[Senate Report 117-147]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 486
117th Congress     }                                     {      Report
                                 SENATE
 2d Session        }                                     {     117-147
_______________________________________________________________________

                                     



                           SMART LEASING ACT

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 2793

           TO AUTHORIZE THE ADMINISTRATOR OF GENERAL SERVICES
           TO ESTABLISH AN ENHANCED USE LEASE PILOT PROGRAM,
                         AND FOR OTHER PURPOSES






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               September 13, 2022.--Ordered to be printed 
               
                             _________
                              
                 U.S. GOVERNMENT PUBLISHING OFFICE
                 
29-010                   WASHINGTON : 2022
               
               
               
               
               
               
               
               
               
               
               
               
               
               
               
               
               
               
               
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware           ROB PORTMAN, Ohio
MAGGIE HASSAN, New Hampshire         RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona              RAND PAUL, Kentucky
JACKY ROSEN, Nevada                  JAMES LANKFORD, Oklahoma
ALEX PADILLA, California             MITT ROMNEY, Utah
JON OSSOFF, Georgia                  RICK SCOTT, Florida
                                     JOSH HAWLEY, Missouri

                   David M. Weinberg, Staff Director
                    Zachary I. Schram, Chief Counsel
              Chelsea A. Davis, Professional Staff Member
                Pamela Thiessen, Minority Staff Director
            Sam J. Mulopulos, Minority Deputy Staff Director
       Cara G. Mumford, Minority Director of Governmental Affairs
                  Andrew J. Hopkins, Minority Counsel
                     Laura W. Kilbride, Chief Clerk













                                                      Calendar No. 486
117th Congress     }                                     {      Report
                                 SENATE
 2d Session        }                                     {     117-147

======================================================================



 
                           SMART LEASING ACT

                                _______
                                

               September 13, 2022.--Ordered to be printed

                                _______
                                

 Mr. Peters, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 2793]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 2793) to authorize 
the Administrator of General Services to establish an enhanced 
use lease pilot program, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment (in the nature of a substitute) and recommends that 
the bill, as amended, do pass.

                                CONTENTS

                                                                     Page
  I. Purpose and Summary..............................................  1
 II. Background and Need for the Legislation..........................  2
III. Legislative History..............................................  3
 IV. Section-by-Section Analysis of the Bill, as Reported.............  3
  V. Evaluation of Regulatory Impact..................................  4
 VI. Congressional Budget Office Cost Estimate........................  4
VII. Changes in Existing Law Made by the Bill, as Reported............  7 

                         I. PURPOSE AND SUMMARY

    S. 2793, the Saving Money and Accelerating Repairs Through 
(SMART) Leasing Act, provides the General Services 
Administration (GSA) the authority to help agencies fully 
access the potential of their property through an enhanced use 
lease pilot program. Under this program, the GSA Administrator 
may authorize Federal agencies to sublease underutilized non-
excess real and related personal property. This bill is modeled 
on a successful National Aeronautics Space Administration 
(NASA) program, which has generated millions of dollars in 
revenue that were used to fund capital projects and facilities 
maintenance.

