Federal government struggles to unload surplus property

Agencies own hundreds of underutilized, vacant buildings in Md.

  • Joseph T. Spence, director of the USDA's Agricultural Research Service, tours building 048, one of many federally owned buildings that have been deemed as surplus on the grounds of the USDA.
Joseph T. Spence, director of the USDA's Agricultural… (Algerina Perna / Baltimore…)
July 20, 2013|By John Fritze, The Baltimore Sun

WASHINGTON — — Two years after the Obama administration relaunched an effort to get rid of surplus federal buildings, almost all of the excess property identified in Maryland remains in government hands, a review by The Baltimore Sun has found.

Red tape, lack of congressional action and inadequate funding have left federal agencies stuck with at least 200 vacant or underutilized properties in the state, from closet-size storage sheds in Beltsville to an eight-story, historic office building a block from Baltimore's Inner Harbor.

As the nation's largest landlord — with more than 3 billion square feet in its portfolio — the federal government has struggled for years to dispose of an estimated 77,700 underutilized or vacant properties it owns. Taxpayers spend about $1.7 billion a year maintaining them, according to the nonpartisan Congressional Research Service.

"What we need is leadership on this issue, and we haven't seen it," said Leonard Gilroy, director of government reform at the libertarian Reason Foundation. "There have been some improvements over the past decade, but they're not enough."

While surplus property owned by the government has spurred criticism from watchdog groups and in a series of recent hearings on Capitol Hill, the issue is more complex than it appears.

Records of federal property are so poor that small sheds and storage tanks are sometimes classified as buildings. Many buildings are located on a larger federal property, making them unsuitable for sale to the private sector. And the cost to demolish a building can be far higher than the expense to maintain it, particularly if the structure is contaminated with lead paint or asbestos.

"I can't justify taking research dollars and knocking down an old greenhouse or a shed," said Joe Spence, director of the Henry A. Wallace Beltsville Agricultural Research Service, a 7,000-acre U.S. Department of Agriculture campus that is home to most of the state's excess federal properties.

But there are also high-profile examples, such as the Appraisers Stores building on South Gay Street in Baltimore, a short walk from the National Aquarium and other tourist attractions. The art deco-style structure, built in the early 1930s, was originally intended to be used by the U.S. Customs Service to appraise the value of goods being shipped through the port of Baltimore, according to the General Services Administration.

Nan Rohrer, vice president of economic development and planning at the Downtown Partnership of Baltimore, expects that there will be high demand to convert the building to residential use when it winds up on the market.

That kind of redevelopment — turning a tax-exempt property into one that generates tax revenue — would help Baltimore's coffers. The property is assessed at more than $10 million, state records show.

Because federal agencies often oversee their own property, there is no reliable central database of the government's nationwide inventory, let alone which buildings are considered surplus. Since 2005, the GSA has maintained a database, the Federal Real Property Profile, but it does not make that list public.

Even if that information were available, it is not clear how much value it would have. An audit by the Government Accountability Office in April found "inconsistencies and inaccuracies" in 23 of the 26 properties it sampled from that list. In one case, a vacant cabin that was covered in moss and missing its roof was classified as being in "excellent" condition. GAO auditors discovered another property rated as excellent that was, in fact, marked with yellow signs warning of radiation contamination.

In the wake of criticism that spanned several presidential administrations, the Office of Management and Budget in 2011 began a new effort to address the problem and disclosed details of nearly 14,000 properties it said the government no longer needed. That list contained 250 "properties" in Maryland, including sheds at Antietam National Battlefield, multifamily housing at the U.S. Coast Guard station in Annapolis and a handful of office buildings across the state.

But neither the OMB nor any other agency has since kept track of the status of those properties in a comprehensive way. OMB officials declined to discuss the issue publicly. Instead, the agency released a statement saying that inclusion on the agency's list "does not mean the asset will necessarily be sold, demolished, or disposed of."

When the list was released in 2011, however, it was positioned under an online headline that read: "Cutting costs by getting rid of buildings we don't need."

In interviews with the four agencies responsible for the bulk of the excess properties in Maryland on the OMB list, officials said few if any had been sold, demolished or repurposed — though they noted some progress toward that goal.

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