Federal Assets Sale and Transfer Act (FASTA)

In an effort to address long-standing obstacles to the timely disposal of unneeded federal real property, Congress passed the Federal Assets Sale and Transfer Act of 2016 (FASTA, P.L. 114-287). FASTA was designed to streamline and simplify real property disposal by establishing a centralized—but temporary—process wherein a board of real property experts recommends properties to be disposed of in three rounds. If the Office of Management and Budget (OMB) approves the recommendations for a given round, federal agencies must then dispose of the properties. This report discusses the status of the board's recommendations and agencies' efforts to implement them.

Background

As a consequence of changing space needs, federal agencies hold thousands of properties—particularly buildings—they may no longer need. In FY2020, federal agencies owned 12,679 buildings that were vacant (unutilized) and another 3,023 that were partially empty (underutilized).¹ Agencies are required to dispose of their unutilized and underutilized space in a timely and efficient manner, generally doing so through the disposition process managed by the General Services Administration (GSA).

The steps to GSA's disposal process are established by statute.² GSA must first offer unneeded space to other federal agencies, then offer to convey it at no cost to state and local governments and qualified nonprofits for statutorily defined public purposes, then offer to sell the property to those same governmental and nonprofit entities for a wider range of purposes and, finally, put it up for sale through a public auction. Additional information about the disposal process may be found in Appendix.

The inability of agencies to dispose of unneeded space in a timely manner is one of the primary reasons the Government Accountability Office (GAO) has included real property management on its list of "high-risk" management issues since 2003.³ Agencies have argued that they have been hampered by a lack of funding to prepare buildings for disposition and by the amount of time it takes to complete each of the mandatory steps in the disposal process.⁴

FASTA was designed to centralize and streamline the disposal process. Rather than have each landholding agency identify individual properties for disposal, an independent board is authorized to recommend the disposal of dozens of properties in three distinct rounds. In addition, FASTA provides a mechanism for funding the disposal costs of each round and exempts properties selected by the board from some of the statutory steps in GSA's disposal process.

Scope

FASTA applies to all federal executive branch agencies and wholly owned government corporations, but Section 3 excludes several categories of properties, including properties on military installations, most Coast Guard properties, and properties located outside the United States operated or maintained by the Department of State or the U.S. Agency for International Development. Properties controlled by Indian and Native Alaskan tribes, the U.S. Postal Service, and the Tennessee Valley Authority are also excluded, as are properties used for certain federal programs or power projects. The OMB director may also exclude properties for reasons of national security.

Development of Recommendations

Agency Recommendations

The first step in disposing of unneeded properties under FASTA is for federal landholding agencies to develop their own recommendations for reducing unused space and operating and maintenance costs. Agencies are required to submit these recommendations to GSA and OMB not later than 120 days after the start of each fiscal year, along with specific data on each of the properties they own and lease.⁵ Agencies must report the following data for each property:

• age and condition,
• operating costs,
• history of capital expenditures,
• sustainability metrics,
• square footage, and
• the number of on-site federal employees.

Agency recommendations must categorize properties according to whether they should be sold, transferred, exchanged, consolidated, relocated, redeveloped, reconfigured, or outleased—a range of options referred to collectively as "realignment." Agencies may also recommend properties be declared excess or surplus if they have not already been so designated.

Review and Revision of Agency Recommendations

FASTA requires the GSA administrator and the OMB director to establish criteria for developing recommendations, including utilization rate standards that apply to each category of space, such as office space and warehouse space. In addition, FASTA specifies 10 factors GSA and OMB must take into account when establishing the criteria:

• 1. the extent to which a property could be sold, redeveloped, or outleased in a manner that would produce the best value;
• 2. the extent to which the operating and maintenance costs would be reduced through the consolidation, colocation, and reconfiguration of space;
• 3. the extent to which a property aligns with the current mission of the agency;
• 4. the extent to which the utilization rate is being maximized and is consistent with nongovernment standards;
• 5. the potential costs and savings over time;
• 6. the extent to which leasing long-term space would be reduced;
• 7. the extent to which there are opportunities to consolidate similar operations across or within agencies;
• 8. the economic impact on existing communities in the vicinity of the property;
• 9. the extent to which public access to agency services is maintained or enhanced; and
• 10. the extent to which energy consumption specifically would be reduced.

