The Chicken and Egg Real Property Dilemma

It’s a classic chicken-and-egg dilemma. Agencies say they need access to capital to help right-size their real property inventory and to reduce the backlog of repairs. At the senior executive levels of government, management professionals are saying that right-sizing the inventory will provide agencies with the capital needed for operations and maintenance.

Which comes first?

In this case, frankly, agencies will have to make do with what they’ve already been given.

It’s not that administrators aren’t feeling your pain. Stan Kaczmarczyk of GSA’s Office of Governmentwide Policy recently conceded that 20 percent of proceeds from disposal of surplus real property might not cover the costs of that disposal. He pointed out, however, that it’s a “good start,” and as much as Congress feels is needed to get the ball rolling on data collection. After that, the program should be fundable by reinvestment.

Kaczmarczyk made his remarks during a recent breakfast seminar by the Federal Real Property Association, where he was joined by OMB’s Danny Werfel and Commissioner David Winstead of GSA’s Public Buildings Service. (For an overview of this panel discussion, see the article “Right-Sizing Inventory Is Key to Capital, Federal Execs Say.”)

Given that both the House and Senate have quoted the 20 percent figure in proposed pilot legislation on real property disposal, that number is not likely to be increased.

The reality at the senior levels of government is that access to capital is not a particularly easy hurdle to clear. GSA’s Winstead said that the Federal Building Act and Budget Act create some impediments to raising capital. The bulk of innovative activity so far, he said, has come from local and municipal government agreements for the sale and reuse of federal property. In short, it’s still largely a matter of reinvesting assets from disposal of excess property that’s at the heart of available budgeting for maintenance, improvements and new construction.

As for the disposal of this property, both Congress and OMB have adopted a laissez-faire attitude. OMB’s Werfel touched on the list presented to Congress this past June of some $17 billion in real property assets deemed eligible for immediate disposal. Congress provided no deadlines or other action items to OMB for this list, other than presenting it.

Absent such direction, OMB’s view – justifiably so – is to see what the affected agencies choose to do with the list. The agencies with properties on this list know they’re on the list, Werfel pointed out. OMB is awaiting the annual Federal Real Property Profile data snapshot in December as a performance milestone. At that time, he said, OMB will have a clearer idea of the properties that have been disposed of, and the next tier of properties to be added to the list.

That means the responsibility for activity related to the list rests squarely on the shoulders of the agencies. OMB offers neither incentives for disposal, nor specifically indicates punitive measures for agencies that do not reduce their surplus inventory. (This lack of guidance can be frustrating. Even the Association of Government Accountants, which has championed increased incentives, still maintains that managers should be held accountable for performance, or lack thereof.)

Have you become discouraged by the lack of funding for operations and maintenance backlogs of your real property inventory? Are you looking for some type of financial support to help collect and validate real property data?

As painful as it may seem, the answer is simply to get started. While incentives may seem insufficient, consequences will have to be faced by agencies that do not perform.

If all chicken and egg dilemmas were this clear…


David Baxa
President and CEO
VISTA