[Federal Register Volume 59, Number 206 (Wednesday, October 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26504]
[[Page Unknown]]
[Federal Register: October 26, 1994]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Parts 90 and 91
RINs 0790-AF61 and 0790-AF62
Revitalizing Base Closure Communities and Community Assistance
AGENCY: Department of Defense, DoD.
ACTION: Interim final rule; amendments.
-----------------------------------------------------------------------
SUMMARY: The interim final rule amendment promulgates guidance required
by Section 2903 of the National Defense Authorization Act for Fiscal
Year 1994. This guidance clarifies the application process and the
criteria that will be used to evaluate an application for property
under this section.
DATES: This document is effective October 26, 1994. Any pending written
request for economic development conveyances, pursuant to
Sec. 91.7(e)(5), will be subject to the terms and conditions of this
rule amendment. Comments on this amendment must be received by December
27, 1994.
ADDRESSES: Comments should be forwarded to the Office of the Assistant
Secretary of Defense for Economic Security, Room 3D814, The Pentagon,
Washington, DC 20301.
FOR FURTHER INFORMATION CONTACT:
Robert Hertzfeld, telephone (703) 604-5690.
SUPPLEMENTARY INFORMATION:
A. Summary of Amendment
In response to public comments regarding the interim final rule
implementing Title XXIX of the National Defense Authorization Act for
FY 1994 published in the Federal Register on April 6, 1994 (59 FR
16123), the Department of Defense is amending the Rule to:
1. Delete section 91.7(d) and the accompanying ``Market Test.''
2. Establish the requirements for an Economic Development
Conveyance (EDC) application for real property in a revised section
91.7(e).
3. Establish criteria that will be used to evaluate EDC
applications in a revised section 91.7(e).
4. Provide guidance for greater flexibility on the compensation to
the Federal Government for property conveyed under an EDC in a revised
section 91.7(e).
The scope of the following amendment is limited to the real
property conveyance section of the rule Secs. 91.7 (d), (e), and (f),
and not the entire April 6, 1994, interim final rule. A final rule
addressing all of the elements of the interim final rule will be
published in early 1995. The Department of Defense will also publish a
guidebook describing the base conversion process.
B. Background
On July 2, 1993, President Clinton announced a major new policy to
speed the economic recovery of communities affected by base closures or
realignments. The President requested that Congress provide additional
authority to expedite the reuse of closing military bases. Congress
agreed, and passed this new authority, Title XXIX of the National
Defense Authorization Act for FY 1994.
Section 2903 of Title XXIX gave the Secretary of Defense the
authority to transfer property to local redevelopment authorities at or
below fair market value. The Department of Defense implemented this
authority by creating an additional tool for local communities to help
foster economic development through the creation of a new form of
conveyance, referred to as the ``Economic Development Conveyance ''
(EDC). Under an EDC, the Department may transfer property to a Local
Redevelopment Authority (``LRA'') at or below estimated fair market
value for purposes of economic development. (Property may also be
transferred under a series of other existing public benefit
conveyances.)
On April 6, 1994, (59 FR 16123), the Department of Defense
published an interim final rule that provided base closure communities
with guidance on how to use the new authority. During the public
comment process, the Department of Defense learned that some of the
procedures contained in the interim final rule may be impractical and
not assist in reaching the rapid economic redevelopment goals. As a
result, they are being revised by this amendment.
Specifically, the interim final rule established a ``market test''
or ``market survey'' as a precondition to any EDC. This approach was
designed to help determine whether immediate private development of a
property was possible by advertising its availability and soliciting
private interest. Many comments suggested that private developers would
not spend the time and money necessary to prepare a detailed expression
of interest until after a community redevelopment plan was approved, if
at all. Additionally, the interim final rule was perceived to encourage
private developers to ``cherry-pick'' valuable parcels for private
sector sales and leave the less attractive parcels for the community
redevelopment. This effort was said to be inconsistent with proper
planning methods and not in the long-term interest of enhancing local
economic recovery.
With the assistance of comments received during the public comment
period of the interim final rule, the Department of Defense has been
persuaded that such solicitation is unlikely to be fruitful unless and
until the local community provides the necessary investment and
infrastructure for development: zoning, public utilities, etc. As a
result, the Department is eliminating the ``market test'' and creating
with this Amendment a new process for an EDC that will consider such
information, as addressed by the local redevelopment plan.
