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Members at Congressional Hearing in Empty Federal Building Fault Government for Sitting on Its Assets

March 22, 2012

Washington, DC – At an empty federal building that has been sitting vacant for years on prime real estate in the nation’s capital, leaders of the House Transportation and Infrastructure Committee today called for an end to the wasteful mismanagement and underutilization of federal assets across the country that costs taxpayers billions of dollars.

Transportation and Infrastructure Committee Chairman John L. Mica (R-FL) and Economic Development, Public Buildings and Emergency Management Subcommittee Chairman Jeff Denham (R-CA) led a Congressional hearing today at the empty Cotton Annex one block away from the National Mall.

“The federal government is sitting on thousands of underutilized and vacant properties,” Mica said. “We’ve held two previous hearings at the Old Post Office Building just a few blocks away, and the Administration finally announced a private developer to redevelop that property and improve its utilization. The Cotton Annex, where today’s hearing is being held, represents another opportunity for taxpayers to get a better return on their investment. We will address this problem one building at a time if necessary to ensure the government is not wasting taxpayers’ money by sitting on its assets.”

“GSA can’t keep sitting on valuable assets like this one,” said Denham. “Despite our budget deficit, GSA continues to operate as if it’s business as usual. This is unacceptable and costly to the taxpayer.

“We know there have been a number of proposals for the redevelopment of this site, yet GSA has acted on none of them. This is exactly why I introduced, and the House passed, the Civilian Property Realignment Act – to get agencies like GSA to get rid of or redevelop unneeded properties. Today, Senator Brown announced he will introduce CPRA in the Senate in bipartisan fashion, bringing this bill one step closer to becoming law.”

U.S. Senator Scott Brown (R-MA) testified at today’s hearing that he was introducing a Senate bill that would be companion legislation to Denham’s Civilian Property Realignment Act (H.R. 1734). H.R. 1734 would significantly improve federal real property management, and create savings by shrinking the federal footprint and selling or redeveloping underutilized buildings through a BRAC-like process. This legislation has the potential to save taxpayers approximately $15 billion.

“Fighting waste, fraud and abuse in the federal government is not a partisan issue,” said Senator Brown. “Saving taxpayer dollars is not a partisan objective. So I am pleased to announce that today, in a bipartisan effort, Senator Mark Warner and I are introducing the Civilian Property Realignment Act of 2012. Our bipartisan legislation takes the necessary steps to ensure the best use of federal property for taxpayers, because it’s time that the government put the best interest of the taxpayers first.”

For nearly a decade, the Government Accountability Office (GAO) has placed real property management on its list of “high risk” government activities, due to greater vulnerabilities to waste, fraud, abuse and mismanagement. In 2009, the operation of underutilized federally-owned buildings cost taxpayers $1.7 billion, and another $134 million for excess buildings.

The Cotton Annex is an empty 89,000 square-foot building occupying a substantially larger parcel of highly desirable but underdeveloped land in Washington, DC. Much of the prized site is taken up by a large parking lot. The building was most recently occupied by the Department of Agriculture, but has been vacant for the last five years. The Congressional Budget Office has conservatively estimated the sale value of the building and land at $150 million.

Because of the high value of the asset, the General Services Administration (GSA) – the federal government’s landlord – has options to get more value out of the property, including bringing in the private sector to redevelop it. However, GSA has announced no plans for the highly-valued property.

Today’s hearing highlighting the GSA’s and the federal government’s mismanagement of property follows hearings held earlier this Congress at the vacant Old Post Office Annex in Washington. That federal property has been underutilized for over a decade. Immediately prior to February’s hearing at the site, the GSA finally announced its selection of the Trump Organization to redevelop the site as a hotel. An earlier example of GSA working with the private sector to turn historic buildings to profitable use is the highly regarded renovation of the historic Tariff Building in Washington, which has been converted from a money-losing federal asset into the Monaco Hotel, which is generating federal revenue.

More information from today’s hearing can be found here.

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