Revitalizing Base Closure Communities and Community Assistance

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.

ACTION: Interim final rule.

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SUMMARY: The interim final rule promulgates guidance required by

section 2903 of the National Defense Authorization Act for Fiscal Year

1994, and provides interpretive guidance concerning other changes to

the base realignment and closure process generated by Title XXIX of the

Act. This document also establishes policy and procedure, assigns

responsibilities, and delegates authority under the President's Five-

Part Plan, ``A Program to Revitalize Base Closure Communities'', July

2, 1993. Because such guidance must be issued and effective to enable

the Department to perform various acts required by the law to be

accomplished by May 30, 1994, such guidance is being issued as an

interim final rule and is effective upon publication.

EFFECTIVE DATE: This document is effective April 6, 1994. Comments must

be received by July 5, 1994.

ADDRESSES: Comments must be forwarded to the Office of the Assistant

Secretary of Defense for Economic Security, Room 3D854, The Pentagon,

Washington, DC 20301.

FOR FURTHER INFORMATION CONTACT:

Steven Kleiman or Frank Savat, telephone (703) 614-5356.

SUPPLEMENTARY INFORMATION: The Department of Defense is engaged in a

major downsizing, resulting in less land and buildings needed to

support defense missions. Congressional legislation in 1988 (Pub. L.

100-526) and 1990 (Pub. L. 101-510) provided for non-partisan

Commissions to assess the closure recommendations of the Secretary of

Defense, and make base closure and realignment recommendations to the

President and the Congress. The bases recommended for closure and

realignment by the 1988, 1991, 1993 Commissions were all approved under

this process. Another Commission will meet in 1995. As a result of the

1988, 1991 and 1993 actions, the Department of Defense is now in the

process of closing 70 major installations throughout the United States.

Even in large cities a military base often represents a major

employment center and a significant economic stimulus for the local

economy. With its multimillion dollar payrolls a base closure can be a

serious blow to the local community. The Department of Defense

recognizes that the manner in which real and personal property at

closing bases is disposed of can have a dramatic impact on the local

community's prospects for economic recovery. In the past, the

traditional property disposal methods focused on maximizing proceeds

from the sale of real and personal property with little regard for

enhancing the prospects for economic recovery in the community.

Recognizing that the old way of doing business was not designed to

dispose of major military installations in a way that would revitalize

base closure communities, President Clinton announced, on July 2, 1993,

a major new program to speed the economic recovery of communities where

military bases are slated to close. In a sharp departure from the past,

the Clinton Administration pledged to give top priority to early reuse

of the base's valuable assets. Rapid redevelopment and the creation of

new jobs in base closure communities are the goals of the new

initiative.

In announcing the program, the President outlined the following

five parts of his community reinvestment program:

Jobs-centered property disposal that puts local economic

redevelopment first.

Fast-track environmental cleanup that removes needless

delays while protecting human health and the environment.

Transition coordinators at major bases slated for closure.

Easy access to transition and redevelopment help for

workers and communities.

Larger economic development planning grants to base

closure communities.

While the task of remaking the economic foundation of a community

is never easy, a closed military base can be a community's single

greatest asset in charting a new future. An airfield, a port, or the

land, buildings, furniture and equipment on a base can be a catalyst

for new economic activity. The Administration's plan to make base

property more affordable to communities for the purpose of job creation

is a fundamental change. It allows communities that have viable plans

for economic redevelopment to obtain property at prices within their

means. The President's Five-Part Plan was an important step in steering

the base closure and reuse process toward rapid job creation.

In announcing the community revitalization program, President

Clinton recognized that existing Federal law required the Department of

Defense to charge full price when closed bases will be used for job-

creating economic development, yet it can transfer bases for free for a

variety of ``public'' uses, including recreation, aviation, education

and health. President Clinton stated that the Administration would seek

to change the law, to enable the Department of Defense to transfer

property for free or at a discount for economic development purposes,

when community development plans meet a strict test for economic

viability and job creation. Accordingly, the President asked the

National Economic Council (NEC) an interagency coordinating arm of the

White House and the Department of Defense to draft a proposal that puts

economic development at the center of base closure asset disposition.

The NEC convened an interagency working group that created the

following framework for base disposal:

--Where a ready market exists, sell properties quickly for public or

private development to speed up job creation.

--Where a ready market does not exist, make property available to the

local redevelopment authority, without initial cost, for economic

development.

--Share the net profits between the Department of Defense and the local

redevelopment authority if a property conveyed without initial cost for

economic development is subsequently sold.

The Congress, mindful of the need to reform this process, endorsed

the President's plan by authorizing Title XXIX of Public Law 103-160,

Base Closure Communities Assistance, the so-called ``Pryor Amendment''.

Based largely on legislation sponsored by Senator Pryor, the provisions

of Title XXIX provide the legal authority to carry out the President's

plan by, among other things, authorizing conveyances of real and

personal property at or below fair market value to local redevelopment

authorities, and sharing of profits on subsequent sales and leases.

Public Law 103-160 required the Secretary of Defense to prescribe

regulations to implement the provisions of the law. This is being

accomplished under the Administrative Procedures Act which allows for

the public to comment on the regulations. Due to the need to begin

acting on the proposed regulations, the Department of Defense has

issued them as interim final rules which allow actions at closing bases

to begin before the regulations are made final after the public comment

period. The section related to the conveyance of property in

consideration of environmental restoration costs, is issued as a

proposed rule and cannot be exercised until a final rule is published

following public comment.

The following is a summary of the major elements of the rules.

1. Real Property Screening

When the Department of Defense no longer needs to retain real

property at a closing base, the Department is required to dispose of

the property in accordance with the prescribed screening process in the

General Services Administration property disposal regulations and the

new expedited process authorized in Title XXIX. This process permits

DoD entities, other Federal Agencies and homeless providers to identify

property they would like to acquire when the base closes.

The screening process for real property requires the Department of

Defense to identify first what it needs to retain. Any property excess

to the Department of Defense is then made available to other Federal

Agencies. Property not needed by other Federal Agencies is then

identified as surplus and reported to the Department of Housing and

Urban Development (HUD) for a determination of suitability for homeless

use and publication of such properties in the Federal Register.