The interim final rule also prescribed procedures and guidelines
for recoupment of value by the Federal Government if and when net
proceeds were realized by development. Based upon experience since its
publication and public comment, the Department of Defense is persuaded
that greater flexibility is needed in this area.
C. Discussion
The interim final rule amendment being published today addresses
some of the concerns raised by affected communities and others. This
amendment eliminates the ``market test'' requirements, includes a new
application and review process for an EDC, and establishes criteria to
evaluate the applications as a substitute for the ``market test.''
Greater flexibility is given to the Military Departments and the
communities to negotiate the terms and conditions of the EDC. A
detailed application, including the approved community redevelopment
plan, will now be the basis for a determination of whether or not an
LRA will be eligible for an EDC. The application and review process
will also be used to help determine the terms and conditions of such a
conveyance.
This Amendment is an intermediate step before the April 6, 1994,
interim final rule is reissued as a final rule.
What is an Economic Development Conveyance (EDC)?
An EDC is a new process for transferring real property to a Local
Redevelopment Authority (LRA) to help spur local economic development
and job creation. An EDC may be with or without initial payment or with
only partial payment at time of transfer, may be at or below the
estimated fair market value of the property, and allows for negotiated
terms and conditions of payment (consideration) to the Department of
Defense. These negotiations must be fair and reasonable to both parties
and strike a balance between compensation to the Federal taxpayer and
the need for the EDC to spur redevelopment. The EDC offers LRAs an
additional tool to use in the acquisition of former military base
property.
When should an EDC be used?
The Federal Property and Administrative Services Act (FPASA) of
1949 (40 U.S.C. 484) and airport public benefit authorities (49 U.S.C.
47151-47153) allow for public benefit transfers to units of government
or non-profit institutions that maintain the use of property for a
public purpose including, but not limited to, parks, public health,
education, aviation, historic monuments, and prisons. Transfers of
property under public benefit transfers must be in accordance with the
sponsoring Federal agency regulations. The FPASA also allows for
negotiated sales at fair market value to public entities for public
purposes or direct sales through a public bid process.
The EDC should be used when the LRA wants to obtain property for
job generating purposes and it is not practicable to pay fair market
value at the time of transfer. However, the EDC is not intended to
supplant other Federal property disposal authorities and cannot be used
if the intended land use can be accomplished through another authority
unless unusual circumstances are presented that demonstrate that the
needed economic development and job generation cannot occur under the
other allowable federal transfer authority.
Surplus Federal Property Transfer Methods Available to LRAs
----------------------------------------------------------------------------------------------------------------
Type of property, Federal agency with Statutory and regulatory
purpose, or method Transfer type\1\ authority FMV discount authority
----------------------------------------------------------------------------------------------------------------
Public Airport Approved........ Federal Aviation 100%............ 49 U.S.C. Secs. 47151-
Conveyance. Administration. 47153, 41 CFR 101-
47.308-2
Public Benefit
Conveyance Categories:
Historic Monument... Approved........ Department of the 100%............ FPASA Sec. 203(k)(3), 41
Interior. CFR 101-47.308-3
Education........... Sponsored....... Department of Education. Up to 100%...... FPASA Sec. 203(k)(1), 41
CFR 101-47.308-4
Public Health....... Sponsored....... Department of Health and Up to 100%...... FPASA Sec. 203(k)(1), 41
Human Services. CFR 101-47.308-4
Public Park or Sponsored....... Department of the Up to 100%...... FPASA Sec. 203(k)(2), 41
Recreation. Interior. CFR 101-47.308-7
Non-Federal Approved........ Department of Justice... 100%............ FPASA Sec. 203(p)(1), 41
Correctional CFR 101-47.308-9
Facility.
Port Facility....... Sponsored....... Department of 100%............ FPASA Sec. 203(q)
Transportation.
Shrines, Memorials, Sponsored....... Department of Education Up to 100%...... 41 CFR 101-47.308-5
or Religious Uses or Department of Health
[only as part of and Human Services.
another public
benefit
conveyance]\2\.