FASTA established three rounds of disposals—the High-Value Asset (HVA) Round, Round One, and Round Two. OMB and GSA must apply the criteria to the agency recommendations developed in Round One and Round Two. The criteria were published on February 10, 2021, and were used by OMB and GSA during the development of their Round One recommendations.⁶

Public Buildings Reform Board

The OMB director submits the list of revised recommendations to a newly established Public Buildings Reform Board (PBRB). FASTA requires the board to have at least five members (the threshold for a quorum) and as many as seven, including one member who serves as chairperson. The President appoints the chairperson with the advice and consent of the Senate. The other members are also appointed by the President but do not need Senate approval. In making appointments to the board, the President is required to consult with the Speaker of the House of Representatives regarding two members, the majority leader of the Senate regarding two members, the House minority leader regarding one member, and the Senate minority leader regarding one member. FASTA directs the President to ensure that the board includes members with expertise in commercial real estate, space optimization and utilization, and community development. Each board member serves a six-year term, and the board itself terminates six years from the date a quorum of members was appointed.⁷

President Trump appointed five board members between May 1 and May 10, 2019: D. Talmage Hocker, Mary Phillips, Nick J. Rahall, Angela Styles, and David L. Winstead.⁸ Two members resigned in 2022—Angela Styles effective January 31 and Mary Phillips effective April 30—leaving the board without a quorum and therefore unable to conduct business.⁹ On July 11, 2022, President Biden nominated Jeffrey R. Gural to serve as the board's chairperson.¹⁰ As of October 27, 2022, the Senate had not approved the nomination. The board is to terminate May 10, 2025.

The board is required to review the recommendations submitted by OMB, but is not bound by them. The board is required to perform an independent review of agency inventories and it may reject, accept, or modify OMB's recommendations and add recommendations of its own. As part of the review process, the board is required to develop an accounting system to help in evaluating the costs and returns of various recommendations. The board has access to the same data that agencies provided to OMB and GSA, and agencies are required to provide any additional information the board requests. In addition, the board may receive and review proposals submitted by state and local officials and the private sector, which the board is required to consider. The board has held seven public meetings while developing its HVA round and Round One recommendations.¹¹

FASTA required the board to submit a set of recommendations to OMB for each of the three rounds. The recommendations for the HVA round had to consist of at least five federal properties to sell that were not listed as excess or surplus, with a total estimated fair market value between $500 million and $750 million.¹² The board had to submit the HVA recommendations not more than 180 days after the date the board reached a quorum—a deadline of November 6, 2019. The board submitted its HVA recommendations on October 31, 2019.¹³ OMB rejected the initial submission on November 27, 2019.¹⁴ Under FASTA, the board has 30 days to submit a revised set of recommendations in cases where OMB disapproves the initial submission. The board submitted a revised set of recommendations on December 27, 2019, which OMB approved on January 24, 2020.¹⁵

The recommendations for Round One had to have a total of value of transactions—the estimated proceeds and costs associated with executing board recommendations—of no more than $2.5 billion. The Round One recommendations had to be submitted no later than two years from the date the board submitted its revised set of HVA recommendations—setting a deadline of December 27, 2021. The board submitted its Round One recommendations, with a total value of transactions below the $2.5 billion threshold, on December 27, 2021.¹⁶ OMB rejected these recommendations on January 25, 2022.¹⁷ With the resignation of Angela Styles on January 31, 2022, the board lacked a quorum and was unable to resubmit a revised set of recommendations within 30 days from the date of OMB's disapproval. Round One therefore terminated.¹⁸

The recommendations for Round Two must have a total value of proceeds and costs of no more than $4.75 billion. They must be submitted no earlier than three years from the date the board submitted its Round One recommendations—a deadline of December 27, 2024. As the board has not had a quorum since January 31, 2022, it has been unable to conduct official business toward developing the Round Two recommendations.

Review by OMB

The OMB Director has 30 days to review each set of recommendations. If the director approves all of the board's recommendations, then he must submit a copy of the recommendations to Congress along with a certification of his approval. If the director disapproves some or all of the board's recommendations, he must submit a report to Congress and the board identifying the reasons for disapproval, and the board has 30 days to submit a revised list of recommendations to the Director. If the Director approves all of the revised recommendations, he must submit a copy of the revised recommendations along with a certification of approval to Congress. If the Director does not submit a report within 30 days of the receipt of the commission's original or revised recommendations, then the process terminates.

