SAVANNAH, Ga. (May 13, 2014) -- In a time of shrinking federal budgets for military construction, how does the Army Reserve gain new facilities to train and equip their Soldiers?
One solution gaining popularity is a Real Property Exchange, known as RPX, which has benefits that extend far beyond the Army.
"The RPX program is a win-win-win for the Army Reserve, private sector developers and communities all across the country," said Ralph Werthmann, chief of real estate for the U.S. Army Corps of Engineers Savannah District.
Werthmann and his team manage the RPX Program for all Army Reserve properties east of the Mississippi River.
An RPX allows the Army Reserve to transfer property to a developer, called an exchange partner, and in return, the partner provides new or upgraded facilities elsewhere for that Army Reserve's Regional Support Command. New facilities must be valued at or above fair market value of the Army Reserve property.
"The exchange authority is a great way for us to get replacement facilities for our Soldiers without using money appropriated from Congress," said Bob Gregory, RPX program manager with the Army Reserve. "The Army incurs some initial administrative costs, but once an exchange partner is selected, they fund the project to completion."
MARKET VALUE
Many of the Army Reserve properties are located in prime real estate markets, said Stephen Bruce, RPX manager for the Corps' Savannah District.
Bruce said that in most cases, these properties were developed many years ago on the outskirts of major metropolitan areas; but over time, urban development has spread outward and now surrounds them. This has caused a significant increase in property value, but many of the Army Reserve properties contain aged facilities that have outlived their functional use.
"It's an attractive option to the community, and the private sector to develop some of these properties into new housing, retail or business areas," Bruce said. "At the same time, Soldiers will benefit from new or upgraded facilities."
THE ARMY'S REAL ESTATE AGENT
The Corps of Engineers serves as the lead executive agent for advertising Army Reserve property, evaluating potential exchange partners and negotiating exchange agreements. From start to finish, the corps works closely with the Army Reserve to ensure the RPX agreement meets their exact specifications.
"We have a great relationship with Stephen and his team at the corps," Gregory said. "The corps acts as our real estate agent. They work with us and negotiate with the exchange partner to ensure the deal meets our requirements."
Gregory said that often a city, county or state government will approach the Army Reserve about a piece of property they would like to exchange for development. From there, the Army Reserve will conduct research and appraisals and determine if the property is suitable for an RPX. The corps advertises all properties online via FedBizOpps.gov and in local newspapers.
Once officials select an exchange partner the corps and the partner finalize an agreement. The corps provides additional services to include design, engineering, environmental planning, and construction quality assurance.
CURRENT WORKLOAD
Currently, the corps' Savannah District has 12 active RPX projects, valued at more than $50 million.
One of those projects, located outside of Chicago in Orland Park, Ill., recently entered the design and construction phase. The exchange partner, Olympia Acquisitions, will replace the water, sewer and storm sewer lines at Fort Philip H. Sheridan, Ill., in exchange for government property that houses an outdated Army maintenance facility in Orland Park. The project is scheduled for completion this fall.
The Savannah District is currently negotiating exchange agreements for four projects scheduled for execution this fiscal year. The remaining seven projects are at different stages of the preliminary phase of the RPX process.
"The Real Property Exchange Authority has provided the Army Reserve with the tools needed to leverage existing antiquated assets and turn them into mission critical assets required to train soldiers today and into tomorrow," said Clayton Redmond, senior realty specialist who oversees the RPX program at the U.S. Army Corps of Engineers Headquarters. "[The U.S. Army Corps of Engineers] will likely see more RPX agreements in the coming years as we continue to support the Army Reserve."
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For more information, contact the Savannah District real estate division at CESAS-RE@usace.army.mil
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