Property that has no homeless interest, as determined by the Department

of Health and Human Services (HHS), will then be available for transfer

by either direct sale to the public, negotiated conveyance to the local

redevelopment authority, public benefit conveyances for airports,

schools, ports, etc., or the new economic development conveyance

discussed in paragraph 5. of this summary. The Military Departments

will work with the other Department of Defense Components, Federal

Agencies, homeless providers and reuse planners, early in the closure

process, to sort out these requests. This new process will provide for

the early identification of property which will become available for

reuse. This information is critical to the local redevelopment

authority's ability to design a realistic redevelopment plan. Agreement

with proposed uses, other than for McKinney Act homeless use, is at the

discretion of the Military Departments who have been delegated disposal

authority.

2. McKinney Act Screening

The Stewart B. McKinney Homeless Assistance Act is a statute

designed to permit recognized providers of assistance to the homeless

to receive a high priority in acquiring unneeded land and buildings on

Federal properties. Buildings and land on closing bases provide

excellent opportunities for homeless providers to acquire the

infrastructure they need to establish their programs. This section of

the interim final rule describes the new process, specifically tailored

for base closure properties, that will expedite the screening process

with homeless providers and will result in the early identification of

their needs. The expedited screening process will be pursued in a

proactive manner. The Military Departments will work with communities

to identify eligible entities and conduct timely outreach seminars to

educate homeless providers with respect to the land and buildings that

will be made available and the process for making a formal application

to HHS to acquire such land and buildings. The early identification of

homeless assistance requirements will permit communities to develop

reuse plans that fully accommodate homeless needs, while permitting

early identification of the remaining property for quick sale to create

jobs, a Federally-sponsored public benefit conveyance, or conveyance to

a local redevelopment authority for economic development purposes.

3. Local Redevelopment Plan

The early formation of a local redevelopment authority is critical

to the successful reuse of the base. The primary focus of the local

redevelopment authority should be developing a comprehensive local

redevelopment plan. This plan should embrace the range of feasible

reuse options that will result in rapid job creation. The local

redevelopment plan will generally be used as the proposed action when

the disposing Military Department conducts the environmental analyses

required by the National Environmental Policy Act (NEPA).

4. Jobs-Centered Property Disposal

The new property disposal process described in this section and in

paragraphs 5. and 6. of this summary, is designed to rapidly create new

jobs. In most cases, that will occur through conveyances for economic

development, without initial cost, as described in paragraph 5.

However, in a few cases, an entire base or a substantial portion of it

will have a high value and hence a ready market for development. In

such cases, market sale of the property may be the most effective way

to rapidly create new jobs.

The Military Department will identify properties having a ready

market and begin the appraisal process as soon as possible but not

later than 6 months after completion of the new expedited McKinney Act

screening process in paragraph 2. of this summary. The appraisals

should take into consideration uncertainties and the associated risks

in property development as well as the impact of the base closure on

market conditions. Moreover, the appraisal will reflect the most likely

range of uses consistent with local interests rather than highest and

best use.

To assist in determining the estimated fair market value, the

Military Departments will solicit for expressions of interest for the

entire or a substantial portion of the base for a period no longer than

6 months. The results will be shared with the local redevelopment

authority. Expressions of interest will be solicited simultaneously

with other screening and disposal actions and will not cause a delay in

the disposal process. The Military Departments will analyze each

expression of interest and determine if it represents a reasonable

proposal that is likely to lead to rapid development and job creation.

If after consulting extensively with the local community, the Military

Department makes a favorable determination, the Department may decide

to offer the property for sale. The local redevelopment authority will

be promptly notified of the decision and may challange the decision. If

the Military Department nevertheless decides to proceed with the sale,

potential bidders will be strongly encouraged to work with the local

redevelopment authority so that their proposals are compatible with the

local redevelopment plan. Identifying a substantial portion of the base

for sale, however, does not preclude the community's acquisition of the

property through a negotiated sale with the Department of Defense.

In the event that a base or substantial portion thereof, is

identified as potentially valuable but does not sell due to the absence

of a ready market, the property will then be available for conveyance

for public benefit or, economic development purposes.

Throughout this process, the Military Departments will make maximum

effort to give community considerations a high priority.

5. Economic Development Conveyances

Closing military bases often have a great deal of land that may not

be readily developable or marketable due to its location. Additionally,

closing bases often have buildings that may need to be demolished in

order to encourage redevelopment and economic revitalization.

Historically, the process of selling bases, or parts thereof, for fair

market value has been time consuming and the proceeds from the few

sales of base closure properties have been less than originally

anticipated. In the past, the law permitted the Department of Defense

to convey property at a discount of up to 100 percent (free of charge)

for specific public purposes such as health, aviation, recreation, and

education--but not for economic development. The new authority permits

the DoD to convey land and buildings to redevelopment authorities

initially for free, after it is determined that the base, or

significant portions thereof, cannot be sold in accordance with the

rapid job creation concept. Such conveyances may help induce a market

for the property, thereby, enhancing economic recovery. Redevelopment

authorities requesting an economic development conveyance, shall submit

a simple written request containing four basic elements as described in

the interim rule. Generally, installations will be conveyed at no

initial cost with a recoupment provision that will permit the

Department of Defense to share in any future profits should the base be

later leased or sold. Bases in rural areas shall be conveyed under this

authority at no cost and with no recoupment if they meet the standards

as detailed in the interim rule. The conveyance for economic

development should be used by local redevelopment authorities to gain

control of large areas of the base, not just individual buildings. The

income received from some of the higher value property should help

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.

6. Profit Sharing

When real property is conveyed as described in paragraph 5. of this

summary, DoD shall generally share in the division of future profits

should the property be subsequently sold or leased. The division of

profits shall be based on net profits and the share shall generally

favor the local redevelopment authority. There shall be a 15-year time

limit on the share of the profits. The government's portion of the

receipts from the profit shall not exceed the estimated fair market

value of the property at the time of conveyance to the local

redevelopment authority.

7. Leasing of Real Property

Leasing of real property early in the reuse process is an effective

way to quickly attract new jobs to replace those that have been lost by

the base closing. In the past, the requirement to lease at fair market

value discouraged the creation of new jobs. The new leasing process, at

less than fair market value, will provide new incentives for

redevelopment authorities and businesses alike to spur job creation and

speed economic redevelopment. Inasmuch as the Department cannot convey

contaminated property until clean-up measures are in place, leasing is

often the only means to allow suitable economic reuse to occur on

substantial portions of closing bases.

