General Services Administration

Equitably scoring the costs of real property leases vs. ownership

I suggest you...change the way in which policy options are "scored" with regard to leasing federal space versus owning a building.

 

The status quo is that when comparing the options of buying a property versus leasing a property, the total ownership costs (design, construction, maintenance, etc.) are used to score the ownership option; whereas only 1 year of lease costs plus the cost to cancel the lease is used to score the lease option. However, since many leases last as long as the 20-30 years calculated for owning the building, the comparison presents an inherent bias toward leasing.

 

By changing the way real property options are scored, we may be better positioned to exercise the cheaper option. As it stands, many facilities projects end up as leased facilities because the up-front "scored" costs are much less; yet, over the term of the lease, the costs can be (and often are) more than if the government had just bought the property.

 

The costs to implement this idea are minimal, as it only requires a change in methods. The benefits, however, could add up to billions annually for lease costs in excess of the cost of ownership. Either way, this change would at least allow us to compare policy options in a more equitable way.

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Idea No. 230