Federal Buildings Funding Limitations and Their Implications

Federal Buildings Funding Limitations
and Their Implications
Updated March 21, 2008
Clay H. Wellborn
Specialist in American National Government
Government and Finance Division

Federal Buildings Funding Limitations and Their
Implications
Summary
The General Services Administration (GSA), through its Public Buildings
Service (PBS), is the primary federal real property and asset management agency,
with a portfolio consisting of 8,847 buildings and structures with an estimated
replacement value of $68.8 billion in FY2006. GSA is also responsible for
completing needed repairs and renovations to the federal facilities it manages.
Congress enacted the Public Buildings Act Amendments in 1972, and established the
Federal Buildings Fund (FBF) within GSA to finance the operating and capital costs
associated with federal facilities. Created as a revolving fund, the FBF is financed by
income from rental charges assessed to tenant agencies occupying GSA-owned-and-
leased space that approximate commercial rates for comparable space and services.
While these deposits to the FBF are the principal source of funding, Congress
annually prescribes how GSA may allocate its FBF assets as new obligational
authority in appropriations funding. Congress also may appropriate additional
monies into the fund. Generally, FBF revenues are used first for GSA’s building
operating expenses. Congress then allocates FBF funds for new construction, repairs,
and renovations.
The 92^nd Congress established the Federal Buildings Fund with the objective
that income derived from agency rental assessments would provide a more
predictable source of revenue for new construction and capital improvements than
direct congressional appropriations. However, the FBF did not generate sufficient
revenues for capital expenditures due, in large part, to statutory obligations and
limitations placed on the FBF when it was created. After meeting its primary
obligation to finance building operating expenses, the FBF has historically not
produced sufficient revenues to fund needed repairs in GSA’s real property
inventory. Because of long-standing problems with a buildings portfolio that has not
been financially self-sustaining, GSA has relied on leasing as the only practicable
method available to meet increased space needs.
Capital reinvestment is one of the largest challenges confronting GSA officials,
who have described their buildings inventory as predominantly aging, with
maintenance and repair needs that far exceed available FBF revenues. Legislation
enacted in the 108^th Congress authorized the GSA Administrator to convey real
property by sale, lease, exchange, or buyback agreements, with net proceeds
deposited into the FBF for future real property capital acquisitions and
improvements. The FY2008 Consolidated Appropriations Act, signed into law on
December 26, 2007, authorizes that an additional amount of $84 million be deposited
in the Federal Buildings Fund. The President’s FY2009 budget requests that $525
million be deposited in the FBF.
This report was originally written by Stephanie Smith, who has retired from
CRS, and will not be updated.

Contents
Introduction and Statutory Intent..................................1
Early Factors Contributing to Reduced FBF Revenues.................5
Current Conditions of GSA Real Property Inventory..................9
Aging and Underutilized Properties............................9
Reliance on Leased Office Space.............................11
FBF Revenues...........................................13
Rent Restrictions.........................................16
Efforts to Address Problems in Real Property Inventory...............18
Past Congressional Reform Initiatives.........................19
Federal Real Property Council...............................20^th
Congressional Initiatives in the 109 Congress..................21
Congressional Action in the 110^th Congress....................21
GSA Initiatives...........................................21
Policy Considerations.........................................22
List of Tables
Table 1. Schedule of Resources, New Obligational Authority,
and Fund Balance: FY2006-FY2008.............................13
Table 2. Amount of Funding Authority Requested and Obligational
Authority Approved for GSA Repairs and Alterations:
FY1995-FY2008 .............................................15

Federal Buildings Funding Limitations and
Their Implications
Introduction and Statutory Intent¹
The General Services Administration (GSA), through its Public Buildings
Service (PBS), is the primary federal real property and asset management agency,
with a portfolio consisting of 8,847 buildings and structures with an estimated²
replacement value of $68.8 billion in FY2006. GSA is also responsible for
completing needed repairs and renovations to the federal facilities it manages.³
Congress enacted the Public Buildings Act Amendments in 1972, and established the
Federal Buildings Fund (FBF) within GSA to finance the operating and capital costs⁴
associated with federal buildings. Created as a revolving fund, the FBF is financed
by income from rental charges assessed to tenant agencies occupying GSA-owned-
and-leased space that approximate commercial rates for comparable space and
services. GSA determines the base or shell rental rate by conducting appraisals of
other comparable properties and incorporates operating expenses and tenant
improvements. In order to assess accurately the commercial market rate for each⁵
facility, GSA conducts a property appraisal every five years. In the event there may
be no comparable building available on which to base a fair appraisal, GSA uses a
“return on investment (ROI)” method, which calculates the rate needed to recover the
building’s actual construction costs over 25 to 30 years.⁶

¹ This report was originally written by Stephanie Smith, who has retired from CRS. The
currently listed author has made no changes in the Smith report, which will not be updated.
² U.S. General Services Administration, The Federal Real Property Council, FY2006
Federal Real Property Report: An Overview of the U.S. Federal Government’s Real
Property Assets, July 2007, p. 6.
³ In addition to GSA, 27 other federal agencies have independent landholding authorities
that enable them to acquire or construct specific types of buildings or facilities. Property-
owning agencies do not pay rent into the FBF, or receive services from GSA for the space
they occupy in the buildings that they own.
⁴ 86 Stat. 216.
⁵ U.S. Government Accountability Office, Federal Courthouses: Rent Increases Due to New
Space and Growing Energy and Security Costs Require Better Tracking and Management,
GAO Report GAO-06-613 (Washington: June 2006), pp. 6-7.
⁶ 41 C.F.R. § 102-85 sets forth regulations for pricing policy for occupancy in GSA space.

The GSA Administrator is required to prescribe regulations providing for the
rates that GSA charges to tenant agencies for use of its space.⁷ The rental rate may
also include a charge for any additional improvements or remodeling performed by
GSA at the request of the tenant, which is amortized, or paid in equal installments
during the term of the lease. However, the tenant agency is responsible for paying
shell rent for as long as it occupies the GSA facility. For privately leased space, GSA
charges the tenant agency for the actual leasing and operating costs, and related
management services. In each instance, there is an occupancy agreement between
GSA and the tenant agency that sets forth the financial terms and conditions of the
occupancy.
While rent deposits to the FBF are the principal source of funding, Congress
annually prescribes how GSA may allocate its FBF assets as new obligational
authority in appropriations funding. Congress also may provide additional
appropriations to the fund. Generally, FBF revenues are used first for GSA’s building
operating expenses. Congress then allocates FBF funds for the construction of new
buildings, including courthouses, as well as for repairs and renovations to existing
facilities. A major concern for GSA is that the FBF has not historically produced
sufficient rent revenues to finance needed capital improvements to its inventory of
owned buildings.
By way of background, congressional establishment of the FBF to finance the
capital costs of federal facilities with income derived from rent assessments
represented an important revision to previously enacted federal real property law.⁸
Previously, construction authority for each federal building was approved and funded
in separate legislation until the 1902 enactment of the Omnibus Public Building Act
authorizing the Secretary of the Treasury to “give effect to and execute the provisions
of existing legislation” to acquire property and to enter into contracts for the
construction of federal buildings.⁹ The federal government’s acquisition of federal
property was suspended in 1914 at the onset of World War I, and was not reinstated
until the enactment of the Public Buildings Act in 1926.¹⁰ This 1926 act provided the
basic authority for construction of federal buildings by the congressional
authorizations and appropriations process.¹¹ Congress later enacted the Public
Buildings Act of 1949 to authorize the acquisition of sites and design plans for
federal buildings located outside Washington, DC, and for improvements to existing
federal buildings.¹² The same year, Congress enacted the Federal Property and

⁷ 40 U.S.C. § 586(a-b).
⁸ U.S. Government Accountability Office, Courthouse Construction: Overview of Previous
and Ongoing Work, GAO Report GAO-05-838T (Washington: June 2005), p. 3.
⁹ 32 Stat. 310.
¹⁰ U.S. Congress, House Committee on Public Works, Public Buildings Amendments of

1972, report to accompany H.R. 10488, 92^nd Cong., 2^nd sess., H.Rept. 92-989 (Washington:

GPO, 1972), p. 6.
¹¹ 44 Stat. 630.
¹² 63 Stat. 176.