Implementation

Agencies must work in consultation with GSA and within their existing authorities to implement board recommendations, although they may contract with real estate companies for assistance. The OMB director has the authority to exclude a property from the board's recommendations if he determines that the property is suitable for use as a public park or recreation area by a state or local government, although they have not used this authority. Federal agencies must begin implementing an approved set of recommendations within two years from the date Congress received them, and complete implementation within six years. After OMB approved the HVA recommendations in 2020, the agencies began implementing them that same year.¹⁹

Certain sections of the U.S. Code that pertain to real property conveyances for public benefit would not apply to FASTA recommendations. For example, properties recommended for disposal do not have to be screened for no-cost transfer to state and local governments and qualified nonprofits.²⁰ The McKinney-Vento Homeless Assistance Act still applies to properties that are included in the approved set of recommendations. However, FASTA amends McKinney-Vento by shortening the screening and application process for these properties.

FASTA requires the Comptroller General to monitor and review agencies' implementation activities and report to Congress his findings and recommendations.²¹ In addition, the act precludes actions taken pursuant to recommendations from judicial review.

Environmental Considerations

If the board recommends the disposal of a property on which hazardous material was stored for more than one year, known to have been released, or disposed of, federal agencies may agree to transfer the deed of such property only under certain conditions. First, the deed must comply with the Comprehensive Environmental Response, Compensations, and Liability Act of 1980 (42 U.S.C. §9601 et seq.). Second, the head of the disposing agency must certify either that (1) the cost of all environmental restoration, waste management, and other environmental compliance activities that would otherwise be paid for by the disposing agency are equal to or greater than the fair market value of the property; or (2) if such costs are lower than fair market value, the recipient of the property agrees to pay the difference between fair market value and such costs.

If the agency head determines that the cost of compliance would exceed the property's fair market value, the agency may pay the recipient of the property the lesser of: (1) the amount by which the costs incurred by the recipient for environmental compliance exceed fair market value, or (2) the amount by which the costs that would have been incurred by the disposing agency exceed fair market value.

The disposing agency must provide to the property recipient all of the information it possesses on environmental restoration, waste management, and compliance activities.

Funding

FASTA established both a salaries and expenses account to fund the board's administrative and personnel costs and an asset proceeds and space management fund (APSMF) to implement recommended actions. Both accounts may receive funds from appropriations but the APSMF is also authorized to receive the proceeds generated by the sale of real property pursuant to the board's recommendations. Through FY2022, the salaries and expenses account has been appropriated approximately $12 million and the APSMF $50 million.²² In addition, GSA has collected $193 million in revenue from the sale of HVAs, but those funds must be made available through the appropriations process before they can be used to implement recommendations.²³

Agency Retention of Net Proceeds

After the board terminates, federal agencies are authorized to retain the net proceeds from the disposal of real property they control. Net proceeds may be used only for further disposal activities and only as authorized in annual appropriations acts. Any net proceeds not expended for disposal activities must be used for deficit reduction.

Real Property Database

FASTA requires the GSA administrator to establish and maintain a "single, comprehensive, and descriptive" database of all real property under the control of federal agencies. The database must include, for each property, its

• size in square feet and acreage;
• geographic location, including a physical address and description;
• relevance to the agency's mission, presently and in the future;
• level of utilization, including whether it is excess, surplus, underutilized, or unutilized, and the number of days it has been so designated;
• annual operating costs; and
• replacement value.

The database must permit users to search and sort properties, and download data. Once operational, the database must be made available, at no cost, to federal agencies and the public. To meet this requirement, GSA established the Federal Real Property Profile Management System, which is publicly available and includes the information required by FASTA as well as other data on agency portfolios.²⁴

Implementation

High-Value Asset Recommendations

As the first step in identifying high-value properties for disposal, GSA solicited data and recommendations from landholding agencies on April 14, 2017, November 30, 2017, and December 7, 2018.²⁵ GSA then eliminated properties excluded from FASTA, such as properties on military installations or owned by the U.S. Postal Service.²⁶ From the remaining 109,179 eligible properties, GSA identified 10,756 "priority assets," each of which would be likely to generate at least $1 million in sales proceeds.²⁷ GSA further refined the list by assessing factors such as building utilization rates and local real estate markets.²⁸ Ultimately, GSA submitted a list of 29 properties to the board.²⁹ GSA's analysis and recommendations drew primarily on data from landholding agencies and the Federal Real Property Profile (FRPP).³⁰

