White House seeks $425M in 2025 budget to sell unneeded federal office space

The Biden administration sees a major opportunity to shrink the federal government’s sprawling real estate footprint and is making the project a top priority in its fiscal 2025 budget proposal.

The White House, in the 2025 budget plan released Monday, proposes giving the federal government’s landlord, the General Services Administration, $425 million to right-size the federal footprint and reduce long-term costs through a new “optimization program.”

The White House budget plan also calls for giving GSA “broadened authorities related to the disposal of excess property.”

“The expanded authority will allow GSA to assist agencies in identifying and preparing real property prior to the agency declaring a property excess,” the White House wrote in its budget request. “Currently, agencies do not always complete these types of activities because agencies must fund the activities from limited resources. This expanded authority will help to reduce the federal footprint by providing the funding required to assess and prepare potential excess properties for disposal, the funds will then be recovered from the proceeds of sale.”

The administration is doubling down on efforts to sell and dispose of underutilized federal buildings and land, at the urging of Congress.

An independent agency, the Public Buildings Reform Board, is also taking a closer look at the issue. Since 2019, the board has recommended underutilized, but high-value federal properties for GSA to sell. GSA, so far, has sold 10 PBRB-recommended properties.

GSA, in a press release Monday, said the $425 million real estate optimization fund would allow the agency to “reconfigure and renovate federal buildings to better utilize space and to expedite the disposition of unneeded federal facilities.”

The agency added that the optimization fund would help GSA make better use of existing federal building space, and reduce spending on leased office space.

GSA Administrator Robin Carnahan said in a statement Monday that the budget plan “reflects critical, targeted investments that will accelerate GSA’s efforts to right-size the real estate portfolio,” and if implemented by Congress, “these sound investments will yield big returns for taxpayers.”

The administration’s budget proposal would also give GSA full access to revenues and collections in the Federal Buildings Fund, where it deposits rent payments collected from agencies using GSA-owned properties.

Congress since 2011 has diverted about $1 billion each year from the Federal Buildings Fund to cover other agencies’ budgets.

GSA officials have told lawmakers that siphoning off these funds has delayed investments in federal buildings, and limited opportunities for agencies to consolidate office space.

The Federal Buildings Fund is GSA’s primary source of maintenance, repair, and construction funding for buildings that it owns.

“The FBF has hit a tipping point with a growing backlog of deferred maintenance and an increasing number of missed opportunities to consolidate from leases into more cost-effective federally-owned space – particularly given the unique opportunity to re-shape the federal footprint and optimize building utilization,” the budget proposal states.

The White House estimates that nearly $13 billion in agency rental payments, over the past 15 years, were never appropriated by Congress.

“At the same time, the GSA inventory of federally owned buildings is seeing an increase in deferred maintenance while experiencing cost increases year over year for unfunded projects,” the budget proposal states. “This year, the budget again proposes a reform to ensure that all agency rental payments can be used for construction and maintenance and repair, as intended, rather than merely sitting unavailable for use in the fund.”

The budget would also build on GSA’s announcement last November to put 23 additional federal properties through its disposition process.

GSA expects the properties, once offloaded, would eliminate up to 3.5 million square feet and would save the federal government $1 billion over 10 years.

The White House also proposes giving GSA $10 million in 2025 to set up an Electric Vehicles Fund to support the government-wide adoption of electric vehicles and electric vehicle supply equipment.

“The Electric Vehicles Fund (EVF) enables [GSA] to support the Administration’s goal of electrifying the Federal fleet by providing the mechanism for GSA to procure zero emission vehicles and the associated charging infrastructure on behalf of federal agencies,” the White House wrote in its budget plan.

Funding for new FBI headquarters

The Biden administration is also asking for $3.5 billion for a new FBI headquarters in Greenbelt, Maryland.

GSA selected Greenbelt from a list of three final sites last November, but agency watchdogs are reviewing the decision, at the urging of Virginia lawmakers and FBI Director Chris Wray.

The White House wrote that the FBI’s current headquarters, the J. Edgar Hoover building in downtown D.C., “can no longer support the long-term mission of the FBI.”

“Major building systems are near end-of-life and structural issues continue to mount, making the current building unsustainable,” the budget proposal states.

The Biden administration expects the FBI headquarters in Greenbelt will accommodate at least 7,500 FBI employees.

GSA and the FBI are looking for a federally owned site in D.C. to accommodate an additional 750-1,000 FBI personnel who would support day-to-day FBI engagement with the Justice Department, Congress and the White House.

“The administration plans to use existing balances in the FBI’s account previously appropriated for the new headquarters effort to build out a downtown D.C. location to support the FBI’s mission,” the budget states.

To support the funding for a new FBI headquarters, the Biden administration proposes setting up a Federal Capital Revolving Fund.

Under this proposal, Congress would appropriate the total amount of money needed for the project upfront. GSA would then repay the revolving fund, over the course of 15 years, by taking out about $233 million each year from the Federal Buildings Fund.

“The administration’s FCRF proposal provides a new budgetary mechanism to fully fund the costs of very large civilian real property capital projects that are difficult to accommodate in the annual appropriations process,” the budget states.

Congress already gave $645 million in prior year appropriations to support the construction of a new, suburban FBI headquarters.

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