Administrative Services Act of 1949.¹³ This act established the General Services
Administration (GSA) and gave the GSA Administrator responsibility for
administering federal real property. In 1954, Congress amended the Public Buildings
Act of 1949 to authorize the GSA Administrator to acquire titles to real property and
to construct federal buildings through lease-purchase contracts.¹⁴ Under this
procedure, a building was financed by private capital, and the federal government
made installment payments on the purchase price in lieu of rent payments. Title to
the property was vested in the federal government at the end of the contract period,
generally of at least 10 and not more than 30 years.
When authority for lease-purchase contracts expired in 1957, Congress
approved a successor statute, the Public Buildings Act of 1959.¹⁵ The 1959 act re-
established earlier requirements to provide for direct federal construction of public
buildings through the congressional authorizations and appropriations process. This
law, as amended and recodified over the years, remains the basic statute authorizing
the construction and renovation of federal civilian facilities.¹⁶ The act vests the
Administrator of General Services with sole authority to acquire, construct, alter,
repair, remodel, improve, or extend most federal buildings, and to acquire the sites
or additions to sites for such buildings. As part of the funding authorization process,
GSA is required to submit to the Senate Committee on Environment and Public
Works, and the House Committee on Transportation and Infrastructure, a detailed
prospectus of all proposed building projects.¹⁷
In the decade following the 1959 passage of the Public Buildings Act, Congress
appropriated approximately $115 million each fiscal year to GSA for new
construction projects. However, by 1972, a total of 63 congressionally authorized
building projects had not received appropriations, largely as a result of fiscal
constraints.¹⁸ In April 1972, the House Committee on Public Works reported that,
while Congress “repeatedly asserted its insistence” that direct federal construction of
public buildings was the most efficient and economical way to meet the
government’s urgent space requirements, an additional $1 billion would be needed
in direct congressional appropriations to fund the 63 uncompleted construction
projects.¹⁹ During its consideration of H.R. 10488 and the proposed Federal
Buildings Fund, the committee reported that

¹³ 63 Stat. 377; 40 U.S.C. § 101 et seq. Since 1949, the enabling law’s original provisions
have been frequently and substantially amended.
¹⁴ 68 Stat. 518.
¹⁵ 73 Stat. 478.
¹⁶ 40 U.S.C. § 3301 et seq.
¹⁷ For FY2006, a prospectus is required for each new construction, repairs, or leasing
proposal valued at $2.41 million or more.
¹⁸ U.S. Congress, House Committee on Public Works, Public Buildings Amendments of

1972, p. 6.

¹⁹ Ibid., p. 8.

a single Congressional approval for all the costs of acquiring a site, designing,
and construction of a building is essential to a timely, responsive Federal
building program. Such a consolidated appropriation would expedite
construction by allowing GSA to employ various time-saving techniques used in
private construction but unavailable where funding uncertainties preclude the
precision planning necessary to implement them.... A buildings fund to finance
the acquisition, construction, alteration, maintenance, operation, and protection²⁰
of all public buildings is the logical mechanism for one-time project funding.
The proposed buildings fund was to be financed by income from rental charges
assessed to tenant agencies occupying GSA-owned-and-leased space that
approximated commercial rates for comparable space and services. Each tenant
agency would budget for its own space needs in the annual congressional
authorizations and appropriations process. The legislative history reveals that
Congress believed that the requirement for tenant agencies to be directly accountable
for their space needs would result in more efficient utilization of federal office
space.²¹ During its 1971 consideration of legislation to create the FBF, the Senate
Committee on Public Works reported that individual agency requests and
justifications for office space during the annual budget process represented a
“significant step toward performance budgeting,” resulting in greater congressional
oversight of the federal buildings program.²²
The 1971 congressional deliberations focused on two different methods to
establish agency rental charges, the cost-recovery method and the rent-equivalent
method. Under the cost-recovery method, charges would have been based on
estimated maintenance costs, the cost of leasing space, and depreciation costs on
GSA-owned facilities. Income resulting from the depreciation charges would have
been available to finance future GSA construction and repairs projects. The cost-
recovery approach was rejected by Congress because not enough revenue could have
been generated; in fact, GSA estimated that it would have needed additional
appropriations of nearly $150 million each year to finance future construction
projects. The second option, the rent-equivalent method based on commercial rates
for leasing space, was ultimately embodied in law. GSA officials estimated that,
based on 1971 funding obligations, approximately $800 million in rental charges
would be paid to the fund. Of this total, Congress and GSA anticipated that nearly
$300 million in revenues would be available for capital expenditures.²³ The Senate
Committee on Public Works reported that, while it endorsed GSA’s use of
commercial charges, it was not encouraging the agency

²⁰ Ibid., p. 7.
²¹ Ibid., p. 8.
²² U.S. Congress, Senate Committee on Public Works, Public Buildings Amendments of

1971, report to accompany S. 1736, 92^nd Cong., 1^st sess., S.Rept. 92-412 (Washington: GPO,

1971), p. 4.

²³ U.S. General Accounting Office, General Services Administration’s Methods for
Computing Rent for Federally Occupied Buildings Need Further Improvement, GAO Report
LCD-75-325 (Washington: June 1975), pp. 1-2.

to establish its rates so high as to produce an inordinate surplus of monies in the
fund. On the contrary, the committee desires that the rates charged ... be
sufficient only to defray the cost of constructing, maintaining, and replacing²⁴
public buildings and facilities, and to provide related services.
P.L. 92-313, enacted on June 16, 1972, amended the Federal Property and
Administrative Services Act of 1949 to establish a real property management
financing fund in the U.S. Treasury to receive revenues from tenant agencies for²⁵
GSA-owned-and-leased space and services. Revenues deposited into the fund were
authorized to be used for expenditures for real property management and related
activities “in such amounts as are specified in annual appropriations Acts without
regard to fiscal year limitations.”²⁶ The Federal Buildings Fund, which became
operational in FY1975, replaced and received the unexpended balances of two
existing buildings management and construction funds, and any prior GSA
congressional appropriations for public buildings. The act authorized appropriations
to the fund for the first two fiscal years in which the fund became operational, and
any additional appropriations as might be necessary to carry out the fund’s purposes.
The legislation also reinstated the purchase contract authority for a three-year period
to provide immediate funding for the construction of GSA’s backlog of authorized,
but unfunded, building projects. Section 5 authorized the GSA Administrator to enter
into purchase contracts, for a period not to exceed 30 years, with title ultimately
reverting to the federal government. In a departure from the 1954 act authorizing
purchase contracts, P.L. 92-313 required GSA to pay local property taxes during the
purchase term. The 1972 legislation authorized the GSA Administrator to charge a
tenant for the GSA space which the agency occupied, and for all GSA maintenance
and repairs. While the act specified that GSA’s rental rates “shall approximate
commercial charges for comparable space and services,” the statute gave no criteria
or guidance for computing these charges.²⁷
Early Factors Contributing to Reduced FBF Revenues
The 92^nd Congress established the Federal Buildings Fund with the objective
that income derived from agency rental assessments would provide a more
predictable source of revenue for new construction and capital improvements than
direct congressional appropriations. Congress also believed that the FBF would
promote responsible asset management by requiring tenant agencies to budget for
their rent and services.²⁸ However, the FBF did not generate sufficient revenues for

²⁴ U.S. Congress, Senate Committee on Public Works, Public Buildings Amendments of

1971, p. 4.

²⁵ 86 Stat. 216.
²⁶ Ibid.
²⁷ U.S. General Accounting Office, Standard Level User Charges Assessed to the
Department of Defense by the General Services Administration, GAO Report LCD-80-18
(Washington: December 1979), p. 1.
²⁸ U.S. General Accounting Office, Federal Buildings Fund Limitations, GAO Report
GAO/GGD-93-34R (Washington: April 1993), p. 1.

capital expenditures due, in large part, to statutory obligations and limitations placed
on the FBF when it was created.²⁹
When the FBF became operational in FY1975, GSA’s existing portfolio of
federal facilities, valued at nearly $3.5 billion, was transferred to the FBF as
contributed capital and provided the principal source of revenue. However, the
General Accounting Office (GAO, now the Government Accountability Office)
estimated that nearly half of GSA’s federal building inventory was more than 30
years old, requiring as much as $1.1 billion in extensive repairs. For many of GSA’s
older buildings, the funds needed for alterations and other related costs could
sometimes exceed the annual rental income generated to the FBF.³⁰ GAO reported
in 1981 that, during the first six years of the fund’s existence, a total of $442 million
was available from the FBF for new construction, averaging only about $73.6 million
each year.³¹
A second factor contributing to a loss of revenue for the FBF was GSA’s use of
the purchase contract method from 1972 to 1975 to finance the construction of 68
federal facilities that had not received congressional funding. As authorized by
Section 5 of P.L. 92-313, building construction projects were financed with private
funds, with ownership of the buildings eventually reverting to the federal
government. GSA borrowed approximately $1.3 billion through the sale of
participation certificates to private investors, while letting contracts for construction
in the same manner employed for direct construction projects financed with
appropriated funds.³² During the purchase contract term, the FBF’s resources were
obligated to repay the principal, interest, and local real estate taxes³³ for the federal
facilities, and these expenditures were a major drain on the FBF.³⁴ On the basis of
available data on 21 of the newly constructed federal buildings, GAO reported in
1979 that FBF expenditures for principal, interest, and real estate taxes actually
exceeded the properties’ incoming rental income to the FBF.³⁵ In FY1980, GSA
estimated that FBF resources would be used to pay about $100 million in principal,