The board conducted its own analysis of FRPP data to identify additional high-value asset candidates, although this step did not result in any new properties for consideration.³¹ Next, the board gathered additional information from the landholding agencies that owned the properties on the high-value candidate list.³² This information included

• appraisals,
• zoning analyses,
• environmental conditions,
• historic preservation factors,
• property condition reports,
• relocation plans, and
• title documents.³³

The board assessed the candidates using this information as well as the 10 factors identified in Section 11 of FASTA.³⁴ Further data were collected through meetings with landholding agencies and visits to the properties.³⁵ In addition, the board solicited input through four public meetings—two in Washington, DC, one in Los Angeles, CA, and one in Denver, CO—and through consultations with congressional, state, and municipal officials.³⁶

The board ultimately placed each candidate property in one of three categories: suitable for submission as an HVA, potentially suitable for future rounds, and not suitable for FASTA disposal.³⁷ It submitted its list of 14 HVAs, listed below, on October 31, 2019.³⁸

• 1. Auburn Complex, Auburn, WA (GSA)
• 2. Sacramento Job Corp Center (excess land only), Sacramento, CA (Department of Labor)
• 3. Southwest Fisheries Science Center, Pacific Grove, CA (Department of Commerce)
• 4. Information Operations and Research Center (IORC) and Shelley-New Sweden Park and Ride, Idaho Falls, ID (Department of Energy)
• 5. Edison Job Corp Center (excess land only), Edison, NJ (Department of Labor)
• 6. U.S. Geological Survey Menlo Park Campus, Menlo Park, CA (GSA)
• 7. Ronald Reagan Federal Building and Courthouse, Harrisburg, PA (GSA)
• 8. Robert A. Taft Laboratory, Cincinnati, OH (Department of Health and Human Services)
• 9. Alice Hamilton Laboratory, Cincinnati, OH (Department of Health and Human Services)
• 10. Federal Archive and Records Center, Seattle, WA (National Archives and Records Administration [NARA])
• 11. Nike Site (excess land only), Gaithersburg, MD (Department of Commerce)
• 12. Chet Holifield Federal Building, Laguna Nigel, CA (GSA)
• 13. Denver Medical Center, Denver, CO (Department of Veterans Affairs)
• 14. WestEd, Los Alamitos, CA (Department of Education)

In a letter dated November 27, 2019, then-acting OMB Director Russell Vought notified the board of his decision to disapprove the initial set of recommendations:³⁹

The limited supporting information does not enable OMB to assess the feasibility of selling the properties within FASTA's required timeframe and does not support our responsibility to ensure the risks to the government posed by the sale of the proposed properties are acceptable to the taxpayer. OMB also requires a financial execution plan that demonstrates that the high value projects identified by the Board can be completed with the Board's available funds.⁴⁰

The PBRB resubmitted its HVA recommendations, along with the documentation requested by OMB, on December 27, 2019.⁴¹ The revised list included 12 properties, all of which were included in the initial set of recommendations. Two properties from the initial recommendations were not included in the revised submission: the Robert A. Taft and Alice Hamilton laboratories in Cincinnati, OH. The board removed these properties after learning of potential delays in construction of the facilities that would replace them.⁴² OMB approved the revised recommendations on January 24, 2020.⁴³ OMB subsequently removed its approval for the sale of the Seattle Federal Archive and Record Center for reasons discussed below. The remaining 11 high-value properties are in various stages of the disposal process.

Seattle Federal Archive and Record Center

The Seattle archives facility holds a range of permanent records created by federal agencies and courts in Alaska, Idaho, Oregon, and Washington.⁴⁴ Among the most commonly requested records are those pertaining to Pacific Northwest Tribes and the Chinese Exclusion Act of 1882, which prohibited the immigration of Chinese laborers.⁴⁵

The board noted that the facility, which was built in 1947, was not adequate for long-term storage and that the landholding agency, NARA, had expressed its "willingness and desire to consolidate operations at more modern NARA facilities."⁴⁶ By selling the Seattle archives property, the board estimated that the government would avoid $356,753 in annual operating and maintenance costs and $2,399,302 in deferred maintenance costs.⁴⁷

