U.S. for sale - Uncle Sam's real estate play

federal_property_auction_2.top.jpg By Charles Riley, staff reporter


NEW YORK (CNNMoney) -- As Washington deficit hawks scour the federal budget for ways to trim the size of government, they are arriving at one idea with increasing frequency: Put government property on the auction block.

It's an opportunity rooted in the scale of federal holdings. The government owns somewhere in the neighborhood of 650 million acres of land peppered with 429,000 buildings.

That has lawmakers on both sides of the aisle salivating as they look for ways to make a dent in the budget deficit. And not just because the federal government has a lot of property it could unload, but because more than 10% of the buildings are of only marginal use.

The roster runs the full range: Lighthouses. Empty buildings no longer used. Big plots of land that once housed government depots.

In fiscal year 2009, the most recent year for which numbers are available, 45,190 buildings were categorized by the government as underutilized. On top of those, 10,327 were counted as "excess" or unwanted.

The government's push to sell off excess property started under President George W. Bush. The first step was figuring out how many buildings it owned.

"There was no inventory of what the federal government owned," said Clay Johnson III, deputy director for management at the Office of Management and Budget during the Bush Administration. "We asked all agencies to categorize and catalog their holdings."

Once catalogued, the Bush administration encouraged agencies to scale back. The Obama administration followed suit. In June, President Obama directed government agencies to save $8 billion by selling excess property and making other cuts.

The calls for reform continue to mount. Obama's fiscal commission incorporated the idea into its budget-slashing proposal, and a bill introduced by a key Republican earlier this month suggested as much as $15 billion could be saved.

Compared to the $3.5 trillion annual federal budget, that's chump change.

Despite all the talk, massive savings aren't exactly stacking up.

In 2009, government agencies sold only 2,200 buildings -- while more than 10,000 were identified as "excess." The previous year, only 835 buildings were sold, according to the General Services Administration.

So if 10,000 buildings were classified as excess, why were only 2,200 unloaded?

Law requires the GSA, which acts as the government's property manager, to offer unwanted property to states, local governments and nonprofit organizations, at discounts of up to 100%, before auctioning the property.

In addition, surplus government buildings must be offered up as housing for the homeless before being sold.

What's up for grabs: The result is a GSA auction website that currently lists a mere 23 properties, with nine open for bidding.

Curiously, the government list includes three lighthouses -- two in New Jersey and one in Massachusetts. The Massachusetts property attracted 29 bids and recently sold for $190,000.

Another property up for auction: Point Stratford, a sprawling 77-acre military instillation formerly used by the Army to manufacture engines.

There are also a few more conventional properties available, including a former Social Security Trust building in Hackensack, N.J., that is attracting bids in excess of $500,000.

Solutions: In a 2009 letter to Rep. Ron Kind, Congressional Budget Office Director Douglas Elmendorf laid out ways to increase revenue from the sale of federal property.

Revenue could be increased by directing the GSA to take all surplus buildings directly to auction, bypassing the cumbersome review currently required, Elmendorf said.

He also proposed changing the incentive structure for federal agencies in an effort to monetarily reward them for reducing their building count.

Meanwhile, the Obama administration says it has already identified $1.7 billion in savings, and has sold an office building in Omaha, Neb., for $1.3 million, one in Springfield, Mass., for $2.5 million, and one in Bethesda, Md., for $12.4 million. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,805.41 127.51 0.76%
Nasdaq 4,483.72 30.92 0.69%
S&P 500 1,964.58 13.76 0.71%
Treasuries 2.27 -0.00 -0.09%
Data as of 3:37pm ET
Company Price Change % Change
Ford Motor Co 13.78 -0.62 -4.31%
Microsoft Corp 46.13 1.11 2.47%
Apple Inc 105.22 0.39 0.37%
Bank of America Corp... 16.72 0.12 0.72%
Yahoo! Inc 43.50 0.90 2.11%
Data as of Oct 24

Sections

New York headlines took a straight forward and direct approach with NYC's Ebola news. More

The midterm elections are around the corner, and the economy remains a top concern. With unemployment down and inflation low, why do people still feel the economy stinks? More

Shares of Facebook recently topped $80. They've more than quadrupled from their post-IPO lows of two years ago. Can Mark Zuckerberg keep the momentum in mobile going? More

Host a furniture market. Here's how small town High Point, N.C. rakes in this much money -- twice a year. More

If you're looking to fly this holiday season, the clock's ticking to get the best prices. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.