Title 32
SECTION 174.9
174.9 Economic development conveyances.
§ 174.9 Economic development conveyances.(a) The Secretary concerned may transfer real property and personal property to the LRA for purposes of job generation on the former installation. Such a transfer is an Economic Development Conveyance (EDC).
(b) An LRA is the only entity eligible to receive property under an EDC.
(c) The Secretary concerned shall use the completed application, along with other relevant information, to decide whether to enter into an EDC with an LRA. An LRA may submit an EDC application only after it adopts a redevelopment plan. The Secretary concerned shall establish a reasonable time period for submission of an EDC application after consultation with the LRA.
(d) The application shall include:
(1) A copy of the adopted redevelopment plan.
(2) A project narrative including the following:
(i) A general description of the property requested.
(ii) A description of the intended uses.
(iii) A description of the economic impact of closure or realignment on the local community.
(iv) A description of the economic condition of the community and the prospects for redevelopment of the property.
(v) 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 generation on the installation, including the projected number and type of new jobs it will assist in generating.
(4) A business/operational plan for development of the EDC parcel, including at least the following elements:
(i) A development timetable, phasing schedule, and cash flow analysis.
(ii) A market and financial feasibility analysis describing the economic viability of the project, including an estimate of net proceeds over the planned life of the redevelopment project, but in no event for less than fifteen years after the initial transfer of property, and the proposed consideration or payment to the Department of Defense. The proposed consideration should describe the methodology for payment and include draft documents or instruments proposed to secure such payment.
(iii) A cost estimate and justification for infrastructure and other investments needed for redevelopment of the EDC parcel.
(iv) A proposed local investment and financing plan for the development.
(5) A statement describing why an EDC will more effectively enable achievement of the job generation objectives of the redevelopment plan regarding the parcel requested for conveyance than other federal real property disposal authorities.
(6) Evidence of the LRA's legal authority to acquire and dispose of the property.
(7) Evidence that:
(i) The LRA has authority to perform the actions required of it, pursuant to the terms of the EDC, and
(ii) That the officers submitting the application and making the representations contained therein on behalf of the LRA have the authority to do so.
(8) A commitment from the LRA that the proceeds from any sale or lease of the EDC parcel (or any portion thereof) received by the LRA during at least the first seven years after the date of the initial transfer of property, except proceeds that are used to pay consideration to the Secretary concerned under paragraph (h) of this section, shall be used to support economic redevelopment of, or related to, the installation. In the case of phased transfers, the Secretary concerned shall require that this commitment apply during at least the first seven years after the date of the last transfer of property to the LRA. For the purposes of calculating this reinvestment period, a lease in furtherance of conveyance shall constitute a transfer. The use of proceeds to pay for, or offset the costs of, public investment on or related to the installation for any of the following purposes shall be considered a use to support the economic redevelopment of, or related to, the installation -
(i) Road construction;
(ii) Transportation management facilities;
(iii) Storm and sanitary sewer construction;
(iv) Police and fire protection facilities and other public facilities;
(v) Utility construction;
(vi) Building rehabilitation;
(vii) Historic property preservation;
(viii) Pollution prevention equipment or facilities;
(vix) Demolition;
(x) Disposal of hazardous materials and hazardous waste generated by demolition;
(xi) Landscaping, grading, and other site or public improvements; and
(xii) Planning for or the marketing of the development and reuse of the installation.
(9) A commitment from the LRA to execute the agreement for transfer of the property and accept control of the property within a reasonable time, as determined by the Secretary concerned after consultation with the LRA, after the date of the property disposal record of decision. The determination of reasonable time should take account of the ability of the Secretary concerned to provide the deed covenants, or covenant deferral, provided for under section 120(h)(3) and (4) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. 9620(h)(3) and (4)).
(e) The Secretary concerned shall review the application and, to the extent practicable, provide a preliminary determination within 30 days of receipt as to whether the Military Department can accept the application for negotiation of terms and conditions, subject to the following findings:
(1) The LRA submitting the application has been duly recognized by the DoD Office of Economic Adjustment;
(2) The application is complete. With respect to the elements of the application specified in paragraph (d)(6) and (d)(7)(i) of this section, the Secretary concerned may accept the application for negotiation of terms and conditions without this element, provided the Secretary concerned is satisfied that the LRA has a reasonable plan in place to provide the element prior to transfer of the property; and
(3) The proposed EDC will more effectively enable achievement of the job generation objectives of the redevelopment plan regarding the parcel requested than the application of other federal real property disposal authorities.