8. Personal Property

Personal property located on closing bases is often very useful to

the redevelopment of the real property. This section of the interim

final rule outlines procedures to allow transfer of personal property

with the real property in many cases. It provides for completing an

inventory soon after the base is approved for closure and consultation

with local officials. This consultation may include a walkthrough of

the base to familiarize local officials with potentially available

property. The community can then identify the personal property it

wishes to retain in its redevelopment plan. The Department of Defense

will keep a great deal of the personal property at the base while the

redevelopment plan is being put together. Only valid exemptions will be

made to this freeze, usually involving specific military requirements

or property which the base does not own. Emissions trading procedures

will be issued separately and are not covered by the interim final

rule.

9. Minimum Level of Maintenance and Repair To Support Non-Military

Purposes

Facilities and equipment located on closing bases are often

important to the eventual reuse. This section of the interim rule below

provides procedures to protect their condition while the redevelopment

plan is being put together. The level of maintenance will be determined

in consultation with the redevelopment authority.

DoD Directive 4165.aa\1\ (32 CFR Part 90) establishes basic

policies to carry out the President's plan and the Base Closure

Community Assistance Act. DoD Instruction 4165.bb\2\ (32 CFR Part 91)

provides procedural guidance for implementation. In addition to

property disposal, the document addresses fast-track environmental

cleanup and increased economic development planning support for

communities. It provides for on-site transition coordinators,

responsible directly to the Secretary of Defense, at major closing

bases in order to minimize red tape and keep environmental cleanup and

base disposal activities on a fast track.

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\1\Draft document. When signed, this document will be available

from the National Technical Information Service, 5285 Port Royal

Road, Springfield, VA 22161.

\2\See footnote 1.

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The Department of Defense has determined that this interim rule is

not a significant regulatory action, as defined by Executive Order

12866. The rule does not:

(1) Have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities. It provides for transfer of paid-for federal installations

no longer needed for economic development purposes. This will benefit

the economy and the communities in which the closing bases are located.

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof;

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

Executive Order 12886.

It has been certified that this interim final rule is not subject

to the Regulatory Flexibility Act (5 U.S.C. 601) because the interim

final rule will not have a significant economic impact on a substantial

number of small entities. The primary effect of the interim final rule

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.

The rule is not subject to the Paperwork 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.

Accordingly, Title 32, Chapter I, Subchapter C, is amended as

follows:

1. Part 90 is added to read as follows:

PART 90--REVITALIZING BASE CLOSURE COMMUNITIES

Sec.

90.1 Purpose.

90.2 Applicability.

90.3 Definitions.

90.4 Policy.

90.5 Responsibilities.

Authority: 10 U.S.C. 2687 note.

Sec. 90.1 Purpose.

This part:

(a) Establishes policy and assigns responsibilities under the

President's Five-Part Plan, ``A Program to Revitalize Base Closure

Communities'',\1\ July 2, 1993, to speed the economic recovery of

communities where military bases are slated to close.

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\1\Document available from the Office of the Assistant Secretary

of Defense (Economic Security), Pentagon, Washington, DC 20301.

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(b) Implements the National Defense Authorization Act for fiscal

year 1994, Title XXIX, 107 Stat. 1909.

Sec. 90.2 Applicability.

This part applies to the Office of the Secretary of Defense, the

Military Departments, the Chairman of the Joint Chiefs of Staff, the

Unified Combatant Commands, the Defense Agencies, and the DoD Field

Activities (hereafter referred to collectively as ``the DoD

Components'').

Sec. 90.3 Definitions.

(a) Closure. All missions of the base have ceased or have been

relocated. All personnel (military, civilian and contractor) have

either been eliminated or relocated, except for personnel required for

caretaking and disposal of the base or personnel remaining in

authorized enclaves.

(b) Base realignment and closure cleanup plan. A plan for the

expeditious environmental cleanup necessary to facilitate conveyance of

the property to communities for economic redevelopment.

(c) Base realignment and closure cleanup team. A team established

for each DoD closing or realigning base where property is available for

transfer to the community. The team has the authority, responsibility,

and accountability for environmental cleanup programs at these

installations, emphasizing those actions which are necessary to

facilitate reuse and redevelopment.

(d) Realignment. Any action that both reduces and relocates

functions and DoD civilian personnel positions, but does not include a

reduction in force resulting from workload adjustments, reduced

personnel or funding levels, skill imbalances, or other similar cause.

A realignment may terminate the DoD requirement for the land and

facilities on part of an installation. That part of the installation

shall be treated as ``closed'' for purposes of this part.

(e) Redevelopment authority. Any entity, including an entity

established by a State or local government, recognized by the Secretary

of Defense as the entity responsible for developing the redevelopment

plan with respect to the installation and for directing implementation

of the plan.

Sec. 90.4 Policy.

It is DoD policy to:

(a) Help communities impacted by base closures achieve rapid

economic recovery through effective reuse of the assets of closing

bases--more quickly, more effectively and in ways based on local market

conditions and locally developed reuse plans--by implementing the

President's Five-Part Plan that encourages:

(1) Transferring real and personal property expeditiously to local

redevelopment authorities and in ways that enhance economic development

and job creation or other public benefits. This can best be

accomplished by:

(i) Making transfers of property to a redevelopment authority for

economic development affordable, when necessary to foster community

redevelopment plans. The use of existing public benefit conveyances

should be considered, where appropriate, before the use of a public

benefit conveyance for economic development.

(ii) Accelerating the property screening process early in the

disposal process to determine other potential Federal uses of the

property, including the identification of the needs of homeless

providers. This will determine how much of the property is available

for early economic development and/or other community reuse.

(iii) Informing communities, as early as possible after the base

closure decision is final, if an installation will be considered for

``economic development'' conveyances under Pub. L. No. 103-160, Title

XXIX and will not be offered for sale, instead. Such decisions shall be

based on a determination that the existence of a ready market for the

property indicates that public or private developers can not be relied

upon as the preferable mechanism to spur economic redevelopment and the

creation of new jobs.

(iv) Encouraging interim leases at less than the estimated fair

market value in order to facilitate State or local economic

redevelopment efforts.

(v) Delegating authority to approve interim leases and simple land

transfers.

(vi) Considering the personal property requirements of the

community redevelopment plan when making decisions on the disposition

of base equipment.

(2) Ensuring fast-track environmental cleanup of closing bases to

permit earlier determination of property suitable for either conveyance

or lease. The key elements of this initiative are to:

(i) Establish a base realignment and closure cleanup team composed

of members from the Department of Defense, the Environmental Protection

Agency and State regulatory agencies, at every base where property is

available for transfer and reuse. The team shall prepare the base

realignment and closure cleanup plan and make decisions to expedite the

process.

