Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending / Why the Government Spends Billions on Idle Land
Transcript
- Lucas: So the federal government owns nearly 640 million acres of land. That's about 28 percent of the entire United States. And here's the thing — it doesn't need all of it. Luna: Define 'doesn't need.' Is this like, vacant lots in the middle of nowhere? Lucas: Sometimes. But it's also former military bases, old post offices, warehouses, even office buildings in prime downtown locations. The Government Accountability Office — the GAO — put out a report last year that found over 80,000 parcels are classified as 'excess' or 'underutilized.' That means no federal agency has a current use for them. Luna: Eighty thousand parcels. So what's the carrying cost on that? Lucas: The GAO estimates it at roughly one point seven billion dollars annually. That's maintenance, security, environmental monitoring, property taxes in some cases. Money that goes out the door every year for land the government isn't using. Luna: And this has been going on for how long? Lucas: Decades. The core problem is a law from 1949 called the Federal Property and Administrative Services Act. It sets up the process for disposing of excess land, and that process requires congressional approval for any sale over ten million dollars. That threshold hasn't been updated for inflation — ten million in 1949 is about 130 million today. Luna: So every time the government wants to sell a piece of land worth more than ten million, it has to go through Congress. That's a bottleneck. Lucas: Exactly. And Congress moves slowly. So properties sit on the books for years, sometimes decades, while the carrying costs pile up. Let me give you a concrete example: the former Alabama Army Depot, near Anniston. It's 3,400 acres, decommissioned in 2010. Since then, the government has spent 47 million dollars just on upkeep — mowing grass, maintaining fences, environmental monitoring for munitions residue. Luna: Forty-seven million with no buyer? Lucas: No serious buyer. The property was offered for sale, but it's contaminated from decades of weapons storage. Cleanup costs are estimated at 200 million. No private developer wants to touch that. And under the 1949 law, the government can't sell it for a dollar to a local redevelopment authority without Congress signing off — because the 'value' on paper is still above ten million. Luna: So you're stuck in this loop where the land is too expensive to clean up, too valuable on paper to give away, and too costly to just hold. That's a perverse incentive. Lucas: It is. And it's not just military bases. There are 12,000 excess buildings across the country. Old IRS service centers, Border Patrol stations, Forest Service ranger stations. The Department of Energy alone has 2,500 excess structures at sites like Hanford in Washington state. Luna: What's the argument for keeping this process so cumbersome? I mean, there must be some logic behind the 1949 law. Lucas: The original intent was oversight. Congress wanted to prevent fire sales of public assets to political cronies. You don't want an administration selling off the Pentagon's parking lot to a donor for a dollar. But the pendulum has swung too far. The GAO has been flagging this since the 1990s. They've made 17 recommendations to streamline the process. Most have been ignored. Luna: So what would a fix look like? Raise the threshold? Lucas: That's one piece. Index it to inflation so it doesn't require constant legislative updates. Another is allowing agencies to transfer land to local governments or nonprofits without going through Congress, as long as it's for a public purpose — like a park or a school. Some pilot programs have worked. The Base Realignment and Closure Commission, BRAC, had some success in the 2000s selling former bases. Luna: But BRAC was a one-time thing. And Congress hasn't authorized a new round since 2005. Lucas: Right. So the system is stuck. And the cost is real. One point seven billion a year may not sound huge in a six-trillion-dollar budget, but it's not nothing. It's about the same as the entire budget of the National Park Service. Luna: Wait — the National Park Service runs on about three billion. So half of that is just carrying costs on empty land? Lucas: Closer to 60 percent, if you include administrative overhead. And there's an opportunity cost. That land could be generating property tax revenue for local communities, or being developed for housing. We're in a housing affordability crisis, and the federal government is sitting on tens of thousands of acres of developable land. Luna: But a lot of it is contaminated or remote. Is it really developable? Lucas: Some is, some isn't. But even the remote stuff — the Bureau of Land Management has 245 million acres that are mostly rangeland. That's not really excess. The problem is concentrated in urban and suburban areas. The GAO found that 40 percent of excess parcels are in or near cities. There's a former Navy base in Alameda, California, right across from San Francisco, that's been sitting empty for 20 years. Luna: That's prime real estate. Why hasn't it been sold? Lucas: Environmental cleanup again. And political wrangling. The city of Alameda wants to turn it into a mixed-use development, but the Navy wants to be indemnified against future liability. Congress hasn't been able to broker a deal. So the base sits, and the government spends about eight million a year on security and maintenance. Luna: So we're paying eight million a year for a fence and a guard shack on a property that could be generating tax revenue and housing. Lucas: That's the story in a nutshell. And it's not unique. There are dozens of similar sites around the country. The Department of Defense alone has 22,000 excess buildings. The total replacement value of all federal excess property is estimated at 17 billion dollars. That's assets sitting idle. Luna: If today's episode made something click about how government land management works — or doesn't — we should mention that listener support is what keeps these shows ad-free and independent. Lucas: Yeah, we don't have sponsors or ads. It's just us digging into numbers like this because we think it matters. If you find value in that, the best way to keep it going is buy me a coffee dot com slash fexingo. Completely optional, but it helps. Luna: So back to that 1949 law. Has there been any recent movement to reform it? Lucas: There's a bill — the Federal Property Reform Act — introduced in the House last session. It would raise the congressional approval threshold to 50 million and index it to inflation. It also creates a centralized online database of excess properties, so local governments can see what's available without having to navigate agency bureaucracy. Luna: Did it pass? Lucas: It passed the House unanimously but stalled in the Senate. The main objection was from senators who worried it would allow the administration to sell off land in their states without their input. So even a modest reform gets caught in turf battles. Luna: So the status quo persists. One point seven billion a year in deadweight loss. Lucas: And that's just the direct cost. There's also the economic multiplier. If you put that land into productive use — even a fraction of it — you'd see local job creation, tax base expansion, maybe even some deficit reduction. The Congressional Budget Office scored a similar reform in 2019 and estimated it would save about 300 million over ten years. That's modest, but it's real money. Luna: Three hundred million over ten years — that's 30 million a year. Compared to 1.7 billion in annual carrying costs, that seems low. Why such a small saving? Lucas: Because the CBO assumes only a small fraction of properties would actually be sold. The process is still cumbersome even with reform. But the point is, the system is broken. And while 1.7 billion is a drop in the federal bucket, it's the principle. It's government money being spent on absolutely nothing. Luna: So what's the best case for reform? What could this look like in five years? Lucas: Ideally, we'd see a streamlined disposal process, a centralized database, and a mandate for agencies to report carrying costs transparently. Some states already do this. Texas has a Land Board that actively markets excess state property. They sold a former prison site in 2022 for 15 million — took 18 months from declaration to sale. The federal government could learn from that. Luna: A prison? Who buys a prison? Lucas: In that case, a data center developer converted it. The concrete walls and secure perimeter were actually useful for a server farm. So there are creative uses out there. The problem is the federal government isn't set up to find them. Luna: Right. So the land sits, the costs pile up, and the taxpayer foots the bill. That's the story of federal land management in a nutshell. Lucas: It is. And it's one of those quiet inefficiencies that doesn't get attention because it's not a sexy scandal. It's just bureaucracy doing what bureaucracy does — nothing.