Congressional Opposition to Sale

On the same day that OMB approved the revised recommendations, some Members of Congress representing Alaska, Idaho, Oregon, and Washington sent a letter to OMB opposing the sale of the Seattle archives.⁴⁸ The letter stated that the archives house records that are "vital to a variety of stakeholders in our states, including state agencies, universities, researchers, scientists, tribal members, and students."⁴⁹ The letter further stated that the PBRB did not consult with key stakeholders, including Native American and Alaska Native tribes in the region and congressional delegations with an interest in the contents of the facility.⁵⁰ The letter further questioned whether the PBRB properly evaluated the potential negative consequences of relocating the archives, such as the additional burden to researchers who would have to travel to California or Missouri and the loss of employment for the archive staff in Seattle.⁵¹

Washington State Opposition to Sale

On February 25, 2020, the Attorney General of the State of Washington, Bob Ferguson, sent a letter to the PBRB asking the board and OMB to "reconsider and reverse their decision to close and sell the Federal Archives and Record Center" in Seattle.⁵² Ferguson argued that the decision to close the facility was "illegal and made without consulting local, state, and tribal officials," as required by FASTA.⁵³ Ferguson noted that among the records that would be relocated out of Washington were documents related to the internment of Japanese-Americans during World War II, historical tribal and treaty documents for 272 federally recognized tribes, and records related to the Chinese Exclusion Act that Chinese-Americans have used to research their ancestry.⁵⁴ The letter concluded with Ferguson's assertion that while he hoped to avoid litigation, he was "preparing to take legal action to defend access to these important historical records and prevent your agency's decision from taking effect."⁵⁵

Washington State Lawsuit to Halt Sale

On January 4, 2021, Ferguson—along with 29 federally recognized tribes, Alaskan tribal entities, the State of Oregon, and nine community organizations—filed a lawsuit in the U.S. District Court for the Western District of Washington, against the federal government⁵⁶ to halt the disposal of the Seattle archives.⁵⁷ The lawsuit claimed that the sale would violate FASTA and that the defendants had failed to properly account for the importance of the archives to the Pacific Northwest region and had "refused to consult or cooperate with local stakeholders, including tribal governments, in making the decision to sell the property." On February 16, 2021, the U.S. District Court for the Western District of Washington granted a preliminary injunction to stop the sale of the Seattle archives.⁵⁸

Federal Legislation to Prohibit Sale

On March 25, 2021, Senator Patty Murray (WA) introduced legislation that would amend FASTA to address tribal concerns about the sale of the Seattle archives.⁵⁹ The bill would prohibit the sale of any property under FASTA procedures where (1) the federal government failed to consult with the appropriate tribal governments, or (2) the sale would hinder a tribe's access to federal services offered at the facility. On July 9, 2021, Representative Pramila Jayapal (WA) introduced identical companion legislation (H.R. 4386).⁶⁰ After committee referral, the House and Senate have not taken further action on these bills.

OMB Withdraws Approval for Sale

On April 8, 2021, OMB sent a letter to the PBRB withdrawing its approval of the sale of the Seattle archives. The letter stated that OMB reached this decision because "the process that led to the decision to approve the sale of the Federal Archives and Record Center is contrary to this Administration's tribal consultation policy" which must be "meaningful and robust."⁶¹ The letter stated that any future efforts to sell the Seattle archives must be preceded by "meaningful and robust tribal consultation" and comply with the tribal consultation procedures established in the memorandum⁶² issued by President Biden on January 26, 2021.⁶³

Status of High-Value Asset Sales

According to the PBRB, the 11 remaining HVAs are in various stages of disposal, and one property—the IORC and Shelley-New Sweden Park and Ride—was sold in two separate transactions.⁶⁴ Of the 12 properties GSA has brought to market, including the split sale of the IORC and Park and Ride in Idaho Falls

• Ten properties have been sold for a total of $193,603,006,⁶⁵ and
• Two properties have not been awarded for sale

Table 1 below provides the status of each property as of October 27, 2022.

Round One Recommendations

FASTA required the board to submit its Round One recommendations not later than two years after it transmitted its HVA recommendations. (The law required three rounds of disposals: the high-value round, Round One, and Round Two.) On December 27, 2021, the board met this deadline and submitted its Round One recommendations to OMB.⁶⁶ The recommendations were part of a broader report that detailed the process by which the recommendations were developed for that round.⁶⁷

In the report, the board described "enhancements" it made in its Round One procedures, which were based on feedback from OMB as well as its own observations. These enhancements included

• having earlier and more frequent engagement with OMB,
• increasing coordination with federal agencies,
• conducting additional stakeholder engagement,
• confirming the legally permitted and likely use of the property with the local jurisdiction, and
• collaborating with GSA on the drafts of the reports for each round.⁶⁸

