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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, the Army offsets the declining operations and maintenance (OM) budget and fills unfunded requirements. The Army pursues EUL under the expanded authority given under the law, in an effort to maximize the utility and value of our available non-excess real property assets. Enhanced Use Leasing 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 and are subject to market demand. Enhanced Use Leasing is a real estate instrument with the relations being landlord to tenant although private sector funding is used to pay the rent. It is not a private-public venture, privatization, or partnership because the Army shares no risk with the developer.

What has the Army done?
As of January 1, 2009, 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. The Army also has six leases being negotiated at: Fort Meade, Maryland, Redstone Arsenal, Alabama, Rock Island Arsenal, Illinois, Fort Detrick, Maryland, Camp Navajo, Arizona, and the former Snake Creek missile site in Miramar, Florida (the last two are National Guard sites).

Concept approval has been granted or packages are being prepared and staffed for four installations: Joint Forces Training Base, Los Alimitos, California; Sierra Army Depot, California; Fort Stewart, Georgia; and the United States Military Academy at West Point, New York. There are an additional 11 preliminary assessments underway across the country. Enhance Use Leasing 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 privatization of Army lodging), medical clinics, and inter-modal terminal. An industry forum is scheduled for March of 2009 at Fort Irwin, California to discuss a large solar renewable energy EUL.

What continued efforts does the Army have planned for 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 current leases will produce approximately $1.1 Billion over the 50 year lease term and the leases in negotiation will produce about $1.3 Billion. General Motors will complete 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. The account has now grown to over $11 Million and construction on the Army track will begin in February and will be completed in August 2009. A central utility plant is 100 percent complete at Fort Detrick and fully operational providing 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. Sixty-five percent of the 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. The initial cost is $33 Million and the team of Federal Development, Whiting Turner, and URS are value engineering the design to bring the cost in line. Work has begun on the readiness center site.

Why is this important to the Army?
Enhanced Use Leasing 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.

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