Homeless Assistance Sponsored....... Department of Health and Up to 100%...... 42 U.S.C. Sec. 11411,
[Public Health]\3\. Human Services. FPASA Sec. 203(k)
Other Specific
Conveyance Categories:
Power Transmission Approved........ Military Department..... None............ SPA Sec. 13(d), 41 CFR
Lines. 101-47.308-1
Housing for Requested\4\.... Military Department..... Up to 100%...... URARPAPA Sec. 218, 41
Displaced Persons. CFR 101-47.308-8
Wildlife Approved........ Department of the Up to 100%...... 16 U.S.C. Sec. 667b-d
Conservation. Interior.
Federal-Aid or Other Sponsored....... Department of 100%............ 23 U.S.C. Secs. 107, 317
Highways [to Transportation.
States].
Widening of Public Approved........ Military Department..... Up to 100%...... 40 U.S.C. Sec. 345c
Highways or Streets.
Negotiated Sale......... Sale............ Military Department..... None............ FPASA Sec. 203(e), 41
CFR 101-47.304
Public Sale............. Sale............ Military Department..... None............ FPASA Sec. 203(e), 41
CFR 101-47.304
Economic Development Approved........ Military Department..... Up to 100%...... NDAA 94, Title XXIX,
Conveyance. Sec. 2903
----------------------------------------------------------------------------------------------------------------
\1\Public benefit and other specific conveyances are typically either approved or sponsored by the authorized
Federal agency. In approved transfers, the Federal agency must grant its approval but property conveyance is
accomplished by the Military Department. In sponsored transfers, the Military Department assigns the property
to the Federal agency, upon request, and the Federal agency is responsible for conveyance of the property to
its recipient.
\2\Property for shrines, memorials or other religious purposes is eligible for public benefit conveyance (PBC)
only as part of a parcel transferred under another PBC mechanism.
\3\42 U.S.C. Sec. 11411 designates uses for homeless assistance as a specific public health category under FPASA
Sec. 203(k) and gives priority to such uses when considering PBCs.
\4\When the activities of a Federal agency result in the displacement of persons from their housing, the Federal
agency may request surplus property for replacement housing. Transfer of property is directly from the
Military Department to an eligible State agency.
ACRONYMS
CFRCode of Federal Regulations
FMVFair Market Value
FPASAFederal Property and Administrative Services Act, 40 U.S.C. Sec. 483 et seq.
LRALocal Redevelopment Authority
NDAA 94National Defense Authorization Act for Fiscal Year 1994, P.L. 103-160
SPASurplus Property Act, 50 U.S.C. App. Sec. 1622(d) and 49 U.S.C. Secs. 47151-47153
U.S.C.United States Code
URARPAPAUniform Relocation Assistance and Real Property Acquisition Policies Act of 1970
Who Can Receive an Economic Development Conveyance?
An LRA is the only entity eligible to receive property under an
Economic Development Conveyance. An LRA should have broad-based
membership, including, but not limited to, representatives from those
jurisdictions with zoning authority over the property. The Secretary of
Defense shall officially recognize an LRA for planning and/or
implementation through the Office of Economic Adjustment. Consequently,
applications submitted by entities other than LRAs will not be
considered.
When should an application for an Economic Development
Conveyance be made?
First, an LRA must be organized and a redevelopment plan created.
The Department of Defense's Office of Economic Adjustment can provide
guidance and technical and financial support in these efforts. Once a
redevelopment plan has been developed and adopted, the LRA can then
submit an EDC application to the Military Department responsible for
the property. The application should be submitted by the LRA after
consultation with the Military Department which shall establish a
reasonable time period for submission of the application.
The LRA always has the option of acquiring property under the FPASA
and thus it may not be necessary to complete an application for an EDC
within the stated timetables. LRAs can discuss the various transfer
options with the Military Department.
How much property should be included in an Economic
Development Conveyance application?
The EDC should be used by LRAs to obtain large parcels of the base
rather than merely individual buildings. The income received from some
of the higher value property should be used to offset the maintenance
and marketing costs of the less desirable parcels. In order for this
conveyance to spur redevelopment, large parcels must be used to provide
an income stream to assist the long-term development of the property.
Why is an application necessary?