(f) Upon acceptance of an EDC application, the Secretary concerned shall determine if the proposed terms and conditions are fair and reasonable. The Secretary concerned may propose and negotiate any alternative terms or conditions that the Secretary considers necessary. The following factors shall be considered, as appropriate, in evaluating the terms and conditions of the proposed transfer, including price, time of payment, and other relevant methods of compensation to the Federal government:
(1) Local economic conditions and adverse impact of closure or realignment on the region and potential for economic recovery through an EDC.
(2) Extent of short- and long-term job generation.
(3) Consistency with the entire redevelopment plan.
(4) Financial feasibility of the development and proposed consideration, including financial and market analysis and the need and extent of proposed infrastructure and other investments.
(5) Extent of state and local investment, level of risk incurred, and the LRA's ability to implement the redevelopment plan. Higher risk assumed and investment made by the LRA should be recognized with more favorable terms and conditions, to encourage local investment to support job generation.
(6) Current local and regional real estate market conditions, including market demand for the property.
(7) Incorporation of other Federal agency interests and concerns, including the applicability of other Federal surplus property disposal authorities.
(8) Economic benefit to the Federal Government, including protection and maintenance cost savings, environmental clean-up savings, and anticipated consideration from the transfer.
(9) Compliance with applicable Federal, state, interstate, and local laws and regulations.
(g) The Secretary concerned shall negotiate the terms and conditions of each transaction with the LRA. The Secretary concerned shall have the discretion and flexibility to enter into agreements that specify the form of payment and the schedule.
(h)(1) The Secretary concerned may accept, as consideration, any combination of the following:
(i) Cash, including a share of the revenues that the local redevelopment authority receives from third-party buyers or lessees from sales and leases of the conveyed property (i.e., a share of the revenues generated from the redevelopment project);
(ii) Goods and services;
(iii) Real property and improvements; and
(iv) Such other consideration as the Secretary considers appropriate.
(2) The consideration may be accepted over time.
(3) All cash consideration for property at a military installation where the date of approval of closure or realignment is before January 1, 2005, shall be deposited in the account established under Section 2906(a) of the Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of Pub. L. 101-510; 10 U.S.C. 2687 note). All cash consideration for property at a military installation where the date of approval of closure or realignment is after January 1, 2005, shall be deposited in the account established under Section 2906A(a) of the Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of Pub. L. 101-510; 10 U.S.C. 2687 note).
(4) The Secretary concerned may use in-kind consideration received from an LRA at any location under control of the Secretary concerned.
(i) The LRA and the Secretary concerned may agree on a schedule for sale of parcels and payment participation.
(j) Additional provisions shall be incorporated in the conveyance documents to protect the Department's interest in obtaining the agreed upon consideration, which may include such items as predetermined release prices, accounting standards, or other appropriate clauses designed to ensure payment and protect against fraudulent transactions. Every agreement for an EDC shall contain provisions allowing the Secretary concerned to recoup from the LRA such portion of the proceeds from a sale or lease by the LRA as the Secretary concerned determines appropriate if the LRA does not use the proceeds to support economic redevelopment of or related to the installation during the period specified in paragraph (d)(8) of this section. The Secretary concerned and an LRA may enter into a mutually agreed participation agreement which may include input by the Secretary concerned on the LRA's disposal of EDC parcels.
(k) The Secretary concerned should take account of property value but is not required to formally determine the estimated fair market value of the property for any EDC. The consideration negotiated should be based on a business plan and development pro-forma that assumes the uses in the redevelopment plan. The Secretary concerned may determine the nature and extent of any additional information needed for purposes of an informed negotiation. This may include, but is not limited to, an economic and market analysis, construction estimates, a real estate pro forrma analysis, or an appraisal. To the extent not prohibited by law, information used should be shared with the LRA.
(l) After evaluating the application based upon the criteria specified in paragraph (f) of this section, and negotiating terms and conditions, the Secretary concerned shall present the proposed EDC to the Deputy Under Secretary of Defense (Installations and Environment) for formal coordination before announcing approval of the application.
[76 FR 70880, Nov. 16, 2011]