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» VISIT US ONLINE @ DSNEWS.COM COVER STORY LEGISLATIVE REVIEW Their shareholders and investors would be asking questions, and rightfully so. Yet taxpayers— somewhat similar to a corporate shareholder—are expected to sit idly by and watch their money squandered right in front of them, yet the government continues to engage in the same wasteful behavior year after year after year. Walls of Waste POINT— COUNTERPOINT The government's 14,000-plus property holdings consist of vacant buildings, partially occupied office complexes, derelict industrial facilities, old warehouses, empty "excess" courthouses, and abandoned shopping centers, according to policymakers. The General Services Administration (GSA) acts as the federal government's "landlord," procuring and managing space to meet the needs of other federal agencies. GSA is one of nine federal agencies that, collectively, own or manage 93 percent of federal real property. Federal data and analysis indicates GSA mismanages one of the government's largest portfolios of real property. In recent years, GSA has increasingly relied upon leasing to satisfy long-term needs of federal agencies, despite its existing inventory of government-owned properties not being used and already draining government resources. As of 2010, GSA leased more space than it owned, yet according to GSA's 2009 State of the Portfolio Report, nearly 40 percent of its assets were underperforming at that time, sitting empty, underused, and deteriorating. GSA's commissioner of public buildings service, Robert A. Peck, testified in 2010 that the average age of GSA's real property inventory was 46 years and nearly a third of the assets were older than the agency itself. Despite the significance of government waste from this matter and the sizeable revenue and savings that could be realized, the propertysurplus story is not very widely known to the general public. One man who has made it his personal crusade to spread the news and encourage others to demand action from their elected officials is Douglas Dennison, national sales coordinator for Rowell Auctions, Inc., in Florida. Dennison says he first became aware of the glut of vacant and abandoned government properties when President Obama gave his State of the Union address in January 2011. "He talked about saving money by selling government surplus properties," Dennison said. "The next month in his State of the Budget address in Baltimore, Maryland, he indicated there were 14,000 properties that we could sell to save billions for the taxpayers." With such large numbers at stake, in terms of both properties and tax dollars, Dennison was confounded. "If we could get the government to sell these properties, not only would it generate revenue that could help offset the federal deficit and save money by eliminating the holding costs footed by American taxpayers," Dennison said, "but the private sector buyers would be contributing to economic growth by hiring staff for the facility, stocking it with goods and services, paying property taxes, and all this positive activity would help elevate local market values and local economies, and the benefits would go on and on." Dennison and his employer, Tommy Rowell, CEO of Rowell Auctions, started out on a mission. With the slow-moving wheels of progress in Washington, they knew it would be a long process before any resolution came of the government's surplus of property holdings, but they've carried on, unwavering and impassioned for two years now. "We knew we should try to make a difference," Dennison said. "Yes, we were LEGISLATIVE REVIEW According to congressional estimates, the government's mismanagement of the old D.C. Post Office alone has cost taxpayers $6.5 million a year for more than a decade that it's been sitting vacant and underutilized. To maintain and secure its 14,000-plus underperforming assets, the federal government expends an estimated $1.6 billion a year in taxpayer funds. The Office of Management and Budget (OMB) has concluded consolidating the footprint of federal buildings and facilities, and selling or redeveloping high-value, but underutilized assets would generate $15 billion in revenue—and that's on top of the billions in future cost savings from trimming the government's property holdings. That doesn't count the additional revenue local municipalities could bring in if the properties were in private hands since government properties aren't subject to local area property taxes. "In order to see the robust economic recovery we all want, we need to deal effectively with the large volume of vacant and distressed properties throughout the country," Federal Reserve Governor Elizabeth A. Duke told a group at the Federal Reserve Bank of New York in a speech on supporting neighborhood stabilization last October. Mortgage lenders, servicers, investors, and other default servicing practitioners across the country have faced increasing pressure from government agencies at all levels pushing for the maintenance and disposal of vacant, foreclosed homes in a manner that is least disruptive to local communities. And per regulators, banks and other private holders of consumer debt are subject to strict accounting rules for the recordation of nonperforming assets and capital write-offs. Imagine if a bank were to hold on to moneydepleting assets like the government is doing. Blowing the Whistle TECH FOCUS F or Sale: Commercial building, 375,000 sq. ft., just blocks from the White House, one previous owner. It reads like an ad for premier office space in a prime location, but the property isn't for sale. It's an old, abandoned U.S. Post Office and annex, and one of more than 14,000 empty, underused federal buildings draining taxpayer money from the Treasury and from local communities. MARKET PULSE Amid budget cuts and promises to eliminate waste, the government is bleeding billions to maintain and secure vacant, underutilized federally owned properties. 63

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