This Amendment to the interim final rule prescribes that an
application be prepared by an LRA as the formal request for property,
to better assist the Military Department in considering requests for
property under the Economic Development Conveyance (EDC). This
information also will provide the basis for the Military Department to
respond to its obligations under Title XXIX, taking into account the
best community-based information on the proposed conveyance action. A
great deal of information necessary for an application is readily
available to the LRA through the community planning process and
supported through existing DoD technical and financial resources.
Beyond the standard planning information collected to date, LRAs
should incorporate a business and development component into their
overall base reuse planning process as a basis for receiving and
managing the real property. This supplemental effort will assist LRAs
in identifying necessary implementation resources and establish a
community-based proposal for the Military Department's consideration.
The Military Departments and the Office of Economic Adjustment will
continue to work closely with the affected LRA to ensure that an
adequate planning effort is undertaken.
What must an application contain?
The application should explain why an EDC is necessary for economic
redevelopment and job creation. The application should contain the
following elements.
1. A copy of the adopted Redevelopment Plan.
2. A project narrative including the following:
--A general description of property requested.
--A description of the intended uses.
--A description of the economic impact of closure on the local
communities.
--A description of the financial condition of the community and the
prospects for redevelopment of the property.
--A statement of how the EDC is consistent with the overall
Redevelopment Plan.
3. A description of how the EDC will contribute to short- and long-
term job creation and economic redevelopment of the base and community,
including projected number, and type, of new jobs it will assist in
creating.
4. A business and development plan for the EDC parcel, including
such elements as:
--A development timetable, phasing plan and cash flow analysis.
--A market and financial feasibility analysis describing the economic
viability of the project, including an estimate of net proceeds over a
fifteen-year period, the proposed consideration or payment to the
Department of Defense, and the estimated fair market value of the
property.
--A cost estimate and justification for infrastructure and other
investments needed for the development of the EDC parcel.
--Local investment and proposed financing strategies for the
development.
5. A statement describing why other authorities--such as negotiated
sale and public benefit transfers for education, parks, public health,
aviation, historic monuments, prisons, and wildlife conservation--
cannot be used to accomplish the economic development and job creation
goals.
6. If a transfer is requested for less than the estimated fair
market value--with or without initial payment at the time of transfer--
then a statement should be provided justifying a discount. The
statement should include the amount and form of the proposed
consideration, a payment schedule, the general terms and conditions for
the conveyance, and projected date of conveyance.
7. A statement of the LRA's legal authority to acquire and dispose
of the property.
Additional information may be requested by the Military Departments
to allow for a better evaluation of the application. LRAs are
encouraged to use site information available from the Military
Departments, including maintenance and caretaking expenses.
What criteria will be used to make a determination on the
application?
After receipt of an application for an EDC, the Secretary of the
Military Department will determine whether an EDC is appropriate to
spur economic development and job creation and examine whether the
terms and conditions proposed are fair and reasonable. The Military
Department may also consider information independent of the
application, such as views of other Federal agencies, appraisals,
caretaker costs and other relevant information.
The following criteria and factors will be used, as appropriate, to
determine whether a community is eligible for an EDC and to evaluate
the proposed terms and conditions of the EDC, including price, time of
payment and other relevant methods of compensation to the Federal
Government.
Adverse economic impact of closure on the region and
potential for economic recovery after an EDC.
Extent of short- and long-term job generation.
Consistency with the overall Redevelopment Plan.
Financial feasibility of the development, including market
analysis and the need and extent of proposed infrastructure investment.
Extent of State and local investment and level of risk
incurred.
Current local and regional real estate market conditions.
Incorporation of other Federal agency interests and
concerns, and applicability of, and conflicts with, other Federal
property disposal authorities.
Relationship to the overall Military Department disposal
plan for the installation.
Economic benefit to the Federal Government, including
protection and maintenance cost savings and anticipated consideration
from the transfer.
Compliance with applicable Federal, State, and local laws
and regulations.
What are the guidelines for determining the terms and
conditions of consideration?