The board also described the steps it took to refine its property screening and valuation methods, including

• identifying new properties for analysis,
• reviewing recommendations with agency and other stakeholders,
• accounting for proceeds and long-term taxpayer returns,
• prioritizing the properties for additional due diligence and valuation, and
• documenting thoroughly the rationale for the status of each property viewed by the board.⁶⁹

According to the Round One report, the board's initial step in identifying candidates for disposal was to assess more than 400,000 properties in the FRPP.⁷⁰ The board applied filters to eliminate certain properties from consideration, such as assets exempt from FASTA, and then prioritized the remaining properties based on their likelihood to meet FASTA's goals, including generating revenue and avoiding costs.⁷¹ Of the 414 properties that remained, agencies supported disposing of 75, and of those, the board recommended 15 properties for disposal:⁷²

• 1. Agricultural Research Service facility, Glenn Dale, MD (U.S. Department of Agriculture)
• 2. Fort Worth Federal Center, Fort Worth, TX (GSA)
• 3. Gary Job Corps Parcel 4, San Marcos, TX (Department of Labor)
• 4. Goddard Space Flight Center Area 400, Greenbelt, MD (National Aeronautics and Space Administration)
• 5. Gus J. Solomon Federal Courthouse, Portland, OR (GSA)
• 6. J. Will Robinson Federal Building, Provo, UT (GSA)
• 7. Jeffersonville National Processing Center, Jeffersonville, IN (GSA)
• 8. Mount Vernon Federal Building, Mount Vernon, IL (GSA)
• 9. Oklahoma City Property Management Depot, Oklahoma City, OK (GSA)
• 10. Racine Social Security Administration District Office, Racine, WI (GSA)
• 11. Richard B. Anderson Federal Building, Port Angeles, WA (GSA)
• 12. Rosa Parks Federal Building, San Antonio, TX (GSA)
• 13. San Antonio Federal Building West, San Antonio, TX (GSA)
• 14. White Oak Parcel K, Silver Spring, MD (GSA)
• 15. William L. Beatty Federal Building and Courthouse, Alton, IL (GSA)

The recommendations included a narrative that described "enhancements" in the recommendation process that the board implemented after its experience with developing the HVA list.⁷³ The enhancements included "additional stakeholder engagement" and "earlier and more frequent engagement with OMB."⁷⁴ The narrative also stated that the board had identified "approximately two dozen additional properties for disposal or consolidation" but had deferred them to Round Two due to the amount of stakeholder coordination needed and the potential lack of funding available to implement those recommendations.⁷⁵

On January 26, 2022, OMB rejected the board's Round One submission, citing a lack of information on project implementation costs and stakeholder outreach.⁷⁶ On February 24, 2022, the board notified OMB that it could not resubmit a revised set of recommendations because it no longer had five members—the minimum needed to meet FASTA's quorum requirement.⁷⁷ Two members of PBRB, Angela Styles and Mary Phillips, resigned after the board submitted its Round One recommendations.⁷⁸ On July 11, 2022, President Biden nominated Jeffrey R. Gural to be the chairperson.⁷⁹ As of October 27, 2022, the Senate had not approved the nomination.

Implementation Issues

Some argue there are indications that the process through which FASTA properties are identified, receive funding for disposal costs, and are sold has weaknesses that undermine the law's objectives. As discussed below, a lack of reliable data may hinder the selection of candidates for disposal, and uncertainty over upfront funding for disposal costs may disincentivize agencies from participating in FASTA. In addition, selling properties via online auction rather than with the assistance of brokers may reduce the number of bidders and reduce the amount of revenue generated.

Quality of Real Property Data

Federal landholding agencies and the board both used the FRPP extensively when developing recommendations.⁸⁰ The board and some agency officials determined that "there are extraordinary issues with both data gaps and data integrity within the FRPP."⁸¹ The board found that key data elements were inaccurate and incomplete, such as utilization rates, operating and maintenance expenses, and tenant headcounts.⁸² As a result, the board and some agency officials reported that the "lack of available and reliable data made it difficult to identify and recommend high-value real property disposal candidates"⁸³ When the board initially evaluated the Auburn Complex as a potential high value asset, for example, it used data from the FRPP which listed seven of the eight warehouses on the property as "utilized."⁸⁴ Information from other sources contradicted the FRPP, and it was eventually determined that all of the warehouses were vacant and "had been vacant for some time."⁸⁵ The Auburn Complex was included in the board's HVA recommendations⁸⁶ and sold for $80 million, making it the largest FASTA disposal to date.⁸⁷ Experiences such as this led the board to conclude that "decisions cannot be driven by data due to lack of quality" and that the success of "future FASTA disposals and consolidations is contingent, in part, on overcoming this challenge."⁸⁸

