"America Builds: Making Federal Real Estate Work for the Taxpayer"

House Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings and Emergency Management

2025-03-05

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Source: Congress.gov

Summary

The meeting of the Subcommittee on Economic Development, Public Buildings, and Emergency Management convened to address the underutilization and costly management of federal real estate nationwide. Participants, including members of Congress and representatives from the Government Accountability Office (GAO) and the Public Buildings Reform Board (PBRB), discussed the significant financial burden on taxpayers due to vacant buildings and explored strategies for rightsizing the federal property portfolio[ 00:23:15 ] .

Federal Real Estate Underutilization and Financial Burden

Federal agencies are grappling with widespread underutilization of their office spaces, with many headquarters operating at 25% capacity or less, and some as low as 9%. This results in American taxpayers paying billions of dollars annually to operate and maintain largely empty federal buildings, a cost estimated at $2 billion a year regardless of use and $10.3 billion overall[ 00:20:59 ] . The issue is compounded by a massive deferred maintenance backlog that has ballooned from $170 billion in 2017 to $370 billion today[ 00:44:15-00:44:15 ]

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. For instance, the Department of Commerce and Labor headquarters incur annual costs per employee far exceeding private sector averages, highlighting the inefficiency[ 01:21:41 ]

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. Mr. David Marroni of the GAO noted that federal buildings are often old and not configured for modern workplaces, leading to inefficiencies, while Mr. David Winstead of the PBRB pointed to the impact of telework and an aged inventory as key factors[ 00:47:10 ]

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GSA's Implementation of Real Estate Reforms

Despite bipartisan agreement on the need for improved efficiency and legislative efforts like the 2024 Water Resources Development Act (WERDA) and the Use It Act, the General Services Administration (GSA) is facing criticism for its rapid and, at times, chaotic approach to reducing the federal real estate footprint. WERDA explicitly directed a methodical process involving two months of utilization measurement before disposals, but GSA is accused of "skipping from step one directly to step five," leading to confusion among federal employees, landlords, and the public. Concerns were raised about simultaneous return-to-office mandates and mass layoffs, making it difficult to assess actual space needs, and the abrupt termination of leases without sufficient communication or planning. The absence of GSA Commissioner Mike Peters at the hearing was repeatedly cited as a point of frustration, hindering the committee's oversight duties. Specific instances of disarray included last-minute lease termination notifications for agencies like the NTSB and the Bonneville Power Administration, as well as the rescinding of facility design standards and pausing of acquisitions, causing uncertainty and potential costs for taxpayers.

Challenges and Opportunities in Property Disposal

The current process for disposing of federal buildings is often described as lengthy and bureaucratic, with GSA typically defaulting to online auctions that may not attract the best real estate investors or achieve maximum value[ 00:49:05-00:49:31 ]

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. The Public Buildings Reform Board, operating under FASTA authority, aims to streamline this by making recommendations for high-value assets that are exempted from some public benefit conveyance requirements, allowing for more expeditious sales and redevelopment. Mr. Winstead emphasized that the PBRB focuses on truly surplus and underutilized properties, aiming to consolidate federal employees into better-maintained buildings rather than moving jobs, thus avoiding negative impacts on local economies. Opportunities exist for redeveloping properties, such as the Southwest Federal Center in Washington D.C., into mixed-use neighborhoods that could generate local tax revenue, increase housing supply, and revitalize communities[ 01:16:25-01:16:36 ]

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. There is also a recognized need for federal agencies to overcome "reluctance" to share space, fostering better mission alignment and coordination across government departments[ 01:23:40 ]

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Impact on Local Communities and Congressional Oversight

Members of Congress expressed significant frustration over GSA's lack of communication regarding potential property sales in their districts, often learning about them through media reports rather than official channels. Concerns were raised about the impact of sudden closures on local communities, including access to essential federal services like Social Security and VA health centers, and potential disruptions to local economies. The subcommittee stressed the importance of deliberate planning and analysis in property disposal to ensure effective results for taxpayers and avoid unexpected mission impacts. Calls were made for greater transparency from GSA and for the agency's leadership, specifically Commissioner Peters, to appear before Congress to provide clear answers and be held accountable for the implementation of federal real estate policies.