The individual circumstances of each community and each
base mean that the amount and type of consideration may vary from base
to base. This amendment gives greater discretion and flexibility to the
Military Departments to negotiate with the LRA to arrive at an
appropriate arrangement. Due to the circumstances of a particular site,
the base's value may be high or low, and the range of the estimated
present fair market value may be broad or narrow. Where there is value,
the Department of Defense has an obligation under Title XXIX of the
National Defense Authorization Act for FY 1994 to obtain consideration
within the estimated range of present fair market value, or to justify
why such consideration was not realized.
Taking into account all information provided in the EDC
application and any additional information considered relevant, the
Military Department will contract for or prepare an estimate of the
fair market value of the property, which may be expressed as a range of
values. The Military Department shall consult with the LRA on valuation
assumptions, guidelines and on instructions given to the person(s)
making the estimation of value.
As stated above, the EDC application must contain a
statement that proposes general terms and conditions of the conveyance,
as well as the amount and type of the consideration, a payment
schedule, and projected date of conveyance. After reviewing the
application, the Military Department has the discretion and flexibility
to enter into one of two types of agreements:
1. Consideration within the estimated range of present fair market
value, as determined by the Secretary of the Military Department. The
Military Department can be flexible about the terms and conditions of
payment, and can provide financing on the property. The payment can be
in cash or in-kind, and can be paid at time of transfer or at a time in
the future. The Military Departments will have the discretion and
flexibility to enter into agreements that specify the form and amount
of consideration and ensures that consideration is within the estimated
range of fair market value at the time of application. Such methods of
payment could include: participation in the gross or net cash flow,
deferred payments, mortgages or other financing arrangements.
2. Consideration below the estimated range of fair market value,
where proper justification is provided. If a discount is found by the
Secretary of the Military Department to be necessary to foster local
economic redevelopment and job creation, the amount of consideration
can be below the estimated range of fair market value. Again, the terms
and conditions of payment will be negotiated between the Military
Department and the LRA.
(a). Justification. Proper justification for a discount shall be
based upon the findings in the business and development plan contained
in the EDC application.
Development economics, including absorption schedules and
legitimate infrastructure costs, would provide a basis for such
justification. The ability to pay at time of conveyance or to obtain
financing would not be a proper justification, since payment terms and
conditions can be negotiated.
In negotiating the terms and conditions of consideration
with the LRA, the Secretary of the Military Department must determine
that a fair and reasonable compensation to the Federal Government will
be realized from the EDC. Where property is transferred under an EDC at
an amount less than the estimated range of fair market value, the
Military Department shall prepare a written explanation of why the
consideration was less than the estimated range of present fair market
value.
D. Executive Order 12866
It has been determined that these amendments are a significant
regulatory action. The amendments to the rule raise novel policy issues
arising out of the President's priorities.
E. Regulatory Flexibility Act
This rule amendment is not subject to the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.,) because the amendment will not have a
significant economic impact on a substantial number of small entities.
The primary effect of this amendment will be to reduce the burden on
local communities of the Government's property disposal process at
closing military installations and to accelerate the economic recovery
of the relatively small number of communities that will be affected by
the closure of nearby military installations.
F. Paperwork Reduction Act
The Rule amendment is not subject to the Paper Reduction Act
because it imposes no obligatory information requirements beyond
internal DoD use.
List of Subjects in 32 CFR Parts 90 and 91
Community development, Government employees, Military personnel,
Surplus Government property.
PART 90--REVITALIZING BASE CLOSURE COMMUNITIES
1. The authority citation for 32 CFR part 90 continues to read as
follows:
Authority: 10 U.S.C. 2687 note.
Sec. 90.4 [Removed and Reserved]
2. Section 90.4(a)(1)(iii) is removed and reserved.
3. Section 90.4(b) is revised to read as follows:
Sec. 90.4 Policy.
* * * * *
(b) In implementing Title XXIX of Public Law 103-160, it is DoD
policy to convey property to a Local Redevelopment Authority (LRA) to
help foster economic development and job creation when other federal
property disposal options cannot achieve such objectives. Conveyances
to the LRA will be made under terms and conditions designed to
facilitate local economic redevelopment and job creation, and may be
made at less than fair market value, with proper justification.
* * * * *
PART 91--REVITALIZING BASE CLOSURE COMMUNITIES--BASE CLOSURE
COMMUNITY ASSISTANCE
4. The authority citation for part 91 continues to read as follows:
Authority: 10 U.S.C. 2687 note.
