. Well, we have focused on the property 
itself because we feel that in many communities, access to a 
piece of property is really key. And it is--we have not been 
open to this point, to the idea of instead of the property, 
substituting money, because we feel that the property is 
important and it gives an important resource to groups who 
otherwise might not have access to it.
    Chairman Issa. And we are assuming in many cases that you 
would use this fund at HUD and the grants provided from that 
fund to bid on those properties. But you would be bidding with 
sort of this earmarked money. If today you're getting 2 percent 
and the fund is 4 percent, now you have a grant process 
administered where they are looking at the needs of various 
communities; they're prioritizing the community certainly that 
needs homeless shelters. Perhaps they're looking 
disproportionately at whether also our opportunity because of 
land or building, but it is administered by the agency that we 
expect to look at the homeless problem to where, quite frankly, 
in Mr. Gosar's district, the disposal of land with some 
buildings that may or may not--they may be way out there. They 
may be of no value, but they are part of the pool.
    On the other hand, in Mr. Cummings' district, it may be or 
may not be that the building being delivered is of any value to 
you, but it is in the right area. So you have both the option 
of bidding on the building and the option of--to the grant 
limit, whatever, you know, HUD was going to make available. But 
basically HUD would be your partner sitting there saying, we 
are going to pay what we need to pay to get this building.
    And I'm not prejudging whether that would be a true option 
or an appraised value or some other system. What I'm viewing is 
it would be quick because you would have your partner and you 
would have this pool of money.
    Mr. Cummings and I would say, you know, the politics are 
out of it; we are not trying to force a decision in our 
community. We are looking and saying we have an agency, they 
have an allocation of money from all dispositions that gives a 
predictability greater than it is today. And, quite frankly, 
that money would allow you to have what you are asking for 
here, which is this 5 percent net proceed. We can talk about 5 
percent, 2 percent. It is not important for the percentage. But 
the idea is it would be built in a single fund where you would 
be, in fact, generating both the purchase acquisition, if you 
will, and the renovation.
    I'm not sure we can get to 5 plus 2, which is what your 
arithmetic adds up to, or 7 percent, you know, or 2 percent of 
the material--of the disposition and then 5 percent of the 
proceeds.
    Ms. Foscarinis. Right. That is assuming, of course, that 2 
percent is the right number.
    Chairman Issa. It is just a historic number and that is 
what I want to improve from.
    Ms. Foscarinis. Right. I understand. We need to look at 
that in detail as a specific proposal. Our concern about 
substituting money for buildings is that there are already 
appropriations through HUD and through other Federal agencies 
to assess homeless persons. They are not sufficient by far. I 
mean, the funding now is vastly oversubscribed. Our concern is 
we don't want this resource, which is a different type of 
resource, to become part of that mix of appropriations where, 
you know, we can cut or not significantly increase other HUD 
funding because--while we have this other pool of money and 
that goes into the overall mix. That is our concern.
    And there is also a separate concern about the property 
itself. And many communities having a building makes a big 
difference because community groups face issues like NIMBYism. 
They face opposition. These buildings are typically--because 
they are Federal property, they can more easily--and they are 
being used for a Federal purpose. They can bypass some of that 
community opposition and allow--give greater strength to the 
group trying to use them. So there are reasons why the property 
matters.
    However, you know, we are open to discussing any proposal. 
We need to take a look at the specifics of it.
    Chairman Issa. Sure. I would like your thoughts as we go 
through this process. Like I say, I jumped onto the 5 percent, 
but I knew that, in fact, there is a certain point at which the 
appropriator starts saying we are not going to let that happen. 
So we want to make sure we steer clear of it.
    Ms. Gullo, there's a number of things that I'm interested 
in. In your report, which is already in the record, you come up 
with some interesting figures as to Mr. Foley's organization's 
scoring. Forty-five percent of the buildings listed, the 
structures were already on the list, so half of his 15 billion, 
if we assume all things being equal. So we are double-counting 
potentially, or counting what has previously been counted. 
Twenty-eight percent of the buildings in your study are 
probably going to be demolished, which I hope they didn't score 
them before demolishment; 20 percent have already been disposed 
of and are no longer considered excess. That part certainly is 
going to affect the 15 billion. Six percent have already been 
slated for conveyance at little or no cost to other public 
entities. And less than 1 percent of the properties, a total of 
30, are expected to be available for sale. And there are only, 
you know, what, 30 sales of them; the highest was $2.5 million. 
Is that also part of your belief, that there isn't that much 
there, there?