(ii) Quickly identify and document uncontaminated real property

parcels to permit timely reuse.

(iii) Identify opportunities to convey property quickly to those

willing to pay the cost of cleaning up the contaminated property.

(iv) Ensure analyses required by the National Environmental Policy

Act (Pub. L. 91-190; 10 U.S.C. 4332 et. seq.) process are produced in a

timely manner.

(v) Establish procedures for identifying and documenting parcels of

real property that are environmentally suitable for lease, even if

needed mitigation precludes conveyance.

(vi) Improve public involvement in the environmental cleanup by

establishing and seeking public participation in Restoration Advisory

Boards.

(3) Providing full time base transition coordinators at major

installations slated for closure or substantial realignment. The

principal functions of the coordinators shall be to:

(i) Assist in cutting through red tape on property disposal.

(ii) Assist in keeping the environmental cleanup on a fast track.

(iii) Assist the DoD Office of Economic Adjustment (OEA) in helping

communities identify sources of Federal assistance for developing and

implementing economic redevelopment plans.

(4) Providing easy access to transition and redevelopment help for

workers and communities by targeting major sources of Federal funding

assistance to base closure communities.

(5) Providing larger economic development planning grants to base

closure communities. Planning grants should be approved quickly. The

Department of Defense's Office of Economic Adjustment will move beyond

the traditional role of providing grants for planning to helping

communities transition from planning to implementation by funding a

portion of the staff required for implementation of the local

redevelopment plan.

(b) Follow the following framework in implementing Title XXIX of

Pub. L. 103-160:

(1) Where a ready market exists, complete screening and then sell

properties quickly for public or private development to speed up job

creation.

(2) Where a ready market does not exist, make property available to

the local redevelopment authority without initial consideration, for

economic development.

(3) Share the net profits between the Department of Defense and the

local redevelopment authority if a property conveyed without initial

consideration for economic development is subsequently leased or sold.

(c) This regulation does not create any rights or 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. 90.5 Responsibilities.

(a) The Under Secretary of Defense for Acquisition and Technology

shall issue DoD Instructions as necessary, to further implement the

President's Five-Part Plan and applicable public law, and shall monitor

compliance with this part. All authorities of the Secretary of Defense

in Pub. L. 103-160, Title XXIX, in section 2905 of Pub. L. 100-526,

Title II, and in section 204 of Pub. L. 101-510, Title XXIX are hereby

delegated to the Under Secretary of Defense for Acquisition and

Technology and may be redelegated.

(b) The Heads of the DoD Components shall advise personnel with

responsibilities related to base closures of the policies set forth in

this directive.

2. Part 91 is added to read as follows:

PART 91--REVITALIZING BASE CLOSURE COMMUNITIES--BASE CLOSURE

COMMUNITY ASSISTANCE

Sec.

91.1 Purpose.

91.2 Applicability.

91.3 Definitions.

91.4 Policy.

91.5 Responsibilities.

91.6 Delegations of authority.

91.7 Procedures.

Appendix A to Part 91--Flow Chart for Base Closure Community Assistance

Appendix B to Part 91--Closure and Transition Timeline for a Notional

BRAC 1993 Base That Closes on September 30, 1997

Authority: 10 U.S.C. 2687 note.

Sec. 91.1 Purpose.

This part prescribes procedures to implement ``Revitalizing Base

Closure Communities'' (Part 90), the President's five-part community

reinvestment program,\1\ and real and personal property disposal to

assist the economic recovery of communities impacted by base closures.

The expeditious disposal of real and personal property will help

communities get started with reuse early and is therefore critical to

timely economic recovery.

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\1\Document available from the Office of the Assistant Secretary

of Defense (Economic Security), Pentagon, Washington, DC 20301.

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Sec. 91.2 Applicability.

This part applies to the Office of the Secretary of Defense, the

Military Departments, the Chairman of the Joint Chiefs of Staff, the

Unified Combatant Commands, the Defense Agencies, and the DoD Field

Activities (hereafter referred to collectively as ``the DoD

Components'').

Sec. 91.3 Definitions.

(a) Base Closure Law. The provisions of Title II of the Defense

Authorization Amendments and Base Closure and Realignment Act (Pub. L.

100-526; 10 U.S.C. 2687 note), or The Defense Base Closure and

Realignment Act of 1990 (Part A of Title XXIX of the Pub. L. 101-510;

10 U.S.C. 2687 note).

(b) Closure. All missions of the base have ceased or have been

relocated. All personnel (military, civilian, and contractor) have

either been eliminated or relocated except for personnel required for

caretaking and disposal of the base or personnel remaining in

authorized enclaves.

(c) Consultation. Fully explaining and discussing an issue and

carefully considering objections, modifications, and alternatives; but

without a requirement to reach agreement.

(d) Date of approval. The date on which the authority of Congress

to disapprove Defense Base Closure and Realignment Commission

recommendations for closures or realignments of installations expires

under Title XXIX of P.L. 101-510, as amended.

(e) Excess property. Any property under the control of a Military

Department that the Secretary concerned determines is not required for

the needs of the Department of Defense. Authority to make this

determination rests with the Military Departments after screening the

property with the other Military Departments.

(f) Realignment. Any action that both reduces and relocates

functions and DoD civilian personnel positions, but does not include a

reduction in force resulting from workload adjustments, reduced

personnel or funding levels, skill imbalances, or other similar cause.

A realignment may terminate the DoD requirement for the land and

facilities on part of an installation. That part of the installation

shall be treated as ``closed'' for this document.

(g) Redevelopment authority. Any entity, including an entity

established by a State or local government, recognized by the Secretary

of Defense as the entity responsible for developing the redevelopment

plan with respect to the installation and for directing implementation

of the plan.

(h) Rural. An area outside a Metropolitan Statistical Area.

(i) Surplus property. Any excess property not required for the

needs and the discharge of the responsibilities of Federal Agencies.

Authority to make this determination, after screening with all Federal

Agencies, rests with the Military Departments.

(j) Vicinity. The county in which the installation is located and

the adjacent counties. An incorporated municipality shall be deemed to

be a county for this purpose, when, under State law, it is not part of

a county.

Sec. 91.4 Policy.

It is DoD policy to help communities affected by base closures

achieve rapid economic recovery through effective reuse of the assets

of closing bases--more quickly, more effectively and in ways based on

local market conditions and locally developed reuse plans. This will be

accomplished by:

(a) Selling properties quickly for public or private development to

speed up job creation where a ready market exists.