Funding Availability

FASTA was structured so that the net proceeds generated by the disposal of high-value properties would be available to fund the disposal of properties in future rounds. This provision addresses a common concern expressed by landholding agencies—that the lack of up-front funding to cover the costs associated with disposal has hindered efforts to reduce the number of underutilized and vacant properties in their portfolios.⁸⁹ Disposal costs often include

• historic preservation assessments,
• environmental assessments and remediation,
• marketing,
• sales transactions, and
• the relocation of federal employees.

Without dedicated funding, agencies that seek to dispose of a property generally divert funds from other accounts to cover the costs, such as operations and maintenance or salaries and expenses.⁹⁰ FASTA's authority to provide upfront funding has incentivized agencies to move forward with disposals that they had previously deferred due to cost, such as the Nike Site (Department of Commerce) and Menlo Park (Department of Commerce), both of which were among the HVA recommendations.⁹¹

FASTA funding is not automatically available to cover disposal costs—Congress can consider whether to provide access to those funds through the appropriations process. The board has expressed concern about the implications of this process, noting that

because the timing of real estate projects rarely coincides with the federal budget and annual appropriations process, there are uncertainties as to when and how much funding will be available to use toward future upfront costs in subsequent rounds.⁹²

These uncertainties could "dramatically affect the number and type of properties recommended" in future rounds, potentially limiting recommendations that might have higher upfront costs, such as consolidating properties.⁹³ The lack of assured upfront funding may also reduce the incentive for some agencies to participate in FASTA.⁹⁴

Through FY2022, the salaries and expenses account has been appropriated approximately $12 million and the APSMF $50 million.⁹⁵

Sale by Auction

GSA has the authority to sell federal property with the assistance of a commercial broker. GSA had considered using brokers under a strategy developed in 2020, when the board decided to sell the HVAs as a single portfolio.⁹⁶ GSA issued a "Sources Sought" notice to determine whether there were "viable and qualified" real estate firms that could provide the required services.⁹⁷ According to the notice, brokers would be required, among other things, "to generate significant local, regional, national, and international interest" in the properties and ensure that sales maximize proceeds to the government.⁹⁸ When the board subsequently decided to sell the HVAs individually rather than as a single portfolio, GSA opted not to use brokers and instead conducted the sales on its auction site, GSA Auctions. Through GSA Auctions, bidders compete directly with each other until the highest bid is unchallenged.⁹⁹ If the bid is accepted, the winner must pay for the property in full by the closing date.¹⁰⁰

The board has argued that selling HVAs through GSA Auctions is "inappropriate" because "it is unlikely to result in maximizing value for the federal government and for taxpayers."¹⁰¹ In its report on the high-value asset round, the board identified three reasons that auctions were "not recommended" as a method of disposal:

1. The private sector is largely unaware of the Government's auction platform, so the largest companies and developers likely would not participate without extensive outreach.

2. GSA Auction process requires bidders to complete all due diligence up front, before they know whether they have been selected as the purchaser or not. Many companies do not want to take on those expenses before they have been selected, so either they choose not to participate or submit a lower offer.

3. Using an auction platform creates certainty but it does not usually achieve highest and best use in larger, more complex transactions.¹⁰²

The board therefore recommended that GSA contract with a private brokerage firm to manage the marketing and sale of FASTA properties in both the HVA round and in Round One.¹⁰³ An additional benefit of using brokers, the board noted, was that they had expertise in complex real estate transactions—such as consolidation and redevelopment—that often have the potential to "generate significant sales proceeds or realize significant cost avoidance."¹⁰⁴ The board identified the use of auctions instead of brokers as a central reason "that the Federal disposal framework urgently needs comprehensive reform."¹⁰⁵

Concluding Observations

At least one of the PBRB's concerns about FASTA implementation may have implications beyond the scope of the recommendations. The board consistently advocated for brokerage firms to assist GSA with the sale of unneeded federal properties, arguing that the expertise and visibility brokers provide would likely generate greater revenue than selling those same properties at auction.¹⁰⁶ Given that the government has 7,697 vacant buildings—a fraction of which would be disposed of under FASTA—agencies will continue to face the choice of whether to sell a surplus building by auction or broker in the future.¹⁰⁷

There is limited data on real property sold through GSA Auctions, and no centralized data on the extent to which federal agencies use brokers to sell unneeded real property. Obtaining data on broker-based sales of federal property would be necessary to determine whether expanding the use of brokerage firms would produce greater net proceeds for the government.

