Utah congressman suggests federal agencies don’t need to be based in D.C.

Utah congressman suggests federal agencies don’t need to be based in D.C.

Jan 23, 2017, 12:06pm EST Updated Jan 24, 2017, 10:19am EST
D.C.’s commercial real estate market could potentially be dealt a serious blow under the new Trump administration and makeup of the 115th Congress.

Rep. Jason Chaffetz, R-Utah, has introduced a House resolution stating the federal government should not be required to have its offices in D.C. House resolutions express the sentiment of a particular chamber in Congress and do not hold the same weight as legislation, and it’s still too early to say whether the full House will even take up the resolution. But the prospect could have major implications for the D.C. area’s office market if it is a sentiment shared by the new administration and Congress.

“This resolution is the first step toward decentralizing federal agencies and initiating a process that shares the wealth with other communities across the United States,” Chaffetz, chair of the House Oversight and Government Reform Committee, said in a statement of H. Res 38, also known as Divest D.C. “I look forward to working with my colleagues on legislation to identify locations where these agencies can best serve the American people.”

In his proposed resolution, submitted Jan. 10, Chaffetz suggests it’s no longer essential that federal agencies be based in D.C. due to advances in communication technology and the ease of travel. He suggests the federal government could lower the cost of doing business by shifting to other cities while serving as an economic driver for those areas.

“Government needs to be closer to the people it regulates,” Chaffetz said. “As it stands, decision-makers at various agencies are largely shielded from the impact of their decisions. Housing federal agencies in a city with one of the highest median incomes in the United States is not only expensive, but keeps federal bureaucrats in an economic and political bubble that offers a distorted view of the realities facing this country.”

Federal real estate expert Kurt Stout said the resolution could be a larger indicator of the mindset in Congress — a mindset, he said, that could take the form of formal federal legislation. Stout, executive vice president of government solutions at Colliers International, said it could also result in pressure from Congress to President Donald Trump, with his more extensive real estate background, to consider distributing more leases to parts of the country where the cost of doing business is less expensive than inside the Beltway.

The General Services Administration leases or manages more than 100 million square feet of federal space in Greater Washington, by far the largest concentration of any metro area in the U.S. It’s not the first time that it’s been suggested the federal government spread its resources more evenly outside of D.C., particularly following the Sept. 11 terror attacks. More recently, consultant Dan McGinn suggested in an opinion piece in The Hill that even the FBI’s headquarters search be opened up to other cities. The GSA has said it expects to chose from one of three locations in Greater Washington by March, but that selection could be influenced by Trump now that he has oversight of the agency.

Daniel J. Sernovitz covers commercial real estate.

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