Enhanced Use Leasing
What is it?
Enhanced Use Leasing (EUL) is the venue for transforming deteriorated non-excess available property or vacant land into modern facilities and/or infrastructure by substituting private sector funds for tax dollars to offset the Army's declining Operations and Maintenance (OM) budget and filling unfunded requirements. The Army pursues Enhanced Use Leasing under the expanded authority of Title 10 United States Code, Section 2667, in an effort to maximize the utility and value of our available non-excess real property assets. EUL provides the Army flexibility in receiving lease payments of cash and/or "In-kind" consideration equal to no less than Fair Market Value (FMV) of the property. These leases are generally long-term and vary in length from 25-50 years, subject to market demand. EUL is a real estate instrument with the relations being landlord to tenant although private sector funding is used to pay the rent. EUL is not private public venture, privatization or partnership as the Army shares no risk with the developer.
What has the Army done?
As of Sept. 30, 2007, eight installations have signed leases: Fort Sam Houston, Texas; Fort Leonard Wood, Missouri, Walter Reed Army Medical Center, Washington DC, Fort Bliss, Texas, Picatinny Army Arsenal, New Jersey, Fort Detrick, Maryland, Aberdeen Proving Ground, Maryland, and Yuma Proving Ground, Arizona. Also as of Sept. 30, 2007, the Army has nine leases being negotiated at: Aberdeen Proving Ground, Maryland, Fort Meade, Maryland, Fort Greely, Alaska, Redstone Arsenal, Alabama, Rock Island Arsenal, Illinois, Walter Reed Army Medical Center, Maryland, Camp Navajo, Arizona, Fort Detrick, Maryland, and the former Snake Creek missile site in Miramar, Florida (the last two are National Guard sites). A project at the United States Military Academy, New York will be advertised in Nov. 2007. Concept approval packages are being prepared for five installations: Fort Huachuca, Arizona, Joint Forces Training Base, Los Alimitos, California, Kahuku Training Area, Oahu, Hawaii, Sierra Army Depot, California and Fort Stewart, Georgia; with an additional 14 preliminary assessments underway across the country. EUL product types include central utility plants (gas and bio-mass), wind power, vehicle test tracks, office buildings, lab buildings, light industrial and manufacturing, bio-fuels, vehicle test tracks, hotels (non-competitive with PAL), medical clinic, and inter-modal terminal.
What efforts does the Army plan to continue in the future?
The Army will continue efforts to lease its available real property assets to bridge the gap between available funds and requirements because appropriated funds remain inadequate to meet Army infrastructure requirements. The Army will continue to look for innovative ways to upgrade our installations and enhance mission.
Why is this important to the Army?
EUL is important to the Army because it permits construction or acquisition of new facilities with cash proceeds earned from leasing military property, permits in-kind consideration received from leases to be used for construction of new facilities and allows for the in-kind consideration to be accepted at any property or facility under the control of the military service. The current leases will produce approximately $1.1 Billion over the 50 year lease term and the nine leases in negotiation will produce about $1.3 Billion. General Motors has begun construction on a $90 Million automotive test facility at Yuma Proving Ground that the Army will use free of charge and they have deposited $10.6 million into an interest bearing escrow account that will be used to build an additional track for the Army's exclusive use to test heavy vehicles. A central utility plant is about 75 percent complete at Fort Detrick that will provide clean, reliable energy to labs in the National Biologic Interagency Campus - this is an important infrastructure need to start construction on this campus. An old building at Picatinny Arsenal that was vacant for several years because of the presence of asbestos and black mold has been renovated through our in-kind rent and is being occupied by Army employees. Cost avoidance was captured through the lease of vacant historic hospital buildings at Fort Sam Houston and in addition the rent from the lease has gone to make repairs to other Army buildings on the installation. Thirty percent design has been reached for a $30 Million National Guard Readiness Center in Miramar, Florida that will be built from in-kind rent for the lease of 107 acres of available, non-excess land.