              II. BACKGROUND AND THE NEED FOR LEGISLATION

    While Congress has passed major legislative reforms in the 
federal property space over the last ten years,\1\ these 
efforts have not fully accounted for the untapped potential of 
underutilized non-excess property. As it stands, agencies 
routinely maintain property that is needed, but could be more 
fully utilized with the proper projects and partnerships. For 
instance, agency campuses could have extra space they cannot 
sell, but could provide an optimal home for capital generating 
opportunities, such as solar panels. Some agencies may also 
have excess space and equipment they need part time but could 
otherwise be well-suited to university or private partnerships. 
If agencies are provided the freedom to explore sensible 
projects to more fully utilize their property, they could 
generate revenue to fund long-needed maintenance, capital 
revitalization, and improvements.
---------------------------------------------------------------------------
    \1\Federal Assets Sale and Transfer Act of 2016, Pub. L. No. 114-
287 was amended by the Federal Property Management Reform Act of 2016, 
Pub. L. No. 114-318.
---------------------------------------------------------------------------
    The SMART Leasing Act, would provide GSA the authority to 
help agencies fully access the potential of underutilized non-
excess property through an enhanced use lease pilot program. 
Under this program, the GSA Administrator may authorize Federal 
agencies to sublease underutilized non-excess real property and 
related personal property to any person or entity, including 
another department or agency of the Federal Government or an 
entity of a State or local government. The Administrator must 
ensure that all subleases generate revenue at a fair market 
value.
    To guard against any potential abuses, this legislation 
prohibits the GSA Administrator from entering into a lease 
unless she certifies that the lease will not have a negative 
impact on the mission of GSA or the applicable Federal agency. 
The Administrator may also require terms and conditions 
appropriate to protect the interests of the United States. 
Additionally, the size of the pilot program is limited to six 
leases per year through 2024. At the conclusion of the pilot, 
this bill provides GSA the opportunity to report on the 
program's merits and advise on whether the program should be 
extended.
    This legislation was modeled after NASA's successful 
enhanced use leasing program. For years, NASA has used enhanced 
use leasing to develop public-private partnerships that have 
made productive use of formerly underutilized property. NASA 
has used the rent payments it receives to fund capital projects 
and facilities maintenance. Under this program, NASA has 
generated millions of dollars in revenue. In fiscal year 2018, 
NASA recovered $6.8 million and another $5.4 million in fiscal 
year 2017.\2\ NASA's fiscal year 2020 appropriations bill 
extended enhanced use leasing authority until December 31, 
2021.\3\ On December 14, 2021, the NASA Enhanced Use Leasing 
Extension Act of 2021 (H.R. 5746) passed by unanimous consent 
in the Senate, which would extend NASA's enhanced use leasing 
authority through March 31, 2022.\4\
---------------------------------------------------------------------------
    \2\Senate Committee on Commerce, Science, and Transportation, 
National Aeronautics and Space Administration Authorization Act of 2019 
(Sept. 8, 2020) (S. Rept. 116-262).
    \3\Further Consolidated Appropriations Act of 2020, Pub. L. No. 
116-94, div. I, title VI, Sec. 602.
    \4\H.R. 5746, 117th Congress (2021).
---------------------------------------------------------------------------

                        III. LEGISLATIVE HISTORY

    Chairman Gary Peters (D-MI) introduced S. 2793, the SMART 
Leasing Act, on September 22, 2021, with Senators Lankford (R-
OK), Hawley (R-MO), and Sinema (D-AZ) as cosponsors. The bill 
was referred to the Committee on Homeland Security and 
Governmental Affairs.
    The Committee considered S. 2793 at a business meeting on 
November 3, 2021. During the meeting, Chairman Peters offered a 
substitute amendment which was adopted by voice vote en bloc 
with Senators Peters, Hassan, Sinema, Rosen, Padilla, Ossoff, 
Portman, Johnson, Lankford, Romney, Scott, and Hawley present. 
The bill, as amended, was approved by voice vote en bloc with 
Senators Peters, Hassan, Sinema, Rosen, Padilla, Ossoff, 
Portman, Johnson, Lankford, Romney, Scott, and Hawley present.

        IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title

    This Act may be cited as the Saving Money and Accelerating 
Repairs Through Leasing Act'' or the ``SMART Leasing Act.''