    Ms. Gullo. Yes, sir. I mean, basically I think what that--
what that data base shows is existing stock of excess 
properties. And I think many of those, as we pointed out, are 
already in the process of being disposed of. And I think the 
point we were making--there are two. First of all, most excess 
properties end up getting demolished and a fairly small 
percentage are actually sold. And that property doesn't have a 
lot of value.
    So the point we were trying to make there is that in order 
to see receipts anywhere close to in the billions of dollars, 
you would have to identify significantly more valuable property 
and dispose of that through sales in order to get receipts of 
15 billion. If what you are talking about are avoided O&M 
costs, then you could achieve avoided O&M costs with properties 
that aren't as valuable.
    Chairman Issa. But aren't a lot of these properties--they 
are basically being shuttered, and in many cases the 
maintenance is not sufficient to maintain them at a usable 
level. So the truth is they are depreciating very, very 
quickly. These are buildings with leaky roofs, broken windows. 
They just try to stop the vandalism pretty much. That's, as Mr. 
Quigley mentioned, that's what you see a lot, isn't it?
    Ms. Gullo. Yeah. That is our impression. I mean, Mr. Foley 
could probably speak on that.
    Chairman Issa. Mr. Foley, I misstated. I realize OMB's 
numbers. Let me just share with you something, and I know I'm 
going on, but if I'm kind of the last I might get away with it.
    You know, I took a team down to Puerto Rico to look at 
Roosevelt Roads. Now, that was worth--and this is BRAC, but it 
was worth about $2 billion estimated at the time of closing. 
Today it is worth about 2 cents. All of the electrics have been 
damaged or destroyed. And they estimate $110 million just in 
copper having been looted. And this is, by the way, where there 
were guards on the place, military operations still going on in 
small pockets of a large base. The giant iguana have destroyed 
the road structure considerably, and they just keep trying to 
patch them so the cars can go over them just to inspect things. 
People implanted in the middle of the base, little pockets of 
new military, thus making it impossible to sell the land in a 
way in which a developer would want to be there.
    To be quite frank, you don't necessarily want the National 
Guard Armory right on the beach. But that is where they put the 
Army National Guard, was right on the beach. So needless to 
say, for the casino or the resort or anybody else, it wasn't--
it is no longer very good. And on top of that, we spent as much 
as $110 million a year to maintain it with these guards and so 
on. Well, $60 million worth of power plant that had 
contamination has never been cleaned up. So the Governor is 
looking forward to having it transferred to him at no cost, not 
much value, and we still have to do the $60 million on the 
power plant. That is my basis for concern.
    In addition to--and, Ms. Gullo, I'm not so sure that you 
actually very quickly get that savings. I was at Fort Ord as a 
young Army officer, obviously a long time ago, but I watched it 
get closed. On the day it closed, I watched the carpenters 
continue to put new roofs on brand-new buildings still under 
construction. We find a way to spend money even after we close 
things.
    I have one or two more quick questions. The American people 
see that we have this excess property. Currently the inventory, 
and Mr. Foley more currently, and Mr. Moravec, historically, 
isn't our biggest problem that we abandon property or choose 
not to go to it while we lease property down the street?
    I can show--the FBI chooses to be in a nice tower building 
in the city where we have excess military installation because 
there is no structure to say, from a command-and-control 
standpoint, no, you will go to what we own if it is good 
enough; no, you may not rent what you want if we can in fact 
provide it cheaper.
    And, Mr. Foley, isn't that really part of the authority the 
GSA would need to start really reining in the selective ``I've 
got my budget, I'm going where I want to go'' type mentality 
and bureaucracy?
    Mr. Foley. I think our process right now does look at do we 
have existing Federal properties first. But the biggest 
challenge often with those facilities is there is a cost to 
convert them. So you mentioned the FBI. If you have to put in 
SCIF space or do something to improve the security around it, 
there is a cost to that. And finding the resources upfront to 
be able to do that is often the biggest challenge versus going 
out and leasing where, you Know, it is just an annual rental 
payment. So you're looking at, in some cases, hundreds of 
billions of dollars to renovate an existing Federal facility or 
convert it for use, versus an annual rental payment, you know, 
of $3 or $4 million.
    Chairman Issa. Right. For example, if we took the GSA and 
we made you a leasing agent, and we took you off budget for a 
moment--in the perfect world, we take you off budget. We make 
you a landlord.
    Mr. Foley. We will take it.
    Chairman Issa. It ain't going to you personally. And 
instead of looking at the capital cost of buying or the capital 
cost of renovating, we look at the competitive rent versus rent 
avoidance. So now we are actually scoring against your 
competitor, the private sector competitor. And I'm as private 
sector as anybody that will ever sit on this dais.