(b) Making property available without initial consideration for

economic development where a ready market does not exist.

(c) Sharing the net profits between the DoD and the local

redevelopment authority if a property conveyed without initial

consideration for economic development is subsequently sold or leased.

Sec. 91.5 Responsibilities.

(a) The Assistant Secretary of Defense for Economic Security, after

coordination with the General Counsel of the Department of Defense and

other officials as appropriate, may issue such guidance and

instructions as may be necessary to implement Laws, Directives and

Instructions on the retention or disposal of real and personal property

at closing or realigning bases.

(b) The Heads of the DoD Components shall ensure compliance with

this part and guidance issued by the Assistant Secretary of Defense for

Economic Security on revitalizing base closure communities.

Sec. 91.6 Delegations of authority.

(a) The authority provided by sections 202 and 203 of the Federal

Property and Administrative Services Act of 1949, as amended (40 U.S.C.

483 et seq.) for disposal of property at closing and realigning bases

has been delegated by the Administrator, GSA, to the Secretary of

Defense by delegations dated March 1, 1989; October 9, 1990; and,

September 13, 1991.\2\ Authority under these delegations has been

previously redelegated to the Secretaries of the Military Departments,

who may redelegate further.

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\2\These documents available from the Office of the Assistant

Secretary of Defense (Economic Security), Pentagon, Washington, DC

20301.

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(b) Authorities delegated to the Under Secretary of Defense for

Acquisition and Technology by 32 CFR 90.5 are hereby redelegated to the

Secretaries of the Military Departments, unless otherwise provided

within this part. These authorities may be redelegated further.

Sec. 91.7 Procedures.

(a) Real property screening.

(1) When the Department of Defense no longer needs to retain real

property, the Department is required to dispose of the property in

accordance with the prescribed screening process in the General

Services Administration property disposal regulations and the expedited

process described in this part. This process permits DoD entities,

other Federal Agencies and homeless providers to identify property they

would like to acquire when the base closes. The Secretary concerned

will work with the other DoD Components, Federal Agencies, homeless

providers and reuse planners, early in the closure process, to sort out

these requests. This process will provide for the early identification

of property which will become available for reuse that is critical to

the local redevelopment authority's ability to develop a realistic

reuse plan.

(2) The Military Departments should complete the internal DoD real

property screening of closing and realigning base property:

(i) By April 1, 1994, for 1988, 1991 and 1993 closures and

realignments.

(ii) Within 4 months of the date of approval of the 1995 closures

and realignments.

(3) Military Departments should seek local redevelopment authority

input in making determinations on the retention of property and should

consider their input, if provided. Transfer of real property at closing

and realigning bases between any of the Military Departments, or

retention of real property at a closing base by a Military Department,

must be approved by the Assistant Secretary of Defense for Economic

Security, unless such a transfer has already been approved by the

Secretary of the Military Department concerned.

(4) Formal screening of real property excess to the DoD with other

Federal Agencies must be completed:

(i) By June 1, 1994, for 1988, 1991, and 1993 closures and

realignments unless the community requests a postponement of the

surplus determination as provided in paragraph (a)(7) of this section.

(ii) Within 6 months of the date of approval of the 1995 closures

and realignments unless the community requests a postponement as

provided in paragraph (a)(7) of this section.

(5) These timeframes afford Federal Agencies sufficient time to

assess their needs, submit initial expressions of interest to the

Department of Defense, and apply for the property. During this period,

Agencies sponsoring public benefit conveyances should also consider the

suitability for such purposes. The Military Departments should provide

other Federal Agencies as full and complete information as practicable

on the property in the Notice of Availability. Requests for transfers

of property submitted by other Federal Agencies will normally be

accommodated. Decisions on the transfer of property to other Federal

Agencies shall be made by the Military Department concerned in

consultation with the local redevelopment authority.

(6) Military Departments should make the notices of availability

available to the local redevelopment authorities, State and local

governments.

(7) Within the 6 month screening period in paragraph (a)(4) of this

section, the Military Departments shall consult with the local

redevelopment authority and make appropriate final determinations

whether a Federal Agency has identified a use for, or shall accept

transfer of, any portion of the property. If no Federal Agency requests

the property, the property shall be declared surplus. However, the

local redevelopment authority may request the Military Department

concerned to delay this final surplus declaration. All requests for

delay must be in writing and made before May 1, 1994 for 1988, 1991 and

1993 closures and realignments and within 5 months of the approval of

the 1995 base closures and realignments. If there is a Federal Agency

request for transfer, the Secretary concerned may postpone the

determination to transfer and the Secretary may also postpone the

determination of surplus for all or any part of the property at the

installation for such period as the Secretary concerned determines is

in the best interest of the communities affected by the closure of the

installation.

(8) Screening of real property with State and local government

agencies shall take place concurrently with McKinney Act screening. The

screening notice should state:

Uses to assist the homeless shall take precedence unless the

Secretary concerned or the Secretary of Health and Human Services (HHS)

determines that a competing request under 40 U.S.C. 484(k) is so

meritorious and compelling as to outweigh the needs of the homeless.

(9) Withdrawn public domain lands are those lands which have been

transferred from the Department of Interior to a Military Department

for its temporary use.

(i) These lands on closing or realigning bases are to be returned

to the Secretary of Interior when the Secretary of the Military

Department concerned no longer has need for these lands, if they are

still suitable for the programs of the Secretary of Interior.

(ii) The Military Department concerned will notify the Secretary of

Interior, normally through the Bureau of Land Management (BLM), when

withdrawn public domain lands are included within an installation to be

closed.

(iii) The Bureau of Land Management will screen these lands within

the Department of Interior to determine if these lands are suitable for

return to the Department of Interior.

(iv) If the lands are not suitable for the programs of the

Secretary of Interior, the Bureau of Land Management will so notify the

Military Department and state that these lands should be processed as

the other real property on the base.

(v) The Military Department will notify the Bureau of Land

Management that it concurs with the determination and will proceed in

accordance with the real property screening procedures described in

this section.

(b) McKinney Act Screening.