²⁹ U.S. General Accounting Office, GSA’s Federal Buildings Fund Fails to Meet Primary
Objectives, GAO Report PLRD-82-18 (Washington: December 1981), p. 13.
³⁰ U.S. General Accounting Office, Statement of Associate Director Joseph P. Normile
Before the Senate Committee on Environment and Public Works, Federal Buildings Fund
and the User Charges Paid into the Fund by Federal Agencies, GAO Report 110395
(Washington: September 1979), pp. 11-12.
³¹ U.S. General Accounting Office, GSA’s Federal Buildings Fund Fails to Meet Primary
Objectives, p. ii.
³² Ibid., p. 7.
³³ Ibid., p. 7. In a departure from the 1954 act authorizing purchase contracts, P.L. 92-313
required GSA to pay local property taxes during the purchase term, because titles to the
buildings were held by private trustees. When a title reverts to the federal government,
property taxes are not paid on the federally owned building.
³⁴ U.S. General Accounting Office, Federal Buildings Fund and the User Charges Paid into
the Fund by Federal Agencies, p. 4.
³⁵ Ibid., p. 10.

interest, and taxes on the 68 buildings.³⁶ The obligations for annual purchase
contract payments increased steadily between 1976 and 1982, from $51 million to
$156 million.³⁷ The FBF’s reserves were also affected by its obligations to pay for the
buildings’ maintenance and other services pertaining to GSA’s central property
management responsibilities, which increased from $414 million in FY1975 to nearly
$571 million in FY1980.³⁸
Another reason the FBF generated less revenue than anticipated for needed
capital investment was that Congress and the Office of Management and Budget
(OMB) periodically restricted the rent payments that GSA was allowed to charge
tenant agencies. GAO reported that, between 1975 and 1988, administrative and
legislative rent restrictions reduced available FBF revenues by nearly $4 billion.³⁹
When the Federal Buildings Fund became operational in FY1975, the GSA
Administrator established agency rental charges and prescribed regulations providing
for the rates that GSA charges to tenant agencies for use of its space.⁴⁰ These rates
were based on computing composite commercial rates charged in various locations
throughout the country and included rating factors pertaining to the quality of
structure and design elements for different types of commercial facilities. According
to GAO’s findings, the quality rating was an important component, since the higher
the rating, the greater the building rental charge. GAO reported, however, that GSA’s
quality ratings were largely based on “subjective judgment and limited criteria,” and
that GSA’s reliance on market surveys did not provide an “adequate basis” for
determining approximate rental rates.⁴¹ Tenant agencies also criticized GSA’s
methodology in determining fees based on composite market rates instead of actual
costs based on more favorable long-term leases.⁴²
During consideration of GSA’s FY1975 budget request, the House Committee
on Appropriations reported that GSA’s rent charges were higher than comparable
commercial rates, reducing rental fees by 10%.⁴³ The Senate Committee on
Appropriations agreed to the provision.⁴⁴ As a result, FY1975 rental income to the

³⁶ Ibid., p. 4.
³⁷ U.S. Congressional Budget Office, The Federal Buildings Program: Authorization and
Budgetary Alternatives (Washington: June 1983), p. 31.
³⁸ U.S. General Accounting Office, Federal Buildings Fund and the User Charges Paid into
the Fund by Federal Agencies, p. 4.
³⁹ U.S. General Accounting Office, Federal Buildings Fund Limitations, p. 2.
⁴⁰ 40 U.S.C. § 586(a-b).
⁴¹ U.S. General Accounting Office, General Services Administration’s Methods for
Computing Rent for Federally Occupied Buildings Need Further Improvement, pp. 4-6.
⁴² Ibid., p. 7.
⁴³ U.S. Congress, House Committee on Appropriations, Treasury, Postal Service, and
General Government Appropriations Bill, 1975, 93^rd Cong., 2^nd sess., H.Rept. 93-1132
(Washington: GPO, 1974), p. 39.
⁴⁴ U.S. Congress, Senate Committee on Appropriations, Treasury, Postal Service, and
General Government Appropriations Bill, 1975, 93^rd Cong., 2^nd sess., S.Rept. 93-1028
(continued...)

FBF was reduced from $1.16 billion to $1.04 billion, and any FBF revenues in excess
of $1.08 billion were authorized to be deposited in miscellaneous receipts of the U.S.
Treasury.⁴⁵ Again in FY1976, the House and Senate Committees on Appropriations
reduced agency rental payments to GSA by 10% and authorized that revenues to the
FBF in excess of $1.34 billion be deposited in miscellaneous receipts of the U.S.
Treasury.⁴⁶ The following year, in FY1977 appropriations language, Congress again
authorized GSA to deposit in the U.S. Treasury any revenues accruing to the FBF in
excess of $1.15 billion.⁴⁷ GAO reported that, in FY1977, GSA decided to reduce its
rental rates by 10% to preclude a congressionally imposed reduction.⁴⁸ In both
FY1976 and FY1977, OMB required GSA to grant length-of-occupancy discounts
to agency tenants, further reducing GSA’s rental income by 20 %. In addition, a GSA
internal audit committee issued a report which criticized the agency’s method of
calculating composite rental rates without giving adequate consideration to the
location of facilities and the corresponding differences in market values.⁴⁹
In order to provide a more equitable method to determine agency rental charges,
GAO recommended that GSA conduct an individual survey and appraisal for each
GSA-owned-and-leased building to determine a rent that would be “equivalent to
commercial rent for comparable space and services.”⁵⁰ In part because of GAO’s
recommendations, GSA began conducting independent appraisals for each of its
owned and leased facilities to establish rental rates in FY1978. GAO subsequently
reported that GSA’s new appraisal method appeared to provide documented and
defensible justifications for computing commercially comparable rental rates.⁵¹
While Congress did not reduce tenant rental fees in FY1978, it did require GSA to
deposit any income from the FBF in excess of $1.33 billion in miscellaneous receipts
of the U.S. Treasury.⁵² From FY1975 to FY1978, GAO reported that GSA had
transferred about $7 million from the FBF to miscellaneous receipts of the U.S.
Treasury, further reducing FBF revenues available for capital improvements.⁵³

⁴⁴ (...continued)
(Washington: 1975), p. 32.
⁴⁵ 88 Stat. 613.
⁴⁶ 89 Stat. 441.
⁴⁷ 90 Stat. 963.
⁴⁸ U.S. General Accounting Office, Federal Buildings Fund and the User Charges Paid into
the Fund by Federal Agencies, p. 6.
⁴⁹ Ibid., p. 14.
⁵⁰ U.S. General Accounting Office, General Services Administration’s Methods for
Computing Rent for Federally Occupied Buildings Need Further Improvement, p. 9.
⁵¹ Ibid.
⁵² 91 Stat. 349.
⁵³ U.S. General Accounting Office, Federal Buildings Fund and the User Charges Paid into
the Fund by Federal Agencies, p. 16.

Current Conditions of GSA Real Property Inventory
After meeting its primary obligation to finance building operating expenses, the
FBF has historically not produced sufficient revenues to fund needed repairs in
GSA’s real property inventory. Past studies by GAO reveal that a large portion of
GSA’s aging federal facilities are urgently in need of significant and costly repairs.⁵⁴
In many instances, federal facilities are vacant or no longer needed because of tenant
agencies’ changing missions. GAO issued a 2003 report on federal property as part
of its high-risk series, which identified areas vulnerable to mismanagement, waste,
or fraud and concluded that “a major commitment is necessary to either modernize
these facilities or to dispose of them.”⁵⁵ Two years later, GAO reported that, while
progress had been initiated by the 2004 establishment of the Federal Real Property
Council⁵⁶ (discussed later in this CRS report), long-standing problems persisted for
GSA in managing its real property inventory.⁵⁷
Aging and Underutilized Properties. Restoration, repair, and maintenance
backlogs in federal facilities are significant and attributable to “ineffective
stewardship” by GSA and other landholding federal agencies who oversee a valuable
and historic real property portfolio.⁵⁸ GAO investigations have revealed that
significant repairs and alterations are necessary to renovate federal buildings that
have deteriorated, have become functionally obsolete, or have health- and safety-⁵⁹
related problems. Inspections of several deteriorating federal buildings have
revealed inadequate and malfunctioning air ventilation and fire safety systems, unsafe
water supplies, and continued structural deteriorations caused by long-standing
plumbing leaks. Other factors impeding adequate workplace conditions included
outdated cooling and heating systems, resulting in significantly higher operating
costs, and obsolete electrical systems unable to accommodate new information⁶⁰
technology. Aging and deteriorating office space can also adversely impact federal
employee recruitment, retention, and productivity.

⁵⁴ U.S. General Accounting Office, Federal Buildings: Billions Are Needed for Repairs and
Alterations, GAO Report GAO/GGD-00-98 (Washington: March 2000), and U.S. General
Accounting Office, Federal Buildings: Funding Repairs and Alterations Has Been a
Challenge — Expanded Financing Tools Needed, GAO Report GAO-01-452 (Washington:
April 2001).
⁵⁵ U.S. General Accounting Office, High-risk Series: Federal Real Property, GAO Report
GAO-03-122 (Washington: January 2003), p. 15.
⁵⁶ E.O. 13327, Federal Register, vol. 69, Feb. 6, 2004, p. 5897.
⁵⁷ U.S. Government Accountability Office, High-risk Series: An Update, GAO Report GAO-

05-207 (Washington: January 2005), pp. 33-34.

