Competing Interests Block Property Disposal

In its January 2007 update to its High Risk Series report, the Government Accountability Office (GAO) noted that real property disposal problems are “exacerbated” by “competing stakeholder interests,” adding that “agencies cite local interests as barriers to disposing of excess property.” Two recently reported instances of local interests put a real face on what GAO means by such barriers.

Kimberly Strassel, reporting in the September 7 edition of The Wall Street Journal, presented the case of the West Los Angeles Medical Center, Veterans' facility donated to the government in 1888, and comprising 387 acres in an upscale part of the city. Strassel noted the property is “more than twice the size of the National Mall” and “is surrounded by the mansions and playgrounds of the city's elite, including the Bel Air Country Club.”

According to Strassel, the Department of Veteran's Affairs in 2002 designated the West L.A. center as one of 18 sites that might be downsized, with extra land being used to produce more revenue for veterans' needs. Leasing the excess acreage could result in a $4 billion return to the VA, Strassel reported.

The obstacle to this strategy, Strassel said, comes in the form of an earmark from Senator Dianne Feinstein (D-CA), which would bar disposing or leasing of any of the ground. The goal would be to prevent “thoughtless” development of the area, Strassel said.

Meanwhile, on the other coast, 45 vacant Coast Guard beachfront housing units in Cape Hatteras are at the heart of other competing interests. Catherine Kozak, reporting in The Virginian-Pilot, noted that the Dare County Board of Commissioners unanimously agreed to zone the 7.5 acre area as a “natural historic district.” The area has been vacant since the Coast Guard relocated its headquarters to Fort Macon.

According to Kozak, Dare County has asked for Congressional assistance to transfer the property to the county as affordable housing for teachers and other public employees. The General Services Administration has said in the past that it wants to auction the property for market value.

It’s ironic that, just as the issue of surplus real property has come under the scrutiny of the US Congress, it is the political process itself that may block the disposal of two pieces of the inventory that are either completely vacant or greatly under-utilized. In this case, one hand truly has no idea of what the other is trying to do. Or, they just don’t care.

I certainly believe that teachers and public servants should have affordable housing, and that the potential development of largely open land in the middle of busy Los Angeles should be carefully considered. However, these two examples demonstrate how difficult the right-sizing of the Federal real property inventory can be.

If two under-utilized areas – one on each side of the country – can find themselves in the middle of a political quagmire, how hard will it be to dispose of inventory that’s more difficult to qualify as surplus or excess? Ultimately, our federal government cannot afford the cost of holding on to unused or under-utilized property. In addition, the federal government must have the latitude to realize market values for disposed inventory as an off-set against the high cost of addressing other urgent real property needs.

Is there a workable answer to this political situation? Perhaps shining a light on the irony is a start. Real property will remain on the GAO’s high-risk list unless competing stakeholder interests can be resolved. The logical place to start is where most of the activity is now happening: Capitol Hill.


David Baxa
President and CEO
VISTA