Section 2. Enhanced used leasing pilot program

    Key terms of ``Administrator'' and ``pilot program'' are 
defined and relevant Congressional committees are outlined.
    This section permits the GSA Administrator to establish an 
enhanced use lease pilot program. Under this program, federal 
agencies may sublease any underutilized non-excess real 
property and related personal property under the jurisdiction 
of the Administrator.
    Entities entering into a lease under the pilot program are 
required to provide monetary consideration for the lease at 
fair market value, as determined by the Administrator. The 
Administrator may use the funds received for a lease to cover 
the administrative costs of the lease. All other funds shall be 
deposited in a working capital account and remain available 
until expended for maintenance, capital revitalization, and 
improvements to the real and related personal property at the 
federal agency. The Administrator is provided authority to 
require any terms and conditions in connection with a lease 
under the pilot program she considers appropriate to protect 
the national interest.
    This section waives the requirements of section 501 of the 
McKinney-Vento Homeless Assistance Act for property leased 
under the pilot program, which would have required federal 
agencies to make excess property available to assist the 
homeless.
    The Administrator is not permitted to lease back property 
under the pilot program during the term of the lease or enter 
into guaranteed service or similar contracts with the lessee 
relating to the property. The Administrator also may not enter 
into a lease under the pilot program unless she certifies that 
the lease will not have a negative impact on GSA's mission or 
that of the applicable Federal agency.
    The Administrator may enter into not more than 6 leases 
under the pilot program during each fiscal year. The authority 
to enter into leases under the pilot program shall expire on 
September 30, 2024.
    The Administrator may not enter into a lease under the 
pilot program more than 15 years in duration.
    Finally, this legislation would require the GSA 
Administrator to report to relevant Congressional committees on 
the pilot program. This includes annual reporting on the pilot 
with a description of each lease entered into that year, the 
value of the lease and the availability and use of the funds 
received. The bill also requires the Administrator to submit a 
final report that includes a recommendation on whether the 
pilot program should be extended.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 26, 2022.
Hon. Gary Peters,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2793, the SMART 
Leasing Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                         Phillip L. Swagel,
                                                          Director.
    Enclosure.

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    The bill would:
           Authorize the General Services 
        Administration to create a pilot program allowing the 
        agency to enter into enhanced-use leases (EULs) with 
        private parties for underused, non-excess property
    Estimated budgetary effects would mainly stem from:
           Use of third-party financing to construct or 
        renovate certain federal facilities under EULs
    Areas of significant uncertainty include:
           Estimating the value of investments and 
        extent of government use of facilities constructed by 
        third parties under EUL agreements
    Bill summary: S. 2793 would establish a pilot program under 
which the General Services Administration (GSA) could enter 
into long-term, enhanced-use leases (EULs) for certain 
underused, non-excess federal property. The bill also would 
require GSA to submit annual progress reports to the Congress.
    Estimated Federal cost: The estimated budgetary effect of 
S. 2793 is shown in Table 1. The costs of the legislation fall 
within budget functions 800 (general government) and other 
budget functions that contain landholding agencies.

                                                    TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF S. 2793
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2022   2023   2024   2025   2026   2027   2028   2029   2030   2031  2022-2026  2022-2031
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Increases in Direct Spending
 