⁵⁸ U.S. General Accounting Office, High-risk Series: Federal Real Property, p. 15.
⁵⁹ U.S. General Accounting Office, Federal Real Property: Executive and Legislative
Actions Needed to Address Long-standing and Complex Problems, GAO Report GAO-03-

839T (Washington: June 2003), pp. 6-7.

⁶⁰ Ibid., p. 22.

Maintaining federal facilities is a challenging task, since many of GSA’s largest
buildings were constructed more than 50 years ago and have deteriorated without
needed alterations. According to GSA, limitations in FBF revenues are exacerbated
by the heightened demands for repairs and alterations associated with aging
buildings. GAO’s analysis of FBF revenues from FY1994 through FY1999
determined that GSA was authorized approximately $580 million in new obligational
authority from the FBF each year to complete repairs on existing GSA facilities.
While GSA completed substantial work, new requirements were frequently added to
GSA’s repairs inventory.⁶¹ In 1999, GSA estimated that nearly $4 billion was needed
to complete repairs and alterations to 903 buildings, or approximately 54% of its
entire inventory of 1,682 federal buildings.⁶² The repair and alteration work identified
in 446 buildings was estimated to cost $500,000 or less per building. However, 44
aging facilities, classified by GSA as large office buildings or courthouses, needed
major repairs of more than $20 million for each facility, accounting for nearly 60%
of the almost $4 billion estimated as needed to fund all identified repairs and
alterations.⁶³ Furthermore, GAO found that some of the repairs and alterations that
had been identified more than five years earlier were still unfinished. GSA officials
stated that some tasks were not completed because adequate funding was not
available.⁶⁴ Three years later, in 2003, GAO reported that GSA’s estimated backlog
of repairs and alterations would require $5.7 billion in federal funding.⁶⁵ GSA
officials estimated in 2005 that deferred maintenance costs for its federal facilities
totaled more than $6 billion.⁶⁶ In 2007, GSA reported an estimated $6.6 billion
backlog of repairs.⁶⁷
The deteriorating physical condition of many federal buildings and the
corresponding underutilization and vacancy of many government facilities has
serious cost implications for GSA’s real property portfolio. Investigations by GAO
have revealed that many properties in the federal inventory are not financially self-
sustaining and are no longer relevant to their agencies’ changing missions.⁶⁸
According to GAO, by identifying and disposing of unneeded properties, GSA could
give greater attention and funding to the repair of a streamlined federal inventory.
Due to the vast size and diversity of its real property portfolio, GSA is often not able
to fully identify and assess each of its properties to determine those that need repairs

⁶¹ U.S. General Accounting Office, Federal Buildings: Billions Are Needed for Repairs and
Alterations, p. 7.
⁶² Ibid., p. 3.
⁶³ Ibid., p. 4.
⁶⁴ Ibid., pp. 4-5.
⁶⁵ U.S. General Accounting Office, High-risk Series: Federal Real Property, p. 22.
⁶⁶ U.S. Government Accountability Office, Federal Real Property: Further Actions Needed
to Address Long-standing and Complex Problems, GAO Report GAO-05-848T
(Washington: June 2005), p. 5.
⁶⁷ U.S. Government Accountability Office, Federal Real Property: Progress Made Toward
Addressing Problems, but Underlying Obstacles Continue to Hamper Reform, GAO Report
GAO-07-349 (Washington: Apr. 2007), p. 27.
⁶⁸ U.S. General Accounting Office, High-risk Series: Federal Real Property, p. 2.

and those for which there is no longer any substantial federal purpose. In May 1991,
GAO first reported that GSA had not fully implemented a systematic approach for
managing its inventory because of a lack of reliable real property data, causing even
more delays in needed building repairs.⁶⁹
At present, GSA annually reports summary data on real property owned and
leased by the federal government worldwide, based on inventory reports submitted
by the individual agencies. These inventory reports are not, however, required under
current law, and there is no statutory requirement for landholding agencies to submit
accurate or timely data. In July 2000, GAO reported to Congress that a
comprehensive and reliable inventory of federal real property holdings was the first
step in identifying and subsequently managing the government’s large portfolio of
federal assets. GAO investigations also revealed that GSA and the other landholding
agencies had poor or inadequate data assessing the current market value of their
properties.⁷⁰ However, GAO acknowledged that agency compliance with proposed
statutory requirements for a comprehensive property inventory would be a
“challenging task,” based on its finding that the federal government lacked the
necessary standards to ensure complete and reliable information on its property
assets.⁷¹ Lacking a reliable and comprehensive listing of federal properties, GSA
continues to have limited success in the identification, maintenance, or disposal of
its federal inventory. GAO reported in June 2003 that GSA, in response to GAO’s
earlier criticisms, had begun to conduct more systematic reviews of individual
facilities, giving funding priority to projects that might return more rent revenues to
the FBF and disposing of properties with no long-term federal purpose.⁷²
In FY2005, the Federal Real Property Council issued new federal property
reporting requirements for executive branch agencies, which replaced GSA’s existing
reporting requirements and the agency’s comprehensive annual report on federally
owned and leased properties. Published in June 2006, the Federal Real Property
Council’s first executive summary was compiled from agency data pertaining to
utilization, condition, and operating and maintenance costs.⁷³
Reliance on Leased Office Space. Because of long-standing problems
with a buildings portfolio that has not been financially self-sustaining, GSA has
relied on leasing as the only practicable method available to meet increased space

⁶⁹ U.S. General Accounting Office, Federal Buildings: Actions Needed to Prevent Further
Deterioration and Obsolescence, GAO Report GAO/GGD-01-57 (Washington: May 1991),
pp. 3-5.
⁷⁰ U.S. General Accounting Office, Federal Real Property: Views on Management Reform
Proposals, GAO Report GAO/T-GGD-00-175 (Washington: July 2000), p. 5.
⁷¹ Ibid.
⁷² U.S. General Accounting Office, Federal Real Property: Executive and Legislative
Actions Needed to Address Long-standing and Complex Problems, p. 7.
⁷³ U.S. Government Accountability Office, Federal Real Property: An Update on High-Risk
Issues, GAO Report GAO-07-895T (Washington: May 2007), p. 3.

needs.⁷⁴ Generally, the federal construction or purchase of buildings provides the
most cost effective approach to meet space requirements over a long period of time.⁷⁵
GSA’s inventory of leased space increased from 87.4 million square feet in FY1975
to 91.2 million square feet in FY1981, an increase of approximately 4.5%. However,
the corresponding costs for annual rental payments increased from $364 million to
nearly $677 million, an 86% increase during the same period.⁷⁶ In the past decade,
GSA has continued to enter into lease agreements to acquire office space because of
insufficient funding available to construct or repair existing buildings.⁷⁷ GAO
reported in 1995 that GSA had entered into 55 long-term lease agreements that would
ultimately cost the federal government $700 million more in extended rent payments
than would have total construction costs for the same space. A 1999 investigation
by GAO auditors of nine major lease agreements proposed by GSA revealed that
construction would have been the most economical option in eight instances,
resulting in an estimated $126 million in savings to the federal government.⁷⁸ While
this GAO investigation focused on GSA’s leasing practices, GAO had previously
found that the other landholding agencies with leasing authorities also relied heavily
on operating leases.⁷⁹ In June 2006, GSA owned 218.9 million square feet of office
space, and spent $4.6 billion to lease 168.8 million square feet of building space, or
almost 46% of the government’s total office area.⁸⁰
The annual congressional appropriations and authorizations process tends to
favor operating leases over construction or purchasing agreements, since they appear
less costly in any given year. While operating leases are more expensive over a 10-
year period, these total costs are not reflected in a single year’s appropriations
request.⁸¹ In contrast, total costs necessary for proposed construction and lease-
purchase contracts must be included in the first year’s budget authority. According
to studies by GAO, the current budget process enables more expensive leasing

⁷⁴ U.S. Government Accountability Office, Federal Real Property: Further Actions Needed
to Address Long-standing and Complex Problems, p. 7.
⁷⁵ According to GAO findings, lease-purchase contracts, where payments are extended over
a 10 to 30 year period and ownership is eventually transferred to the government, are
generally more expensive than construction contracts, but less expensive than lease
agreements. See U.S. General Accounting Office, High-Risk Series: Federal Real Property,
p. 30.
⁷⁶ U.S. General Accounting Office, GSA’s Federal Buildings Fund Fails to Meet Primary
Objectives, p. 7.
⁷⁷ U.S. General Accounting Office, Federal Real Property: Executive and Legislative
Actions Needed to Address Long-standing and Complex Problems, p. 8.
⁷⁸ U.S. General Accounting Office, High-Risk Series: Federal Real Property, p. 30.
⁷⁹ Ibid.
⁸⁰ U.S. General Services Administration, The Federal Real Property Council, FY2005
Federal Real Property Report: An Overview of the U.S. Federal Government’s Real
Property Assets, p. 13.
⁸¹ U.S. General Accounting Office, High-Risk Series: Federal Real Property, p. 31.