4A. Section 91.4 is revised to read as follows:
Sec. 91.4 Policy.
It is DoD policy to convey property to a Local Redevelopment
Authority (LRA) to help foster economic development and job creation
when other federal property disposal options cannot achieve such
objectives. Conveyances to the LRA will be made under terms and
conditions designed to facilitate local economic redevelopment and job
creation, and may be made at less than fair market value, with property
justification. This regulation does not create any rights and remedies
and may not be relied upon by any person, organization, or other entity
to allege a denial of any rights or remedies other than those provided
by Pub. L. 103-160, Title XXIX.
Sec. 91.7 [Removed and Reserved]
5. Section 91.7(d) is removed and reserved.
6. Sections 91.7 (e) and (f) are revised to read as follows:
Sec. 91.7 Procedures.
* * * * *
(e) Economic Development Conveyances
(1) Section 2903 of Public Law 103-160 gives the Secretary of
Defense the authority to transfer property to local redevelopment
authorities for consideration in cash or in kind, with or without
initial payment or with only partial payment at time of transfer, at or
below the estimated fair market value of the property. This authority
creates an additional tool for local communities to help spur economic
opportunity through a new real property conveyance method specifically
designed for economic development, referred to as the ``Economic
Development Conveyance'' (EDC).
(2) The EDC should only be used when other Federal property
disposal authorities for the intended land use cannot be used to
accomplish the necessary economic redevelopment.
(3) Before making an EDC, the Military Department must prepare an
estimate of the present fair market value of the property, which may be
expressed as a range of values. The Military Department shall consult
with the Local Redevelopment Authority on valuation assumptions,
guidelines and on instructions given to the person(s) making the
estimation of value, but shall be fully responsible for completion of
the valuation.
(4) A Local Redevelopment Authority (LRA) is the only entity able
to receive property under an Economic Development Conveyance. An LRA
should have broad-based membership, including, but not limited to
representatives from those jurisdictions with zoning authority over the
property. The Secretary of Defense shall officially recognize an LRA
for planning and/or implementation through the Office of Economic
Adjustment.
(5) A properly completed application will be the basis for a
decision on whether an LRA will be eligible for an Economic Development
Conveyance. An application should be submitted by the LRA after a
Redevelopment Plan is adopted by the LRA. The Secretary of the Military
Departments shall establish a reasonable time period for submission of
the EDC application after consultation with the LRA. The Services will
review the applications and make a decision whether to make an EDC
based on the criteria specified in paragraph (e)(7) of this section.
The terms and conditions of the EDC will be negotiated between the
Military Departments and the LRA. Bases in rural areas shall be
conveyed with no consideration if they meet the standards in paragraph
(f)(3) of this section.
(6) The application should explain why an EDC is necessary for
economic redevelopment and job creation.
In addition to the elements in paragraph (e)(6) of this section,
after Military Department review of the application, additional
information may be requested to allow for a better evaluation of the
application. The application should contain the following elements:
(i) A copy of the adopted redevelopment plan.
(ii) A project narrative including the following:
(A) A general description of property requested.
(B) A description of the intended uses.
(C) A description of the economic impact of closure on the local
communities.
(D) A description of the financial condition of the community and
the prospects for redevelopment of the property.
(E) A statement of how the EDC is consistent with the overall
Redevelopment Plan.
(iii) A description of how the EDC will contribute to short- and
long-term job creation and economic redevelopment of the base and
community, including projected number, and type of new jobs it will
assist in creating.
(iv) A business and development plan for the EDC parcel, including
such elements as:
(A) A development timetable, phasing plan and cash flow analysis.
(B) A market and financial feasibility analysis describing the
economic viability of the project, including an estimate of net
proceeds over a fifteen-year period, the proposed consideration or
payment to the Department of Defense, and the estimated fair market
value of the property.
(C) A cost estimate and justification for infrastructure and other
investments needed for the development of the EDC parcel.
(D) Local investment and proposed financing strategies for the
development.
(v) A statement describing why other authorities--such as
negotiated sale and public benefit transfers for education, parks,
public health, aviation, historic monuments, prisons, and wildlife
conservation--cannot be used to accomplish the economic development and
job creation goals.