Tone of the Meeting

The meeting conveyed a tone of strong concern and bipartisan frustration among congressional members regarding the management of federal real estate. While there was broad agreement on the necessity of addressing underutilized properties and wasteful spending, members expressed significant dissatisfaction with GSA's perceived lack of transparency, chaotic implementation, and failure to communicate effectively with stakeholders and Congress. The repeated absence of the GSA Commissioner was a particular point of contention, leading to reiterated demands for his appearance to provide direct answers. The witnesses from GAO and PBRB provided expert analysis, maintaining a professional and informative demeanor amidst the expressed legislative concerns.

Participants

Transcript

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Mr. David Marroni
Subcommittee on Economic Development, Public Buildings, and Emergency Management will come to order.  I ask unanimous consent that the chairman be authorized to declare recess at any time during today's hearing.  Without objection, so ordered.  I also ask unanimous consent that members not on the subcommittee be permitted to sit with the subcommittee at today's hearing and ask questions.  Without objection, so ordered.  As a reminder,   Members wish to insert a document into the record, please also email it to documentsti at mail.house.gov.  I now recognize myself for the purpose of an opening statement for five minutes.
I want to thank our witnesses for being here today to discuss how we can make federal real estate work for the American taxpayer.
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Mr. David Marroni
At the beginning of last Congress, this subcommittee hosted a round table with industry stakeholders to help members better understand current market trends in office space and how to right size the federal real estate portfolio.
Building on that round table, this subcommittee held a hearing that highlighted a report published by the Government Accountability Office on the use of space for federal agencies in their headquarters buildings.
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Mr. David Marroni
The information that GAO uncovered in this report was shocking.  While many federal workers' workspace was underused, I don't think any of us expected to see just how devastating the useless numbers are.  GAO found that a majority of the agencies reviewed used 25% or less of their headquarters building space.  In the case of some agencies, the utilization rate was closer to 9%.  Let that number sink in.   9%.  Even under the Trump administration's return to the office directives, we know there will be unused space because in the same report, at least one agency admitted that even if 100% of their employees returned to the office, 33% of their space would still be empty.
As Mr. Maroney has testified in previous hearings, the federal government spends $2 billion a year to operate and maintain
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Mr. David Marroni
federal office buildings, regardless of whether the building is being used.  This means that American taxpayers are literally paying billions for federal office space just to sit empty.  In response to the findings from GAO, subcommittee members put forward a slate of bills to improve the use of office space, increase the transparency, and hold agencies accountable.   two key pieces of legislation enacted included.  First, the Use It Act, which sets targets for space usage, requires deployment of technology to count actual employees using government space and establishes timelines, meaning if agencies don't use their space, they'll lose it.  Secondly, the FASTA Reform Act,   strengthens the authority of the Public Buildings Reform Board to identify federal properties that should be sold.  On January 5, 2025, these reforms and others put forth by committee members became law as part of the Water Resources Development Act, or WERDA, of 2024.  With some deadlines in those reforms approaching quickly, I look forward to working with GSA, OMB, and the Public Buildings Reform Board   on WERDA implementation.  I am pleased that Trump administration hit the ground running by identifying the waste in federal real estate and promptly taking action to ensure that taxpayer dollars are not wasted on empty buildings.  This is not a partisan issue.  Even the mayor of Washington DC has highlighted the negative impact of empty federal offices on the local economy here in DC.  American taxpayers expect Congress to hold the federal government accountable   for all of its wasteful spending, and I look forward to working with the Trump administration to achieve results for our constituents.  Getting a handle on waste in federal real estate can save the taxpayers billions of dollars annually.
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Mr. David Marroni
Members of both parties should be supportive of this goal.  I now recognize ranking member, Honorable Mr. Stanton, for five minutes for an opening statement.
Thank you very much, Mr. Chairman, and before I talk about the issue at hand,   I just want to speak on behalf of all members of Congress that are present.  We lost a colleague last night, our colleague Sylvester Turner, brand new Congress member representing Houston, the former mayor of Houston, and before that a member of the state legislature, sadly passed away after the State of the Union.   And I've known him for many, many years as a former mayor myself.

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