transactions to appear to be more economical in the short term, thus encouraging an
“over-reliance” on them for meeting the government’s space requirements.⁸²
FBF Revenues. While agency rental payments have provided a relatively
stable and predictable source of income for the Federal Buildings Fund, this revenue
had not been sufficient to finance both growing capital investment needs and the cost⁸³
of leased space. GAO estimated that, between FY1983 and FY1988, annual
revenues to the FBF from tenant rental payments increased from approximately $1.8⁸⁴
billion to $3.1 billion. Between FY1995 and FY2001, about $5.3 billion in
incoming rent revenues was deposited each year into the FBF. Nearly 90% of this
total was used for GSA’s operating costs, rental payments for leased space, and
construction of new buildings, with, on average, only $606 million remaining each⁸⁵
year for completing repairs and renovations. In FY2007, $7.5 billion in FBF
revenue came from rent paid by federal tenant agencies; $4.4 billion was obligated
from the FBF for rental of space, and $733 million for repairs and alterations (see
Table 1). Table 1 indicates the FBF’s incoming revenues and obligations for
FY2006 through FY2008 (request).
Table 1. Schedule of Resources, New Obligational Authority,
and Fund Balance: FY2006-FY2008
(dollars in thousands)
FY2006FY2007 FY2008
Ac t u al Ac t u al Request
RESOURCES
Available from prior year for reauthorization
$521,226 $55,820 $391,894
Redemption of debt($40,340)($43,338)($50,804)
Reprogramming authority$132,871$0$0
Appropriation $75,000^c $89,061 $334,450
Rescission/lapsed $0 $0 $0
Revenue from operations:
Rent $7,245,882 $7,470,807 $7,810,454
Indefinite authority for rental of space$252,342$311,225[$316,046]^f
Other indefinite authorities$32,526[$38,800]^f[$42,100]^f
Miscellaneous $2,375 $5,133 $5,241
Outleasing $9,511 $5,755 $5,870

⁸² Ibid.
⁸³ U.S. General Accounting Office, Federal Buildings: Funding Repairs and Alterations Has
Been a Challenge — Expanded Financing Tools Needed, p. 15. See also, U.S. Government
Accountability Office, Courthouse Construction: Overview of Previous and Ongoing Work,
p. 10.
⁸⁴ U.S. General Accounting Office, Federal Buildings: Funding Repairs and Alterations Has
Been a Challenge — Expanded Financing Tools Needed, p. 15.
⁸⁵ Ibid.

FY2006FY2007 FY2008
Ac t u al Ac t u al Request
Retention of proceeds/sale of real
property $51,891 $63,896 $80,000
SSA/CDC/CMS payments$13,732$14,707$14,707
Subtotal, revenue$7,608,259$7,871,523$8,591,812
TOTAL RESOURCES
AV AILABLE $8,297,016 $7,973,066 $8,591,812
NEW OBLIGATIONAL AUTHORITY
Construction and acquisition$819,527$212,146$615,204
Repairs and alterations$1,148,392^a,^c^{d, e}^,$733,030^b$804,483^b
Installment acquisition payments$168,180$163,999$155,781
Rental of space$4,177,130^a,^d$4,379,106^a$4,383,000^b
Building operations$1,932,255^a,^b$2,003,830^b$2,132,450^b
TOTAL NEW OBLIGATIONAL$8,245,484$7,492,111$8,090,918
AUTHORITY
FUND BALANCE
Total resources available$8,297,016$7,884,005$8,601,812
Total new obligational authority($8,245,484)($7,492,111)($8,090,918)
Prior year recoveries$4,288$0$0
Fund balance (available for
reauthorization) $55,820 $391,894 $510,894
Net budget authority$540,406($336,074)$225,450
^Source:^Gen^e^r^a^{l Ser}^v^{ices A}^d^mⁱⁿⁱ^str^a^tioⁿ^,^{FY 2008 C}^ongr^es^sⁱ^onal^Jus^tifications^{, p. F}^B^3.
^{a. I}ⁿ^clu^d^{es in}^d^e^fⁱⁿ^{ite au}^th^o^r^ity^.
^b^.^Ex^clu^d^{es in}^d^e^fⁱⁿ^{ite au}^th^o^r^ity^.
^{c. In}^cl^u^d^es^{$15,000 t}^h^ou^s^aⁿ^d^f^o^{r Bu}ⁱ^l^dⁱⁿ^g^O^p^e^r^a^tⁱ^oⁿ^s^an^{d $60,000 t}^h^ou^s^aⁿ^d^f^o^{r R}^e^pai^r^s^an^d
^A^l^t^e^ratⁱ^oⁿ^f^r^om^t^h^e^D^e^f^eⁿ^s^{e A}^ppropri^a^tⁱ^oⁿ^(P.L^{. 109-}^{148) an}^{d Em}^erg^eⁿ^c^y^S^u^ppl^em^en^t^a^l
^A^ppropri^a^tⁱ^oⁿ^s^(P.L^{. 109-}^{234) A}^c^t^s^f^o^{r h}^u^r^ri^can^{e rel}ⁱ^e^f^ef^f^o^rt^s^.
^d.^In^clu^d^es^approv^{ed reprog}^ram^mⁱⁿ^g^of^{$279,250 th}^ou^s^aⁿ^d^{to C}^oⁿ^s^tru^c^tion^an^d^A^c^qu^is^ition^($24,471
^t^h^ou^s^aⁿ^d^{) an}^{d R}^e^pai^r^s^an^{d A}^l^t^e^ratⁱ^oⁿ^s^{($251,779 t}^h^ou^s^aⁿ^d^).
^{e. In}^cl^u^d^es^propos^{ed rep}^r^o^g^r^a^m^mⁱⁿ^g^of^{$6,225 t}^h^ou^s^aⁿ^d^(R^epai^rs^an^{d A}^l^t^e^ratⁱ^oⁿ^s^—^G^oodf^el^l^o^w
^F^e^deral^C^eⁿ^t^{er, S}^t^{. L}^o^uⁱ^s^,^MO^{($4,125 t}^h^ou^s^aⁿ^d^{) an}^{d F}^O^{B 10A}^G^a^rage^,^Was^hⁱⁿ^g^t^on^{, D}^C
^{($2,100 t}^h^ou^s^aⁿ^d^).
^f^.^P^l^eas^{e n}^o^{te, [brack}^{eted n}^u^m^bers^{] are proj}^ection^s^w^h^ich^ar^{e n}^o^{t in}^clu^d^edⁱⁿ^su^b^t^o^t^{als an}^d^to^tals.
^E^x^p^l^an^ati^oⁿ^{of FY}^{2007 N}^O^A^L^e^vel^s^Uⁿ^d^{er P.L}^.^{109-289, D}ⁱ^vi^sⁱ^on^B,^as^A^m^en^d^e^d^{. A}^s^part^of^t^h^e
^pres^en^t^a^tⁱ^oⁿ^of^t^h^{e F}^Y^{2008 Pres}ⁱ^d^en^t^’^s^bu^dg^et^{, t}^h^{e n}^e^w^oblⁱ^g^a^tⁱ^o^nal^au^t^h^ori^t^y^(N^O^A^{) f}^o^{r F}^Y²⁰⁰⁷
^ref^l^ect^e^d^t^h^e^H^o^u^s^e-^pas^s^e^{d ag}^g^r^eg^at^{e N}^O^Aⁿ^u^m^{ber f}^o^{r t}^h^{e F}^e^deral^buⁱ^l^dⁱⁿ^g^s^F^uⁿ^d^of^$7,180,856
^t^h^ou^s^aⁿ^d^an^{d i}ⁿ^cl^u^d^{ed $311,225 t}^h^ou^s^aⁿ^d^as^s^o^ci^at^{ed w}ⁱ^t^hⁱⁿ^defⁱⁿⁱ^t^e^au^t^h^ori^t^y^f^o^r^t^h^e^R^eⁿ^t^al^of^S^p^ace
^accouⁿ^t^{. T}^h^{e NOA}^w^a^s^deriv^e^{d bas}^e^{d on}^th^{e as}^s^u^m^p^tion^th^{at th}^e^prov^is^ion^s^of^P^.^L^.^109-^{289, Div}ⁱ^sⁱ^on
^B^,^(as^am^en^{ded) w}^o^u^l^{d be ex}^ten^d^{ed f}^o^{r th}^{e en}^{tire y}^{ear. T}^h^is^pres^en^tation^f^u^nd^e^d^t^h^eⁱⁿ^divⁱ^du^al
^o^p^e^ratin^g^acco^uⁿ^t^s^(In^s^tallm^en^t^A^c^q^u^isitioⁿ^P^a^y^m^en^{ts, B}^u^ildⁱⁿ^g^Op^eratioⁿ^s^an^d^Ren^t^{al o}^f^Sp^{ace) at}
^th^e^lev^e^lⁿ^ecessar^y^to^m^a^k^e^sch^e^d^u^ledⁱⁿ^ter^e^{st p}^a^y^m^en^{t to}^th^{e Fed}^e^r^a^{l Fin}^aⁿ^cⁱⁿ^g^B^aⁿ^k^,^lease^p^a^y^m^en^ts
ⁱⁿ^ex^is^tin^g^s^p^{ace an}^{d prov}^{ide bas}ⁱ^{c bu}^ildin^g^s^e^rv^ices^.^T^h^e^rem^aⁱⁿⁱⁿ^g^NOA^am^ouⁿ^t^s^w^e^{re allocated}
^to^th^{e v}^a^rⁱ^o^u^{s cap}^{ital p}^r^o^g^r^a^m^s^.

