July 01, 2019 Public Contract Law Journal

The Good Neighbor Next Door: Public-Private Partnerships in Federal Real Property Management

by Makalia Griffith

Makalia Griffith is a J.D., 2019, The George Washington University Law School; B.A., 2010, M.A., 2011 Villanova University; mgriffith@law.gwu.edu. I would like to thank my Notes Editors and professors for their time and helpful comments. Special thanks to my family and loving husband Alex for their unwavering support.

I.  Introduction

Fifty-five acres of developable land positioned a few miles away from the U.S. Capitol is prime real estate, yet fifty-five acres of federally owned developable land located a few miles away from the Capitol remained barren for over 10 years.1 The land was too valuable to sell but also unsuitable for use as a traditional government site; therefore, due to its size and proximity to both public transportation and the Washington Navy Yard, the land was a good candidate for a public-private partnership designed to develop it and the surrounding neighborhood.2

Local government, community and stakeholder buy-in, and congressional approval each contributed to the redevelopment of the Washington, D.C. neighborhood, Navy Yard.3 Advocates for redevelopment attempted to persuade government employees and subcontractors to move to Navy Yard, while local government cleared blighted and vacant lots in the surrounding neighborhood.4 Through a series of federal and local government actions in the late 1990s, Navy Yard’s redevelopment was underway.5 First, the Navy Seas Systems Command (NAVSEA) Headquarters Project relocated and consolidated the NAVSEA headquarters.6 Congress, through the Southeast Federal Center Public-Private Development Act of 2000 (Public-Private Development Act), permitted the General Services Administration (GSA) to partner with the private sector to develop the empty, government-owned land.7 The Public-Private Development Act was crucial to Navy Yard’s development. More government investment into the area followed in 2004, with the decision to bring the U.S. Department of Transportation and a mixed-use development to Navy Yard.8 These investments served as catalysts for economic development.9 Now, Navy Yard, a previously undeveloped and industrial neighborhood in Washington, D.C., is on track to become one of D.C.’s most densely populated neighborhoods.10

Navy Yard’s development demonstrates that public-private partnerships can be a successful tool in federal real property management. A definition of public-private partnerships does not exist but the partnerships generally include a partnership between the government and the private sector, where a private sector partner provides a service traditionally provided by the government.11 The partnerships address two competing priorities: meeting policy goals while operating within budget constraints.12 Not only do the partnerships fill gaps in the federal budget by providing agencies with alternate methods to finance their real property needs, but the partnerships also allow GSA to be a strategic neighborhood partner.13

GSA, the agency that maintains the government’s real property portfolio, is required to fulfill its mandate while advancing local community development goals.14 GSA’s Urban Development/ Good Neighbor Program (Good Neighbor Program) strives to leverage federal space needs while simultaneously supporting community development goals.15 The program recognizes that meeting federal space requirements while engaging the local community is an efficient use of federal funds.16 As the federal government is already concerned with neighborhood development, public-private partnerships present a mutually beneficial relationship that meets the dual goals of efficiently using federal office space while engaging local communities.17

Since 2003, federal real property management has consistently appeared on the Government Accountability Office’s (GAO) high-risk list.18 Inefficient property management and waste continue to pose challenges to real property management.19 Yet, the government continues to underutilize the property it currently owns, and agencies still overwhelmingly rely on leases, when owning property would be more cost efficient in the long term.20 As the government struggles with inefficient property management and waste, this Note proposes public-private partnerships as an alternative funding mechanism and illustrates that the government can efficiently manage its real property portfolio while creating an economic benefit for the surrounding community.

This Note argues that public-private partnerships should occupy a central role in federal real property management. Public-private partnerships provide an alternate method of financing while enabling the government to meet a public policy goal. These steps would allow the government to efficiently manage its real property portfolio. Part I of this Note begins with an introduction to GSA and details the two overarching issues: (1) excess and underutilized property and (2) a reliance on leasing that impedes effective property management. Part II discusses the underlying issues that prevent the government from addressing its property management challenges. Part III discusses the federal government’s failed policy attempts and addresses the underlying reasons these policies have been unsuccessful. Finally, Part IV examines public-private partnerships and concludes that public-private partnerships can be a formidable tool in reducing the government’s real property footprint.

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