An increase in net proceeds would likely provide agencies with additional funding for disposing of unneeded properties in the future. Section 20 of FASTA, which takes effect upon termination of the board, is to permit agencies to retain the net proceeds that result from the disposal of any excess property that they control. Agencies may use these proceeds to pay for the costs associated with disposing of additional properties, including costs that GSA incurs while assisting the agency with the disposal. In this way, the authority to retain net proceeds may partially address agencies' concern that they lack up front funding to prepare unneeded properties for disposal.

Appendix. Additional Background

As a consequence of changing space needs, federal agencies hold thousands of properties—particularly buildings—they may no longer need. In FY2021, federal agencies owned 7,697 buildings that were vacant (unutilized), and another 2,265 that were partially empty (underutilized).¹⁰⁸ Agencies are required to dispose of unneeded space and have a range of options for disposal, including transfer to another federal agency, demolition, sale, and conveyance to a state or local government or qualified nonprofit. Federal agencies have indicated, however, that their disposal efforts are often hampered by legal and budgetary disincentives.¹⁰⁹ The inability of agencies to dispose of unneeded space in a timely manner is one of the primary reasons GAO has included real property management on its high-risk list since 2003.¹¹⁰

Statutory Disposal Requirements

The steps in the real property disposal process are established by statute. Agencies must first offer to transfer properties they do not need (excess properties) to other federal agencies, which generally pay market value for excess properties.¹¹¹ Unneeded properties that federal agencies do not acquire (surplus properties) must then be offered to state and local governments, and qualified nonprofits for use in accomplishing public purposes specified in statute, such as creating public parks or providing services to the homeless.¹¹² Agencies may convey surplus properties to state and local governments and qualified nonprofits for public benefit at less than fair market value—even at no cost.¹¹³ Surplus properties not conveyed for public benefit may be sold at fair market value to state and local governments and qualified nonprofits for purposes beyond those specified in statute as public benefits—so-called negotiated sales. Surplus properties not disposed of through negotiated sales are offered for sale to the public at fair market value or are demolished (or, in some cases abandoned) if the property could not be sold due to the condition or location of the property.¹¹⁴

Agencies have argued that these statutory requirements slow down the disposition process, compelling agencies to incur operating costs while the properties are being screened.¹¹⁵ For example, real property officials have said that the McKinney-Vento Act (P.L. 100-77)—which mandates that all surplus property be screened for homeless use—can extend the time it takes to dispose of certain properties by months.¹¹⁶ Because public benefit conveyance requirements are set in law, agencies do not have the authority to skip screening, even for surplus properties they cannot convey. Real property experts with the Army, for example, told auditors they had properties they believed could be disposed of only by demolition, due to their condition or location, but that still had to be screened, thereby adding as much as six months to the disposal process and requiring the Army to pay maintenance costs that could have been avoided.¹¹⁷

Disposal Costs

Unneeded buildings are often among the older properties in an agency's portfolio. Agencies may discover that some of these buildings require expensive repairs and renovations before they are fully functional, meet health and safety standards, and comply with historic preservation requirements. Similarly, agencies that wish to demolish vacant buildings face deconstruction and cleanup costs that, at times, exceed the cost of maintaining the property—at least in the short run—which may encourage real property managers to retain properties rather than dispose of them.¹¹⁸ Federal agencies frequently cite the cost of complying with environmental regulations as a major disincentive to disposal.¹¹⁹

Quality of Real Property Data¹²⁰

At the start of each Congress, GAO releases a list of government operations that it deems "high risk"—programs or activities with "serious weaknesses in areas that involve substantial resources and provide critical services to the public."¹²¹ Federal real property management has been included on every high-risk list since 2003, due in large part to a lack of reliable data on federal buildings, land, and structures.¹²² One GAO report concluded that FRPP data collection results in agencies "making real property management decisions using unreliable data."¹²³