While Congress has increased authorized funding through the FBF for building
repairs and alterations, these funds have not been adequate to maintain GSA’s
building inventory.⁸⁶ Funding data compiled by GSA since FY1995 indicate that
Congress has authorized $8.9 billion from the FBF, or 72%, of the $12.5 billion in
new obligational authority that GSA has requested for building repairs and
alterations. However, in FY2006, Congress approved $1.1 billion in FBF revenues
for repairs, which was more than was requested by GSA, or 104%. Table 2
indicates the FBF funding authority that GSA has requested from FY1995 through
FY2008, and the obligational authority that Congress has approved for repairs and
alterations from the FBF.
Table 2. Amount of Funding Authority Requested and
Obligational Authority Approved for GSA Repairs and
Alterations: FY1995-FY2008
(dollars in thousands)
Obligational P ercent
Fiscal YearFunding AuthorityRequested^aAuthority^bof Request
Approved Approved

1995 $997,641 $720,564 72%

1996 $1,248,905 $637,000 51%

1997 $1,105,842 $639,000 58%

1998 $1,052,000 $300,000 29%

1999 $724,277 $668,031 92%

2000 $869,140 $598,674 69%

2001 $777,626 $681,613 88%

2002 $826,676 $826,676 100%

2003 $986,029 $951,529 97%

2004 $1,012,729 $991,300 98%

2005 $980,222 $867,722 89%

2006 $1,029,165 $1,148,392 112%

2007 $866,194 $733,030 85%

2008 $804,483 $722,161 90%

T otal $13,280,929 $10,485,692 79%
^Source:^U^.^S.^G^e^ne^r^a^l^A^c^c^o^untⁱ^{ng O}^ffi^c^e^,^Feder^a^l^Bui^l^dⁱ^ngs^{: Fundi}^{ng Repai}^r^s^{and Al}^t^e^r^a^tⁱ^ons^H^a^s
^Been^{a C}^hal^l^e^{nge — Expanded Fi}^nanci^{ng T}^ool^s^N^eeded,^G^A^O^-^01-^{452, p. 15. F}^Y^2002-^F^Y²⁰⁰⁸^dat^a
^com^pⁱ^l^e^{d f}^r^om^G^S^A^,^{FY2002-FY2008 C}^ongr^es^sⁱ^onal^Jus^tifications^.
^{a. A}^ccordin^g^{to GA}^{O, F}^Y^1995-^F^Y^{2001 data w}^e^{re GS}^A^’^s^requ^es^ts^bef^o^{re receiv}ⁱⁿ^g^OMB’^s^fⁱⁿ^a^l
^approv^al^{. F}^Y^2002-^F^Y^{2008 dat}^a^{, prov}ⁱ^d^{ed f}^r^om^G^S^A^,^w^e^{re t}^h^{e ag}^en^cy^’^s^requ^es^t^s^a^f^t^e^r^r^e^c^eⁱ^vⁱⁿ^g
^O^M^B’^s^fⁱⁿ^a^l^approv^al^.
^b^.^A^cco^r^dⁱⁿ^g^t^o^G^S^A,^t^h^e^o^b^lig^atioⁿ^a^{l au}^th^o^r^ity^ap^p^r^o^v^ed^w^o^u^l^dⁱⁿ^clu^d^{e f}^uⁿ^dⁱⁿ^g^f^o^r^p^r^o^j^{ects th}^at
^C^oⁿ^g^r^es^s^{added t}^o^G^S^A^’^s^requ^es^t^.
GAO has reported that GSA officials are developing new ways to generate
additional FBF revenues to finance capital improvements in GSA-owned facilities.

⁸⁶ U.S. General Accounting Office, Federal Buildings: Funding Repairs and Alterations Has
Been a Challenge — Expanded Financing Tools Needed, p. 15.

These methods include giving the highest priority to maintenance projects that would
achieve the most rent revenue for the FBF and reducing operating costs where
possible to redirect monies to repair and alteration projects.⁸⁷ Legislation enacted in
the 108^th Congress authorized the GSA Administrator to convey real property by sale,
lease, or exchange agreements, with net proceeds deposited into the FBF for future
real property capital acquisitions and improvements.⁸⁸ As a result of this new
authority, an additional $50.4 million in net proceeds was achieved in FY2006 (see
Table 1).
Rent Restrictions. As discussed earlier in this report, the FBF generated less
revenue than anticipated during its first years of operation because Congress and
OMB periodically restricted the rent payments that GSA was allowed to charge
tenant agencies for their office space. GSA’s ability to finance its repair and
alteration requirements was so limited by these imposed rent restrictions that, in
1989, GAO recommended their removal. GAO further recommended that no new
restrictions on rent be authorized.⁸⁹ The GSA Administrator also has the authority
to exempt a tenant agency from the rent it owes for occupying GSA space.⁹⁰ These
exemptions are generally granted for the partial or full rent payments for a particular
building, and for a limited time. Based on GSA data, 14 partial and full rent
exemptions were in effect in 2005, with an estimated forgone annual rent of $169.6
million. Of this total, 12 rent exemptions were authorized by the GSA
Administrator, and the remaining two were authorized by Congress.⁹¹
Even though the federal judiciary has the responsibility to identify and propose
new courthouse construction projects, GSA is responsible for their design and
construction.⁹² GSA and the federal judiciary undertook a substantial courthouse
construction initiative from FY1993 through FY2005, with congressional funding of
approximately $4.5 billion through new appropriations and obligations from the FBF
for 78 courthouse projects.⁹³ In the last 30 years, the judicial branch has increased
the amount of GSA space it occupies by 310%, an increase of one million square feet
per year.⁹⁴ In September 2004, the Judicial Conference approved a two-year

⁸⁷ Ibid., p. 16.
⁸⁸ 118 Stat. 3259.
⁸⁹ U.S. General Accounting Office, Federal Office Space: Increased Ownership Would
Result in Significant Savings, GAO Report GAO/GGD-90-11(Washington: December 1989),
p. 22.
⁹⁰ 40 U.S.C. § 586(b)(3).
⁹¹ U.S. Government Accountability Office, Courthouse Construction: Overview of Previous
and Ongoing Work, pp. 11-12.
⁹² For a full discussion of this issue, see CRS Report 98-527, Federal Courthouse
Construction, by Stephanie Smith.
⁹³ U.S. Government Accountability Office, Courthouse Construction: Information on
Project Cost and Size Changes Would Help to Enhance Oversight, GAO Report GAO-05-

673 (Washington: June 2005), p. 1.

⁹⁴ U.S. Congress, House Committee on Transportation and Infrastructure, Subcommittee on
(continued...)

moratorium on new courthouse projects in an attempt to reduce its annual rent
obligations for the use of GSA-owned space.⁹⁵ In December 2004, the Judicial
Conference requested that GSA provide the judicial branch with a permanent annual
$483 million rent exemption.⁹⁶ According to GSA testimony, the $483 million rent
exemption sought by the judiciary, approximately 50% of the courts’ yearly rental
payments, would essentially bankrupt the FBF.⁹⁷
Two bills were introduced in the 109^th Congress to provide rent relief to the
federal judiciary. The first, H.R. 4710, the “Judiciary Rent Reform Act of 2006,”
would have required the GSA Administrator to establish rent charges for GSA-
owned-and-leased space that do not exceed actual operating and maintenance costs.
The proposed legislation would also have required the judiciary to reimburse GSA
from judiciary appropriations for any GSA courthouse construction, alterations, or
tenant improvements for which GSA did not receive congressional authorization and
funding. The legislation was referred to the House Judiciary Committee and
Transportation and Infrastructure Committee on February 8, 2006, and, on the
following day, to the House Transportation and Infrastructure Subcommittee on
Economic Development, Public Buildings, and Emergency Management. The second
bill, S. 2292, also would have required GSA to charge the judiciary for actual
operating costs, but would have authorized the Director of the Administrative Office
of the U.S. Courts and the GSA Administrator to agree mutually upon how the
judicial branch would reimburse GSA for repairs. S. 2292 was referred to the Senate
Judiciary Committee on February 15, 2006. The bill was reported favorably on April

27, 2006, and placed on the Senate Legislative Calendar the same day.

