Friday, October 08, 2010

When government manages assets

Congressman Mica, R-FL, has put out a report titled "Sitting on Our Assets" on how the federal government manages its assets. Would any businessman marshaling limited resources make these sorts of mistakes with his own money?
For instance, the General Services Administration (GSA) finally got around to selling a 10-story office building in downtown Bethesda that’s been vacant for eight years when the real estate market was in the tank, forcing it to accept less than the minimum suggested bid for the property – even though it’s located just eight miles from downtown D.C. and comes with high-density zoning exemptions.

To make matters worse, GSA officials are now trying to lease a similarly-sized office building in Bethesda for an agency whose lease expires next year. Certain GSA employees clearly have no idea what their counterparts are doing.

Other underutilized properties include the only partially occupied Old Post Office Building in D.C., which loses $6.5 million a year. In 2005, GSA determined that simply leasing the building to private developers would yield a $21 million profit, but of course the agency has taken no steps during the last five years to make the switch. When other people’s money is at stake, what’s the rush?

Here’s another example right here in D.C: Ten years ago, the Government Accountability Office predicted that space would be needed for 49 federal judges at the E. Barrett Prettyman Courthouse and Bryant Annex. There are now 10 less judges hearing cases there than projected, and two less than when the annex was proposed – leaving 12 empty chambers. GAO has admitted that it overbuilt the facility, costing taxpayers $56 million for unneeded construction and $4 million more for annual maintenance and operations.

Under a bizarre deal, the new Department of Transportation headquarters, also located in D.C., was “built on federal land, transferred to the developer, who in turn constructed the building leased back to the U.S. government with no right of ownership…the taxpayer will pay for this structure several times over without any ownership interest in the building,” according to the report. Who signs off on these “deals”?
The sad thing is that this is probably just the tip of the iceberg. Without any real incentives, bureaucrats will make these sorts of mistakes and then shrug them off. Maybe it's time to talk about outsourcing some of this asset-management to a private organization.

2 comments:

ic said...

Follow the money? Follow the developers', the buyers', the landlords' trails of campaign contributions, you would understand what happened. As they say, nothing is what it seems in Washington.

"Without any real incentives, bureaucrats will make these sorts of mistakes and then shrug them off." Mistakes or malfeasance? There are a lot of things that "incompetents" could accomplish with a shrug. We are trained to be suspicious of wise guys and let wiser "incompetent" guys get away with much more. Anyway, bureaucrats don't make decisions, who is the puppet master?

equitus said...

And bear in mind the Federal Government is the largest property owner in the nation, by far.