    But I will give you an example--Moffet Field. We have 
donated huge amounts of tracts to schools and everybody we can 
think of, while in fact major Federal agencies are sitting in 
very expensive space in San Jose, Santa Clara, and the area. 
Why? Well, I can't quite figure it out. It is not that I don't 
want to do good, but those agencies could have been told the 
GSA has land behind a secure gate. We already have NASA and 
highly classified programs there. We can put you behind that 
gate. We will put you behind that gate, and we will meet your 
requirements as we see for renovation. Maybe capex was part of 
it, but quite frankly, our per-year cost--we have tenants that 
pay almost nothing for land that--and facilities they normally 
wouldn't have taken, except it was almost free. And we are not 
talking homeless in this case. You can't afford to be homeless 
in San Jose as it turns out.
    Don't we need to change that system so that we don't 
score--and this is really a CBO thing. Can't we get to where we 
score it in a 10-year window or a 20-year window so that we are 
not constantly trying to look at these capexes.
    My bases have, including Camp Pendleton, have PPV. PPV is a 
good program because of a bad accounting system that we live 
under. The idea that we pay somebody 50 years' worth of a 
guaranteed lease so that they will make the capex so we don't 
have to, and it scores cheaper for us, is a disingenuous way of 
doing it. But the fact is the appropriators won't guarantee 
they will do the MILCON every year; and there is no agency that 
has the ability to say, look, we can compete and really meet 
this cost at the same or less, but we are not able to compete.
    Ms. Gullo. Congressman, we agree with you on the issue of 
capital leases. When we see legislation that would authorize 
and allow for that kind of a long-term lease, CBO's scoring 
will score that up--the full cost of those upfront. I mean--so 
we agree with you.
    Chairman Issa. You're stuck with the existing way of 
scoring because we have given it to you.
    Ms. Gullo. Right. But I think--and that is not always the 
way. If it is an ongoing lease that is just for, you know, 
annual leases, then those are scored just on a cash basis each 
year. But we do tend to take that view, that if we are entering 
into a long-term capital-type lease, we would score that up 
front, the full cost of that, so that it is a little bit more 
comparable to what we would have to pay or appropriate to build 
a building.
    Chairman Issa. You try to normalize it as best you can. But 
PPV exists because of government's failures, not because it was 
inherently cheaper for the private sector to build barracks on 
my bases.
    Mr. Moravec. I think that is right. I would add--I mean, 
the reasons that the government leases space as opposed to 
constructs it or finds a way of people putting in owned space 
is several. It begins with the fact that it is much easier to 
get the money from Congress for a lease because of budget 
scorekeeping rules and because of the availability of funds 
than it is to federally construct or acquire space.
    Second, it is much faster. The private sector actually is 
much faster at producing a finished facility that supports the 
mission of the tenant agencies than the public sector. It just 
is.
    And the final thing is that the agencies actually prefer to 
be in private, modern, efficiently run space, as opposed to 
having to force themselves to accommodate their mission to an 
existing federally owned installation. In your Moffet Field 
example, that would be--that is a great example except that--of 
course, it begs the question: Where does the money come from to 
build the facility behind the fence? Okay. The land is free, 
but where does the money come from to build a--in many cases, a 
special purpose building? That is one other thing I want to 
mention. A lot of these Federal buildings are not just plain 
vanilla office space.
    You mentioned the FBI. An FBI building is a very special-
purpose building. It has anti-progressive collapse technology 
in the way it is developed. It is typically on a very large 
site. It gives standoff distances to the surrounding areas. It 
has hardened curtain walls, blast-resistant glass, a lot of 
special functionality. And it is just--you can't just move into 
a regular office building and turn it into that kind of 
facility, especially given the Federal Government's 
requirements with regard to security in the post 9/11 era and 
with regard to environmental sustainability, which are both 
highly laudable social objectives. When you add those factors 
in, it really adds to the cost of building a Federal building.
    Chairman Issa. Did I mention that the FBI took one of the 
shacks--I am sorry--one of the old buildings at Roosevelt Roads 
because they could? And we don't know what they are doing 
there, and we can't find out.
    I want to thank the ranking member. This was an unusually 
long set, and he was patient to hear me out.
    We thank you for both your comments on some other areas and 
on this. The committee is committed to help in both parts, the 
property disposal and trying to create a situation in which new 
acquisitions, whether leased or purchased, can be better 
thought out to save the American taxpayers' money.
    And, with that, we stand adjourned.
    [Whereupon, at 12:05 p.m., the subcommittee was adjourned.]

                                 
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