During consideration of GSA’s FY2006 funding, the Senate Committee on
Appropriations expressed disappointment that the federal judiciary had attempted to
relieve its overall budget problems by challenging the overall rent and cost of its
courthouses. The judicial branch has suggested that all the courthouses be
transferred to the judicial branch with a forgiveness of debt. This is misplaced
logic and any forgiveness would undermine the ability of the Federal Buildings
Fund to meet its mission of supporting federal buildings needs both currently and
in the future. The committee notes that it strongly supports the purpose and

⁹⁴ (...continued)
Economic Development, Public Buildings, and Emergency Management, The Judiciary’s^th^st
Ability to Pay for Current and Future Space Needs, hearing, 109 Cong., 1 sess., June 21,

2005 (Washington: GPO, 2005), p. 83.

⁹⁵ The Judicial Conference of the United States is the governing body for the administration
of the U.S. Courts, excluding the U.S. Supreme Court (28 U.S.C. § 331), and supervises the
Director of the Administrative Office of the United States Courts in the performance of his
duties (28 U.S.C. § 604).
⁹⁶ U.S. Government Accountability Office, Courthouse Construction: Overview of Previous
and Ongoing Work, pp. 13-14.
⁹⁷ Ibid., p. 4.

structure of the Federal Buildings Fund, of which the judicial branch is an
important participant.⁹⁸
The Judicial Conference’s rent exemption request has renewed longstanding
congressional concerns over costly courthouse construction which requires upgraded⁹⁹
structural and architectural elements. GAO reported that courthouses are among the
most costly types of federal space to construct. These construction costs necessitate
rental rates under GSA’s pricing policy that are more expensive than the highest-
quality office space in other locations.¹⁰⁰ In addition, GAO recommended that GSA
fully analyze and explain factors such as space increases, operating costs, and
security upgrades that determine the judiciary’s rental rates on an annual basis. GAO
believes this information could enable the judiciary to “better understand the reasons
behind its rent increases, make more informed space allocation decisions in the¹⁰¹
future, and identify errors in GSA’s billing.” The issues not completely resolved
include courtroom sharing and assurances from GSA and the judiciary that all future
construction projects will be adequately justified to reduce costs. GAO
recommended that the judiciary create incentives for more efficient space use,
establish criteria for courtrooms and chambers, and reallocate its space needs based
on new technological advancements.¹⁰²
Efforts to Address Problems in Real Property Inventory
Capital reinvestment is one of the largest challenges confronting GSA officials,
who have described their buildings inventory as predominantly aging, with¹⁰³
maintenance and repair needs that far exceed available FBF revenues. The
condition of the federal government’s real property inventory is not static; that is,
even as certain repairs are completed, new problems are identified. In addition, the
amount of funding needed for repairs is greater each year, due to cost increases in
maintaining an expanded inventory of properties. As a solution, GAO has stated that

⁹⁸ U.S. Congress, Senate Committee on Appropriations, Transportation, Treasury, the
Judiciary, Housing and Urban Development, and Related Agencies Appropriations Bill,^th^st

2006, report to accompany H.R. 3058, 109 Cong., 1 sess., S.Rept. 109-109 (Washington:

GPO, 2005), p. 219.
⁹⁹ U.S. Congress, House Committee on Transportation and Infrastructure, Subcommittee
on Economic Development, Public Buildings and Emergency Management, The Judiciary’s
Ability to Pay for Current and Future Space Needs, p. 7.
¹⁰⁰ U.S. Government Accountability Office, Federal Courthouses: Rent Increases Due to
New Space and Growing Energy and Security Costs Require Better Tracking and
Management, p. 4.
¹⁰¹ Ibid., p. 21. In January 2005, the judiciary put into effect a rent validation initiative to
ensure that GSA is accurately applying its rent pricing policy. As a result, the judiciary
discovered errors in GSA pricing policies that led to a significant decrease in rent in two
judicial districts.
¹⁰² Ibid., p. 5.
¹⁰³ U.S. General Accounting Office, Financial Condition of Federal Buildings Owned by the
General Services Administration, GAO Report GAO-02-854R (Washington: August 2002),
p. 1.

GSA must find new ways to generate additional revenues that are needed to upgrade
its federal inventory.¹⁰⁴ Seeking to increase the amount of funding available to
adequately maintain these federal properties, GSA officials have expressed support
for legislative reform initiatives introduced in previous Congresses that would
authorize the agency to convey excess real property by sale, lease, or exchange, with
net proceeds deposited into the FBF for future real property capital acquisitions and
improvements.
Past Congressional Reform Initiatives. Legislative initiatives to revise
federal real property management policies, S. 2805 and H.R. 3285, were introduced^th
in the 106 Congress, but neither bill was reported out of committee before Congress
adjourned.¹⁰⁵ In 2001, S. 1612 was introduced with recommendations to reform
federal property asset management, but the legislation was not reported out of
committee before adjournment of the 107^th Congress.
Two similar bills were introduced in the 108^th Congress to revise federal
property management policies, H.R. 2548 and H.R. 2573. The first, H.R. 2548, the
Federal Property Asset Management Reform Act, was more comprehensive in its
attempt to allow landholding agencies greater flexibility to manage directly their own
federal properties. Its provisions were similar to those of S. 1612, introduced in the^th
107 Congress. The proposed legislation would have modified existing federal
property statutes to authorize landholding agencies to enter into interagency transfers
or exchanges of property, subleases of unexpired portions of existing leases, property
exchanges or sales with non-federal sources, or outleases¹⁰⁶ of underutilized real
property that must remain in federal ownership. If enacted, H.R. 2548 would have
authorized federal landholding agencies to retain the proceeds from their real
property transactions. New statutory requirements would have been provided for the
crediting of monetary proceeds to existing agency accounts, which would then have
been used to fund that agency’s capital asset expenditures. H.R. 2548 was ordered
to be reported, as amended,¹⁰⁷ by voice vote on July 17, 2003. No further action^th
occurred during the 108 Congress.
The second bill, H.R. 2573, the Public Private Partnership Act, focused on
public-private partnerships as a method to increase funding for the FBF and would

¹⁰⁴ U.S. General Accounting Office, Federal Buildings: Funding Repairs and Alterations
Has Been a Challenge — Expanded Financing Tools Needed, p. 14.
¹⁰⁵ For a full discussion, see CRS Report RL32368, The General Services Administration
and Federal Real Property Management: Overview and Current Legislation, by Stephanie
Smith.
¹⁰⁶ The term outlease refers to an agreement granting the use of property which temporarily
is not required for public use, for a specified period of time, revocable at will or as otherwise
provided in the agreement, for an adequate, specified consideration.
¹⁰⁷ The House Government Reform Committee added an en bloc amendment that would
have allowed landholding agencies to withhold property records for reasons of national
security, as authorized by law. The amendment would also have required, in certain
instances, that cultural resource surveys or comprehensive preservation plans be completed
before a federal property was sold, transferred, or leased. There was no written committee
report.

have authorized GSA to administer these transactions. The proposed legislation
would have authorized GSA to enter into agreements with non-federal entities for the
acquisition, lease, construction, maintenance, or renovation of real property under
the jurisdiction of GSA, or other landholding agencies. Proceeds from all real
property transactions have been deposited into the FBF. H.R. 2573 was reported
favorably from the House Government Reform Committee to the full House by voice
vote on June 25, 2003.¹⁰⁸ No further action was taken on H.R. 2573.
Although no final action was taken on either H.R. 2548 or H.R. 2573, the 108^th
Congress revised GSA’s property management policies with the passage of the
FY2005 Consolidated Appropriations Act on December 8, 2004.¹⁰⁹ Section 412
authorized the GSA Administrator to convey real property for sale, lease, exchange,
or leaseback agreements, with net proceeds deposited into the FBF for future real
property capital acquisitions and improvements.
Federal Real Property Council. On February 4, 2004, President George W.
Bush implemented new federal property guidelines for executive branch agencies
with Executive Order 13327, entitled “Federal Real Property Asset Management.”¹¹⁰
Many of its provisions were based on his earlier administrative initiatives pertaining
to federal property asset management reforms, which were incorporated as Title III^th
of S. 1612, introduced during the 107 Congress. In order to increase agency
accountability for real property asset management, E.O. 13327 established the
position of Senior Real Property Officer within each executive branch agency.
Section 3(b) required that each officer prepare and submit to OMB an initial asset
management plan composed of data on the agency’s real property assets, and
proposals for cooperative arrangements with the commercial real estate community.
Section 4 established a Federal Real Property Council within OMB to develop
guidance and provide oversight for the executive branch’s real property inventory.
The chairman of the council is OMB’s Deputy Director for Management. Members
include each agency’s Senior Real Property Officer, OMB’s Financial Management
Controller, the Administrator of GSA, and any other federal officials deemed
appropriate by the chairman.
Section 5 required GSA, in consultation with the Federal Real Property Council,
to provide policy oversight, and to manage selected properties for the executive
branch agencies that requested such assistance. With the consent of the GSA
Administrator, operational responsibilities may be delegated to a particular agency,
taking into consideration the receiving agency’s willingness and proven ability to
perform such tasks. Section 5(b) authorized GSA, in conjunction with the council,
to establish and maintain a comprehensive database of the executive branch’s real
property inventory, except when otherwise precluded for reasons of national security.
GSA also must publish any asset management measures or standards that may be