(1) The Stewart B. McKinney Homeless Assistance Act, as amended (42

U.S.C. 11301), is a statute designed to permit HHS-approved providers

of assistance to the homeless to receive a high priority in acquiring

unneeded land and buildings on Federal properties. Buildings and land

on closing bases provide excellent opportunities for homeless providers

to acquire the land and buildings they need to establish their

programs. This section describes the new process specifically tailored

for base closure properties that will expedite the screening process

with homeless providers and will result in the early identification of

their needs. The Military Departments will work with communities to

identify eligible entities and conduct timely outreach seminars to

educate homeless providers with respect to the land and buildings that

will be made available and the process for making a formal application

to the Department of Health and Human Services (HHS). The early

identification of homeless assistance requirements for land and

buildings at closing bases will permit communities to develop reuse

plans that fully accommodate homeless needs, while permitting early

identification of the remaining property for either quick sale for job

creation, a federally sponsored public benefit conveyance or conveyance

to a local redevelopment authority for economic development purposes.

(2) The Department of Housing and Urban Development (HUD) is

required to publish by February 15 of each year a list of all the

properties which were published in accordance with the McKinney Act in

the previous calendar year. For the purpose of reporting properties to

HUD pursuant to the new expedited McKinney screening process described

in this section, the Military Departments should report only those

properties which remain available as of the reporting date. For the

purposes of the new expedited McKinney Act screening process:

(i) Properties listed by HUD in the annual report for which an

expression of interest has been received by HHS from a homeless

provider, but a final HHS determination has not yet been made, shall be

reported for screening under the new procedures in paragraphs (b) (3)

through (11) of this section.

(ii) Properties listed by HUD in the annual report for which no

expression of interest has been received by HHS from a homeless

provider and for which the Department of Defense has received no

expression of interest or bona fide offer in accordance with the

provisions of section 501(c)(4)(C) of the McKinney Act, shall be

reported in accordance with the procedures in paragraphs (b) (3)

through (11) of this section.

(iii) Properties listed by HUD in the annual report for which no

expression of interest has been received by HHS from a homeless

provider and for which the Department of Defense has received an

expression of interest or bona fide offer in accordance with the

provisions of section 501(c)(4)(C) of the McKinney Act, shall not be

reported in accordance with the procedures in paragraphs (b) (3)

through (11) of this section.

(iv) 1988 and 1991 base closure and realignment properties which

remain available shall be reported to HUD in accordance with the new

expedited procedures in paragraphs (b) (3) through (11) of this

section.

(3) Under the new expedited McKinney Act screening process, the

Military Departments shall sponsor a workshop or seminar in communities

having closing or realigning bases before reporting to HUD. All

available property at closing and realigning bases that will become

surplus to Federal Agency needs will be reported to HUD:

(i) By June 1, 1994, for the 1988, 1991, and 1993 closures and

realignments, unless the community requests a postponement of the

declaration of surplus under paragraph (a)(7) of this section.

(ii) Within 6 months of the date of approval of the 1995 base

closures and realignments unless the community requests a postponement

of the declaration of surplus under paragraph (a)(7) of this section.

(4) HUD shall make a determination of the suitability of each

property to assist the homeless in accordance with the McKinney Act.

Within 60 days from the date of receipt of the information from the

Department of Defense, HUD shall publish a list of suitable properties

that shall become available when the base closes.

(5) Providers of assistance to the homeless shall then have 60 days

in which to submit to HHS expressions of interest in any of the listed

properties. If a provider indicates an interest in a listed property,

it shall have an additional 90 days after submission of its written

notice of interest to submit a formal application to HHS, a period

which HHS can extend. HHS shall then have 25 days after receipt of a

completed application to review and complete all actions on such

applications.

(6) During the new expedited McKinney Act property screening

process (from 60 to 175 days following Federal Register publication, as

appropriate), disposal agencies shall take no final disposal action or

allow reuse of property that HUD has determined suitable and that may

become available for homeless assistance, unless and until:

(i) No timely expressions of interest from providers are received

by HHS.

(ii) No timely applications from providers expressing interest are

received by HHS.

(iii) HHS rejects all applications received for a specific

property.

(7) If no provider expresses an interest to HHS in a property

within the allotted 60 days, the Military Department should promptly

inform the affected local redevelopment authority, the Governor of the

State, the local governments, and Federal Agencies that support

authorized public benefit conveyances, of the date the surplus property

will be available for community reuse. The local redevelopment

authority shall then have 1 year to submit a written expression of

interest to incorporate the remainder of the property into its

redevelopment plan.

(8) If there are expressions of interest by homeless assistance

providers, but no application is received by HHS from such a provider

within the subsequent 90-day application period (or within the longer

application period if HHS has granted an extension), the Military

Department should promptly inform the local redevelopment authority,

the Governor of the State, and Federal Agencies that support authorized

public benefit conveyances, of the date the surplus property will be

available for community reuse. The local redevelopment authority shall

then have 1 year to submit a written expression of interest to

incorporate the remainder of the property into its redevelopment plan

for the base.

(9) If at any time during the 25 day HHS review period HHS rejects

all applications for a specific property, the Military Department

should promptly inform the local redevelopment authority, the Governor

of the State, and Federal Agencies that support authorized public

benefit conveyances, of the date the surplus property will be available

for community reuse. The local redevelopment authority shall then have

1 year to submit a written expression of interest to incorporate the

remainder of the property into its redevelopment plan for the base.

(10) During the allotted 1-year period for the local redevelopment

authority to submit a written expression of interest for the property,

surplus properties not already approved for homeless reuse shall not be

available for homeless assistance, unless such homeless assistance is

included in the local redevelopment authority's plan. The surplus

properties will also not be advertised by HUD as suitable during these

1-year periods. The surplus property may be available for interim

leases to any entity, including local redevelopment authorities as

deemed appropriate by the Secretary of the Military Department

concerned.

(11) If the local redevelopment authority does not express in

writing its interest in a specific property during the allotted 1-year

period, the disposal agency shall again notify HUD of the date of

availability of the property for homeless assistance. HUD may then list

the property in the Federal Register as suitable and available after

the base closes following the previous McKinney Act procedures.

(12) The listing of base closure property from the 1991 and

subsequent rounds of base closures reported to HUD shall contain the

following statement:

The properties contained in this listing are closing or realigning

military installations. This report is being accomplished pursuant to

Pub. L. 103-160, section 2905(b). In accordance with section 2905(b),

this property is subject to a one-time publication under the McKinney

Act, after which property not provided to homeless assistance providers

will not be published again unless there is no expression of interest

submitted by the local redevelopment authority in the one-year period

following the end of the McKinney screening process pursuant to this

publication.

(13) The list of 1988 base closure properties that will be reported

to HUD shall contain the same statement as paragraph (b)(12) of this

section, and shall refer to section 2905(a) of the Act (107 Stat.

