This is What Happens When Government Plays Footsie with Real Estate Developers

The plans for a new FBI headquarters have been scrapped.

As much as I hope that a new headquarters would remove the name of J. Edgar Hoover, this was rather complex deal, which involves various "incentives" from competing state and local governments and a byzantine property swap for services to lower cost, and as such, it seemed to be a recipe for a fiasco:

The federal government is canceling the search for a new FBI headquarters, according to officials familiar with the decision, putting a more than decade-long effort by the bureau to move out of the crumbling J. Edgar Hoover Building back at square one.

The decision follows years of failed attempts by federal officials to persuade Congress to fully back a plan for a campus in the Washington suburbs paid for by trading away the Hoover Building to a real estate developer and putting up nearly $2 billion in taxpayer funds to cover the remaining cost.

Officials from the General Services Administration, which manages federal real estate, said they plan to announce the cancellation in a phone call with bidders and in meetings on Capitol Hill on Tuesday morning. They spoke on the condition of anonymity because they were not authorized to disclose the decision before it was announced.

For years, FBI officials have raised alarms that the decrepit conditions at Hoover constitute serious security concerns. But the plan to replace the building grew mired in a pit of government dysfunction and escalating costs with no end in sight.

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The GSA’s unconventional strategy of trying to offset the development cost by trading the Hoover Building downtown to the winning bidder was aimed at saving the government money but became a laborious and expensive complication.

As the search dragged on, both the federal government and developers bidding on the project began to bear inordinate costs.

Real estate companies pursuing the deal spent years and millions of dollars attempting to make their case for the project. The GSA, meanwhile, is housing many of the bureau’s 9,500 headquarters employees using expensive short-term leases at about a dozen locations throughout the Washington region because the staff long ago outgrew the Hoover Building.

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President Barack Obama had sought $1.4 billion toward construction of the project, but in May, Congress left it underfunded by more than a half-billion dollars. Congressional leaders had pulled together $523 million toward the project and possibly $315 million more through transfers of existing funds previously meant for other uses.

That was on top of $390 million that had been previously appropriated for the project.

Then in June, House appropriators rescinded $200 million from the project, drawing exasperation from local officials who have been pushing for the government to decide among three final locations: Greenbelt, Md., Land­over, Md., or Springfield, Va.

At the time the House took back the $200 million, Minority Whip Steny H. Hoyer (D-Md.) and Rep. Anthony G. Brown (D-Md.) called the decision “reprehensible.”

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Acting GSA administrator Timothy Horne is scheduled to testify before a House subcommittee Wednesday at a hearing about “Maximizing Taxpayer Returns and Reducing Waste in Real Estate.”

Hopefully, he will be aggressively questioned, because a cost more than $1½ billion for the building AFTER giving away some of the most attractive real estate in indicates that, “Maximizing Taxpayer Returns and Reducing Waste in Real Estate,” is not a governing principle here.