Federal Asset Disposition Takes Center Stage

On Thursday morning, the Senate Homeland Security and Government Affairs Committee considered a bill that would streamline the disposition of underutilized or excess Federal Real Property. The Federal Real Property Assert Management Reform Act (S. 2178), which Senator Tom Carper (D-DE) introduced, if enacted, would remove many of the administrative requirements that make the disposition process unduly burdensome and allow agencies to capture a portion of the proceeds from a property sale. Currently, agencies cannot capture those funds, which doesn’t spur activity for property disposal.

This hearing comes a week after the House Transportation and Infrastructure Committee held an onsite hearing at the West Heating Plant in Washington, D.C. on the exact same subject. The need for the Federal Government to dispose of these excess properties has wide, bipartisan support, with the only disagreement being on how to accomplish the dispositions.

While the 112th Congress has significantly stepped up the effort to dispose of these assets, the focus is not a new one for Congress. In a 2003 report, the Government Accounting Office designated excess and underutilized property as an area that is at “high risk” for fraud and abuse within the federal government. This designation has spurred a recent flurry of draft legislation from both houses of Congress from both parties, as well as the President, to create an independent Commission similar to the Defense Department’s Base Realignment and Closure Commission to handle the analysis and disposition of these Federal assets. Of these proposals, only the Civilian Property Realignment Act (H.R. 1734), introduced by Subcommittee Chairman Jeff Denham (R-CA), has been approved by the full House.

Before today’s Senate Hearing, only the House Civilian Property Realignment Act had seen any movement. Today’s hearing could establish Senator Carper’s Bill as the Senate’s preferred version of the legislation, and if the rhetoric is any indication, we could see a compromise Bill circulated in the near future. The passage of any one of these Bills would reduce the administrative burdens currently hampering the disposition process and result in a sharp increase in acquisition opportunities across the country that could range from rural land to urban, Class A office buildings. In most versions of the legislation, this window of opportunity would be temporary, however, so purchasers looking for these opportunities will need to keep their eyes on the Feds in the coming months and years.

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