1916).

(c) Local redevelopment plan.

(1) The early formation of a redevelopment authority is critical to

the successful reuse of the base. The primary focus of the

redevelopment authority should be developing a comprehensive local

redevelopment plan. This plan should embrace the range of feasible

reuse options that will result in rapid job creation. The local

redevelopment plan will generally be used as the proposed action in

conducting environmental analyses required by the National

Environmental Policy Act of 1969 (NEPA), (42 U.S.C. 4332 et seq.).

(2) Although the statute only requires the local redevelopment

authority to submit a written expression of interest within 1 year

after the date the property is released from McKinney Act screening,

the local redevelopment plan should be prepared within that 1 year

period. The plan should at a minimum identify:

(i) Parcels recommended to be transferred to other Federal Agencies

(whether or not a specific request for such transfer was made by the

Agency during the screening period) and their intended uses.

(ii) Parcels recommended to be transferred or conveyed for uses

such as homeless assistance, public benefit purposes, or other

qualifying public purpose conveyance programs and their intended uses.

(iii) Parcels, and their intended uses, recommended to be conveyed

by:

(A) Negotiated sale at estimated fair market value.

(B) Conveyance without initial consideration to local redevelopment

authorities, with or without recoupment, as provided in this part.

(iv) The plan should discuss how it will enhance the prospects for

economic development and job creation, if the redevelopment authority

intends to request an economic development conveyance.

(d) Jobs-centered property disposal.

(1) The new property disposal process described in this section and

in paragraphs (e) and (f) of this section which follow, is designed to

rapidly create new jobs, either by taking advantage of a ready market

for development of valuable property or by inducing a market through

conveyances for economic development, initially without consideration.

The procedures described below generally apply to 1993 and 1995 base

closures and may not apply to 1988 and 1991 closures which may be well

along in the disposal process.

(2) The Military Departments should identify properties with

potential for rapid job creation and begin, as soon as possible, but

not later than completion of the new expedited McKinney Act screening

(paragraph (b) of this section), an appraisal or other estimate of the

property's fair market value. Such appraisals or estimates should

address a range of likely market values taking into account: feasible

uses for the property; the uncertainties in property development; and,

current market conditions (i.e., recognizing the state of the market

after a closure announcement). The appraisals should not be based on

the replacement cost of the properties, since they may not be readily

adaptable for civilian use. Additionally, the appraisal should not be

based on the highest and best use, but the most likely range of uses

consistent with local interests. The above appraisal may be

accomplished for 1988 and 1991 closures if it is determined that it

would be beneficial to do so and will not delay the disposal process.

(3) To assist in the appraisal/estimation of fair market value of

properties with a potential for rapid job creation, and to determine if

interests exist in properties not originally identified for rapid job

creation, the Military Departments shall, for 1993 and 1995 closures,

advertise for expressions of interest in all or any substantial part of

each closing installation. For the 1993 and 1995 closures, the Military

Departments shall advertise at the completion of the new expedited

McKinney Act screening process (see paragraph (b) of this section). The

Military Departments may advertise for expressions of interest in all

or any substantial part of each closing installation on the 1988 or

1991 closure lists if it is determined that it would be beneficial to

do so and will not delay the disposal process.

(i) Advertisements for expressions of interest shall be open for 6

months. Expressions of interest received should detail the intended

use, the site plan, the jobs estimated to be created, the schedule for

development and hiring, and an evaluation of the worth of the land and

buildings. Expressions of interest will be shared with the local

redevelopment authority. Advertisements for expressions of interest

will be conducted simultaneously with all other disposal actions and

are not an additional step in the disposal process.

(ii) The Military Departments shall analyze each expression of

interest and determine within 30 days of receipt if it is made in good

faith and represents a reasonable development proposal. If the Military

Department decides that an expression of interest received demonstrates

the existence of a ready market, the prospect of job creation, and

offers proceeds consistent with the range of estimated fair market

value, it may decide to offer the property for sale. The property

proposed for sale shall promptly be publicly identified, and the

redevelopment authority shall be notified. The redevelopment authority

may request reconsideration of this decision under paragraph (d)(5) of

this section. Potential offerors will be encouraged to work with the

redevelopment authority so that their development goals will be

compatible with the local redevelopment plan.

(iii) If a redevelopment plan has not been completed, the

redevelopment authority will be encouraged to include the potential for

sale of the property identified by the Military Department under

paragraph (d)(3) of this section, in the plan. The DoD Component will

evaluate whether the potential sale of the identified property is

covered by any ongoing environmental analyses required by the National

Environmental Policy Act (NEPA). Based on this evaluation,

consideration can be given to integrating the potential sale into the

existing analyses or preparing additional analyses required by law or

otherwise deemed appropriate. The environmental impact statement shall,

to the extent practicable, be completed within 12 months, or a Finding

of No Significant Impact issued within 6 months, of the public

announcement identifying the property proposed for sale.

(4) A few high value installations for which a ready market

apparently exists may, nevertheless, not have generated any expressions

of interest during the allotted 6 month period. Regardless, such

installations provide an opportunity for private sector rapid job

creation which should be pursued. In these cases, the Military

Departments, based on completed appraisals or other estimates of the

fair market value, shall inform redevelopment authorities that the

property is expected to be offered for sale and an economic development

conveyance should not be anticipated. Redevelopment authorities shall

be so informed as soon as possible, but not later than 6 months after

completion of the McKinney Act screening process. In making these

determinations, airport, port, and school property may be excluded if

it appears that they are likely to be converted to public airports,

ports or schools under existing public benefit conveyance programs. The

determination that an installation will be sold under paragraph (d)(4)

of this section has 2 components:

(i) The property must have a high value.

(ii) There must be a ready market. Ready market means that offers

to purchase at or near the estimated range of fair market value from

the private sector covering all or most of the installation could be

expected within 6 months of advertising the base for public sale.

(5) Within 60 days of the announcement by the Secretary of the

Military Department concerned of the intention to sell property in

accordance with paragraph (d)(3) or (d)(4) of this section, the

authorized local redevelopment authority may request, in writing, that

this determination be reconsidered. The Secretary shall consider the

request, provide a final determination in writing to the local

redevelopment authority and announce this determination publicly.

(6) Identification of an installation or property for sale under

this section does not preclude a community's acquisition of property

for the estimated fair market value.

