On The Money: Real Estate Red Tape

By Mike Luery

MODESTO, Calif. (CBS13) -- The biggest property owner in the U.S. is the U.S. government, which owns more than 1.1 million properties from coast to coast, at a cost of $20 billion annually in maintenance fees.

The feds admit that billions of dollars are wasted each year on properties that are no longer needed. More than 1,100 of them are here in California.

The list includes the downtown Modesto Post Office, which is shutting down, much to the surprise of many residents.

"Closing down? For what?" asked Louella Brown of Modesto.

"I did not know, but I wish they would choose a different one," stated Modesto's Jean Anderson outside the post office.

The federal government considers the down Modesto Post Office to be underutilized – just like thousands of other buildings across the country. Shutting down those vacant and underused buildings can save billions of dollars, federal officials say.

The president want to dispose of properties like this Social Security Office in Modesto. The property has been vacant since 2004, Social Security officials told CBS 13. It's now a crash pad for the homeless. A federal building in Alameda is also on the list of surplus property.

And as On The Money reported last May, a Social Security office in Fairfield was vacant for eleven months, forcing taxpayers to shell out $300,000 in rent for an empty building.

President Obama says he wants to sell off 14,000 empty and underutilized buildings. But the bureaucrats in charge have been slow to respond – according to California Congressman Jeff Denham, a Republican from Atwater.

Denham blames the General Services Administration, the property managers for the federal government.

In an interview inside the Modesto Post Office, CBS 13 talked to Congressman Denham about his dealings with the federal agency in providing a list of surplus properties.

"I would say initially they were definitely stonewalling us," Denham said.

"How long did it take them to supply the list you asked for," I asked.

"About 3 months," Denham replied. "(It) took some threats and ultimately it took going to the president and saying do you really want to get this done," the Congressman stated.

But Denham told CBS 13 the list he received is still missing crucial information about which properties are losing money. CBS 13 wanted to know why. The General Services Agency wouldn't answer our questions, so we asked the White House.

"We're putting together this list of excess properties for the first time. The important point is that they are now available. They are publicly available. And we are most importantly moving forward to getting rid of these properties that we cannot afford," said Jeffrey Zients, Deputy Director of the White House Office of Management and Budget.

"I'm not going away. We're going to fight for this. We want not only a list, but also a full evaluation - how much is the property worth?" Denham said.

Denham may get his wish. The White House is now asking Congress to set up an independent commission to dispose of these unwanted properties quickly. The President says the commission could help save up to $15 billion.

Remember that U.S. Post Office in Modesto? It's slated to be put up for auction on June 9th.

The feds say there are more than 20 requirements to sell a government property. That independent commission is designed to cut through red tape and come up with a list of specific properties to sell or consolidate. The list would then be voted up or down by Congress.