Estimated Budget Authority..................................      5     30     30      0      0      0      0      0      0      0        65         65
Estimated Outlays...........................................      *     15     20     15     10      5      0      0      0      0        60         65
--------------------------------------------------------------------------------------------------------------------------------------------------------
*= between zero and $500,000.
CBO estimates that discretionary costs stemming from requirements for GSA to prepare annual reports for the Congress would be less than $500,000 over
  the 2022-2026 period.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted late in fiscal year 2022.
    Background: The budgetary treatment of transactions 
financed by third parties depends on the extent and nature of 
federal support. In CBO's view, transactions supported entirely 
by private entities would not be recorded in the federal budget 
because the total costs of those activities would be borne by 
nonfederal entities.\1\ Some projects established under EULs, 
however, are effectively governmental and subject to federal 
control, either because of their location on federal land or 
because federal agencies would be the primary or major users of 
the services supported by those facilities. Those transactions 
would be recorded in the federal budget.
---------------------------------------------------------------------------
    \1\See Congressional Budget Office, Third-Party Financing of 
Federal Projects (June 2005), www.cbo.gov/publication/16554.
---------------------------------------------------------------------------
    When a third party recovers at least a portion of their 
investments through contracts with government agencies to use 
specialized facilities, CBO considers such financing to be 
similar to an agency using federal borrowing authority to 
improve physical infrastructure. Because governmental funds 
would be used to develop and construct those facilities, CBO 
believes that full cost of long-term commitments that obligate 
the government to make payments in future years should be 
recorded in the budget as direct spending.\2\
---------------------------------------------------------------------------
    \2\See Congressional Budget Office, How CBO Determines Whether to 
Classify an Activity as Governmental When Estimating Its Budgetary 
Effects (June 2017), www.cbo.gov/publication/52803.
---------------------------------------------------------------------------
    Direct spending: S. 2793 would establish a pilot program 
allowing GSA to enter into EULs with private parties to lease 
underused, non-excess federal property at fair market value. 
The program would allow GSA to collect payments and use those 
proceeds to cover lease-related costs and to fund property 
maintenance and capital improvements. Under the bill, GSA could 
enter up to six 15-year EUL agreements annually through the end 
of fiscal year 2024. Because CBO assumes that enactment would 
be late in fiscal year 2022, we expect that only one EUL 
agreement would be entered into in that year.
    The Departments of Defense and Veterans Affairs, the 
National Aeronautics and Space Administration, and the National 
Oceanographic and Atmospheric Administration are among the 
federal agencies that currently have some form of EUL 
authority. Using information from a review of relevant 
agreements, CBO expects that the EULs authorized under S. 2793 
would allow third parties to, for instance, build new 
facilities or renovate existing ones, establish new energy 
production facilities, or construct facilities for other 
specialized uses.
    CBO cannot predict how the government might use or benefit 
from new projects or the extent to which GSA and other agencies 
it supports would use the new EUL authority. Further, little 
comprehensive information about the value of underused federal 
assets is available. Using information about EUL activity under 
current law and the comparatively short 15-year term of the 
proposed leases, CBO expects that the value of facilities 
constructed or leased under the pilot authority would average 
roughly $5 million per lease. On that basis, CBO estimates that 
enacting S. 2793 would increase direct spending by $65 million 
over the 2022-2031 period.
    Spending subject to appropriation: S. 2793 would require 
GSA to provide annual reports to the Congress that provide 
information on the types of leases entered into and how funds 
received under the program were used. The final report, due 
September 30, 2024, would include GSA's recommendation on 
whether the pilot program should be continued. CBO estimates 
the costs to prepare those reports would be insignificant.
    Uncertainty: Direct spending under S. 2793 could be higher 
or lower than CBO's estimate because of the following sources 
of uncertainty:
           CBO cannot foretell the value of third 
        parties' investments in facilities that would be leased 
        under the pilot program. Generally, investments of 
        higher value would increase the potential for direct 
        spending.
           CBO cannot predict with certainty whether or 
        how the government would use facilities constructed by 
        third parties under EULs. If the government is the 
        primary user of the services provided by a facility, 
        and thus serves as the main source from which a third 
        party would recover its investment, the government's 
        share of indirect financing for and benefits from that 
        project would be higher, resulting in greater direct 
        spending. However, if the federal government makes 
        little or no use of the services provided by a 
        facility, the net effect on direct spending could be 
        much less.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in Table 1.
    Increase in long-term deficits: CBO estimates that enacting 
S. 2793 would not increase on-budget deficits by more than $5 
billion in any of the four consecutive 10-year periods 
beginning in 2032.
    Mandates: None.
    Estimate prepared by: Federal Costs: Matthew Pickford; 
Mandates: Andrew Laughlin.
    Estimate reviewed by: Susan Willie, Chief, Natural and 
Physical Resources Cost Estimates Unit; H. Samuel Papenfuss, 
Deputy Director of Budget Analysis; Theresa Gullo, Director of 
Budget Analysis.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation would make no change in existing law, 
within the meaning of clauses (a) and (b) of subparagraph 12 of 
rule XXVI of the Standing Rules of the Senate, because this 
legislation would not repeal or amend any provision of current 
law.

                                  [all]