(vi) If a transfer is requested for less than the estimated fair
market value (``FMV''), with or without initial payment at the time of
transfer, then a statement should be provided justifying the discount.
The statement should include the amount and form of the proposed
consideration, a payment schedule, the general terms and conditions for
the conveyance, and projected date of conveyance.
(vii) A statement of the LRA's legal authority to acquire and
dispose of the property.
(7) After receipt of an application for an EDC, the Secretary of
the Military Department will determine whether an EDC is needed to spur
economic development and job creation and examine whether the terms and
conditions proposed are fair and reasonable. The Military Department
may also consider information independent of the application, such as
views of other Federal agencies, appraisals, caretaker costs and other
relevant material. The Military Department may propose and negotiate
any alternative terms or conditions that it considers necessary.
(8) The following factors will be considered, as appropriate, in
evaluating the application and the terms and conditions of the proposed
transfer, including price, time of payment and other relevant methods
of compensation to the Federal Government.
(i) Adverse economic impact of closure on the region and potential
for economic recovery after an EDC.
(ii) Extent of short- and long-term job generation.
(iii) Consistency with overall Redevelopment Plan.
(iv) Financial feasibility of the development, including market
analysis and need and extent of proposed infrastructure and other
investments.
(v) Extent of State and local investment and level of risk
incurred.
(vi) Current local and regional real estate market conditions.
(vii) Incorporation of other Federal agency interests and concerns,
and applicability of, and conflicts with, other Federal property
disposal authorities.
(viii) Relationship to the overall Military Department disposal
plan for the installation.
(ix) Economic benefit to the Federal Government, including
protection and maintenance cost savings and anticipated consideration
from the transfer.
(x) Compliance with applicable Federal, State, and local laws and
regulations.
(f) Consideration.
(1) For conveyances made pursuant to section 91.7(e), Economic
Development Conveyances, the Secretary of the Military Department will
review the application for an EDC and negotiate the terms and
conditions of each transaction with the LRA. The Military Departments
will have the discretion and flexibility to enter into agreements that
specify the form, amount, and payment schedule. The consideration may
be at or below the estimated fair market value, with or without initial
payment, in cash or in-kind and paid over time. An EDC must be one of
the two following types of agreements:
(i) Consideration within the estimated range of present fair market
value, as determined by the Secretary of the Military Department.
Payments must be made to ensure consideration is within the estimated
range of fair market value at the time of application.
(ii) Consideration can be below the estimated range of fair market
value, when proper justification is provided. The amount of
consideration can be below the estimated range of fair market value, if
the Secretary of the Military Department determines that a discount is
necessary for economic redevelopment and job creation.
(2) The amount of consideration paid in the future shall equal the
present value of the agreed-upon fair market value or discounted fair
market value. Additional provisions may be incorporated in the
conveyance documents to protect the Department's interest in obtaining
the agreed upon consideration. Also, the standard GSA excess profits
clause, appropriately tailored to the transaction, will be used in the
conveyance documents to the LRA.
(3) In a rural area, as defined by this rule, any EDC approved by
the Secretary of the Military Department shall be made without
consideration when the base closure will have a substantial adverse
impact on the economy of the communities in the vicinity of the
installation and on the prospect for their economic recovery. The
Secretary of the Military Department concerned will determine if these
two conditions are met based on all the information considered in the
application for an Economic Development Conveyance. Specific attention
will be placed on the business and development plan submitted as part
of the EDC application and the criteria listed in section 91.7(e)(8)
will be used.
(4) In those instances in which an EDC is made for consideration
below the range of the estimated present fair market value of the
property--or if the estimated fair market value is expressed as a range
of values, below the lowest value in that range--the Military
Department shall prepare a written explanation why the estimated fair
market value was not obtained. Additionally, the Military Departments
must prepare a written statement explaining why other Federal property
transfer authorities could not be used to generate economic
redevelopment and job creation.
* * * * *
Dated: October 20, 1994.
L.M. Bynum,
Alternate OSD Federal Register, Liaison Officer, Department of Defense.
[FR Doc. 94-26504 Filed 10-25-94; 8:45 am]
BILLING CODE 5000-04-M