¹⁰⁸ There is no written committee report.
¹⁰⁹ 118 Stat. 3259.
¹¹⁰ E.O. 13327, Federal Register, vol. 69, Feb. 6, 2004, pp. 5897-5900. President Bush also
added federal real property asset management as the sixth government-wide initiative to be
included in the President’s Management Agenda.

adopted by the Federal Real Property Council. E.O. 13327 further required GSA to
consult with OMB and the other landholding agencies to develop new legislative
initiatives to improve the federal government’s management of real property
activities. Section 2(b) recognized that the provisions of E.O. 13327 did not
supersede existing real property law.
Congressional Initiatives in the 109^th Congress. H.R. 3134, the Federal
Real Property Disposal Pilot Program and Management Improvement Act of 2005,
was introduced in the House by Representative Tom Davis and one co-sponsor, on
June 30, 2005. The proposed legislation would have established a five-year pilot
program to allow for the expedited disposal of surplus or underutilized federal real
properties to increase revenues for capital improvements. The OMB Director would
be authorized to select the federal properties to participate in the program, based on
the cost and time required to dispose of real property assets and the availability of
unneeded federal properties. A selected federal property would have been sold at or
above fair market value, and the agency that owned the property would have been
authorized to retain a portion of the proceeds. If enacted, H.R. 3134 would have
codified certain provisions authorized by E.O. 13327, such as the establishment of
a Federal Property Council and the creation of senior real property officer positions
in the executive branch agencies. Two amendments were adopted by voice vote on
October 26, 2005. The first amendment was to authorize the GSA Administrator to
notify local governments of the federal government’s intent to dispose of federal
property in their jurisdictions. In addition, a federal property determined by GSA to
be a public benefit conveyance for use by homeless groups would not have been
eligible for the five-year pilot program. The second substitute amendment was to
require that the OMB Director submit an annual report on the status of the Federal
Real Property Disposal Pilot Program to the House Government Reform Committee
and the Senate Homeland Security and Governmental Affairs Committee. H.R. 3134,
as amended, was ordered to be reported favorably by the House Committee on
Government Reform on October 26, 2005.
Congressional Action in the 110^th Congress. As approved by the House
on June 28, 2007, H.R. 2829, the FY2008 Financial Services and General
Government appropriations bill, provides that an additional amount of $88 million
be deposited in the FBF. On July 12, 2007, the Senate Appropriations Committee
reported that an additional amount of $625 million be deposited in the Federal
Buildings Fund.¹¹¹ The FY2008 Consolidated Appropriations Act, signed into law
on December 26, 2007, authorized that an additional amount of $84 million be
deposited in the Federal Buildings Fund.¹¹²
GSA Initiatives. Given its backlog of rent repairs and the FBF’s limited
resources, GSA is striving to improve its owned-building inventory by conducting
a financial analysis to determine which GSA-owned facilities are not generating
sufficient income to cover their operating expenses and the amounts needed for

¹¹¹ U.S. Congress, Senate Committee on Appropriations, Financial Services and General
Government Appropriations Bill, 2008, report to accompany H.R. 2829, 110^th Cong., 1^st
sess., S.Rept. 110-129 (Washington: GPO, 2007).
¹¹² P.L. 110-161; Dec. 26, 2007.

future repairs. Capital reinvestment funds would be used on GSA facilities that are
not generating sufficient income compared with their market value, but might
generate higher rents once the buildings are renovated. Buildings that are deemed to
be nonperforming may be referred for disposal or, if authorized by Congress,
alternatives include property exchanges with other federal, state, or local agencies;
outleasing to non-federal tenants; and public-private partnerships.¹¹³ Legislation
enacted in the 108^th Congress authorized the GSA Administrator to convey real
property by sale, lease, or exchange agreements, with net proceeds deposited into the
FBF for future real property capital acquisitions and improvements.¹¹⁴ As a result of
this new authority, an additional $50.4 million in net proceeds for the FBF was
achieved in FY2006.
Policy Considerations
It has been documented that incoming rent revenues deposited into the FBF
have been insufficient to fund needed repairs. Moreover, GSA’s efforts to deal with
a long-standing backlog of needed repairs have been hindered by a lack of reliable
and detailed information about specific properties. In addition, real property law
restricts GSA’s, and other landholding agencies’, ability to generate the additional
revenues necessary to upgrade federal buildings, or to dispose of them when they are
no longer of use. Some observers contend that existing statutory requirements that
have been in place since 1949 often constrain effective federal property management
that is necessary to meet agencies’ changing mission requirements.¹¹⁵
As previously mentioned, the 108^th Congress revised GSA’s property
management policies with the passage of the FY2005 Consolidated Appropriations
Act, on December 8, 2004.¹¹⁶ Section 412 authorized the GSA Administrator to
convey real property by sale, lease, exchange, or leaseback agreements, with net
proceeds deposited into GSA’s Federal Buildings Fund for future real property
capital acquisitions and improvements. Introduced in the 109^th Congress, H.R. 3134,
the Federal Real Property Disposal Pilot Program and Management Improvement Act
of 2005, proposed to improve the management of federal real property by
establishing a five-year pilot program to allow for the expedited disposal of surplus
or underutilized federal real properties, and would have enacted many of the
requirements of E.O. 13327 into law. It also appears that certain types of transactions
with the private sector will continue to be encouraged as the most cost-effective
means to restore federal properties, and to dispose of properties that the government
no longer needs. GAO has long supported real property reform initiatives that would
allow incoming revenues to the FBF from real property transactions.¹¹⁷ According to

¹¹³ U.S. General Accounting Office, Financial Condition of Federal Buildings, p. 2.
¹¹⁴ 118 Stat. 3259.
¹¹⁵ U.S. General Accounting Office, Federal Real Property: Views on Real Property Reform
Issues, GAO Report GAO-02-622T (Washington: April 2002), p. 1.
¹¹⁶ 118 Stat. 3259.
¹¹⁷ U.S. Government Accountability Office, Federal Real Property: Further Actions Needed
to Address Long-standing and Complex Problems, p. 15.

proponents, enactment of reform initiatives, such as H.R. 3134, could fundamentally
change existing law by giving GSA and other landholding agencies new incentives
to manage and dispose of their real property inventories.
Other issues regarding property management may also need to be addressed to
resolve GSA’s long-standing problems. GAO has reported that GSA’s continued
reliance on leased property remains as one of the major obstacles to a viable and self-
sustaining federal property portfolio. As stated earlier, the current budget process
favors lease agreements that appear more economical. One option that Congress may
wish to consider would be to include a reference to the total cost of lease agreements
in the annual appropriations and authorizations process to reflect better the actual
long-term costs associated with leasing.¹¹⁸
President Bush’s establishment of the Federal Real Property Council and the
appointment of Senior Real Property Officers will arguably provide greater
coordination within the executive branch to improve the operational and financial
management of the government’s real property inventory. Congressional enactment
of H.R. 3134 would have codified these provisions into law. GAO has reported that,
while the Federal Real Property Council is developing performance measures and a
real property inventory database, it is too early to determine the impact of these
efforts, which, in GAO’s view, are positive.¹¹⁹
Funding limitations will likely continue to be GSA’s greatest obstacle to
completing urgent repairs and renovations to aging federal facilities. Addressing
GSA’s long-standing issues with its real property portfolio will:
...require a reconsideration of funding priorities at a time when budget
constraints will be pervasive. Without effective incentives and tools; top
management accountability, leadership, and commitment; adequate funding; full
transparency with regard to the government’s real property activities; and an
effective system to measure results, long-standing real property problems will¹²⁰
continue and likely worsen.
The cost history pertaining to FBF reserves and trends in the following areas may
continue to be of particular concern to Congress: the size of the GSA-managed space
inventory and how efficiently that space is used; the leasing program and its effect
on costs; and the level of capital investments. In addition to Congress and the
executive branch, local and foreign governments, the private sector, and various
advocacy groups, such as historic preservation organizations, all have a vested¹²¹
interest in how GSA acquires, manages, and disposes of its real property. A
diversity of views could be expected should Congress choose to address this issue
further.

¹¹⁸ U.S. General Accounting Office, General Services Administration: Factors Affecting the
Construction and Operating Costs of Federal Buildings, GAO Report GAO-03-609T
(Washington: April 2003), p. 31.
¹¹⁹ Ibid., p. i.
¹²⁰ Ibid., p. 15.
¹²¹ CRS Report RL32368, The General Services Administration and Federal Real Property
Management: Overview and Current Legislation, by Stephanie Smith.