(7) The provisions of this section may not be appropriate for some

of the 1988 and 1991 base closures and realignments because these bases

are so far along in the property disposal process that certain actions

have been taken or agreed to that are inconsistent with the new

procedures. In cases of 1988 and 1991 closures where this new property

disposal process is considered not appropriate, the Secretary concerned

shall request a waiver from the ASD(ES) before proceeding with the

disposition of the property.

(e) Economic development conveyances.

(1) Closing military bases often have a great deal of land that may

not be readily developable or marketable due to its location.

Additionally, closing bases often have buildings that may need to be

demolished in order to encourage redevelopment and economic

revitalization. Historically, the process of selling bases, or parts

thereof, for fair market value has been time consuming and the proceeds

from the sales of base closure properties have been less than

originally anticipated. In the past, the law permitted the Department

of Defense to convey property at a discount of up to 100% (free of

charge) for specific public purposes such as health, aviation,

recreation, and education--but not for economic development. The new

process that follows permits the DoD to convey land and buildings to

redevelopment authorities with no consideration, subject to recoupment,

after it is determined that the base, or significant portions thereof,

cannot be sold in accordance with the rapid job creation concept. Such

conveyances may help induce a market for the property, thereby,

enhancing economic recovery. Redevelopment authorities shall submit a

simple written request containing four basic elements as described in

paragraphs (e)(5)(i) through (e)(5)(iv) of this section. Generally,

installations will be conveyed at no initial cost with a recoupment

provision that shall permit DoD to share in any future profits should

the base be later leased or sold. Bases in rural areas shall be

conveyed under this authority with no recoupment if they meet the

standards in paragraph (e)(6) of this section. The conveyance for

economic development should be used by local redevelopment authorities

to gain control of large areas of the base, not just individual

buildings. The income received from some of the higher value property

should help 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.

(2) The Secretary of Defense is authorized by Pub. L. 103-160,

Section 2903 to convey real property at an installation to be closed to

the local redevelopment authority for economic development (an economic

development conveyance). The conveyance of property may be for

consideration at or below the estimated fair market value, or without

consideration. The consideration, if any, can be paid in cash or in

kind. Property to be transferred pursuant to Public Law 103-160,

section 2903, will be conveyed with no consideration, subject to

recoupment as described in paragraph (f) of this section.

(3) The economic development conveyance authority is an addition to

existing public benefit authorities and, generally, should not be used

when these public benefit authorities would apply. The Military

Departments shall prepare a written explanation why a transfer was made

using this economic development conveyance authority for what appears

to be a purpose covered by an existing public benefit authority.

(4) Before making an economic development conveyance of real

property, an appraisal or other estimate of the property's fair market

value shall be made, based on the proposed reuse of the property. The

Military Department shall consult with the local redevelopment

authority on appraisal assumptions, guidelines and on instructions

given to the appraiser, but shall be fully responsible for completion

of the appraisal. When a property is conveyed for economic development

with no initial consideration, the Military Department shall prepare a

written explanation why the estimated fair market value was not

received and retain it in their real property files.

(5) Property may be conveyed under Pub. L. No. 103-160 to an

authorized local redevelopment authority for economic development

following submission of a written request to the Secretary of the

Military Department concerned disposing of the property. The requests

should contain the following elements:

(i) Description of the property to be conveyed.

(ii) Statement of the local redevelopment authority's legal

authority to acquire and dispose of property under the laws of the

governing State.

(iii) A redevelopment plan that includes economic development and

job creation.

(iv) A statement explaining why existing public benefit conveyance

authorities are not appropriate.

(6) Installations located in rural areas are of particular concern.

An economic development conveyance may be made without consideration

and without recoupment in a rural area when the base closure will have

a substantial adverse impact on the economy of the local community and

on the prospect of its economic recovery from the closure. To determine

whether a rural community is eligible for transfer under this section,

the Secretary concerned shall first determine whether the closure will

have a substantial adverse impact on the prospect for economic recovery

by determining whether there is a market for the property. The closure

may be determined to have substantial adverse impact if after

advertising for expressions of interest pursuant to paragraph (d) of

this section, no expressions of interest are received. No expressions

of interest to purchase the property signifies that public or private

developers will not be able to provide jobs and economic growth

sufficient to provide timely recovery from closure without assistance.

The second step requires the Secretary concerned to make a

determination that the base closure will have a substantial adverse

impact on the economy of the communities in the vicinity of the

installation. In these cases, the base shall be offered to the local

redevelopment authority for conveyance without consideration and

without recoupment (subject to paragraph (f)(5) of this section).

(7) The provisions of this section may not be appropriate for some

of the 1988 and 1991 base closures and realignments, because these

bases are so far along in the property disposal process that certain

actions have been taken or agreed to that are inconsistent with the new

procedures. In cases where the new property disposal process is not

appropriate, the Secretary concerned shall request a waiver from the

ASD(ES) before proceeding with the disposition of the property.

(f) Profit sharing.

(1) When real property is conveyed as described in paragraph (e) of

this section, the Department of Defense shall generally share in the

division of future profits should the property be subsequently sold or

leased. The division of profits shall be based on net profits and the

share shall generally favor the local redevelopment authority. There

shall be a 15-year time limit on the share of the profits. The

government's portion of the receipts from the profit shall not exceed

the fair market value of the property at the time it was conveyed to

the local redevelopment authority.

(2) Properties conveyed under the authority of Pub.L. 103-160,

section 2903, to local redevelopment authorities under an economic

development conveyance that are subsequently sold or leased shall be

subject to recoupment (profit sharing) by the Department of Defense,

except as provided in paragraph (e)(6) of this section. In the absence

of a determination by the Secretary of the Military Department

concerned that a different division of the net profits is appropriate

because of special circumstances, the net profits shall be shared on a

basis of 60 percent to the local redevelopment authority and 40 percent

to the Department of Defense. The purpose of this recoupment policy is

to allow the local redevelopment authority to benefit from the success

of its efforts and from value created from zoning. Eliminating the

requirement for initial consideration also frees the local

redevelopment authority's income stream for use in funding

infrastructure improvements needed to develop the property and increase

its value. Sharing the profits, when they occur, will provide a return

to the taxpayers for the property they originally paid for, without

unduly burdening the community.

(3) The total recoupment by the Government shall not exceed the

fair market value of the property (or the top end of the range of

values) calculated at the time of conveyance to the local redevelopment

authority.

(4) The standard excess profits covenant promulgated by the General

Services Administration (GSA) at 41 CFR 101-47.4908 shall be used as a

model deed provision to implement this recoupment policy, recognizing

that the GSA provision will require tailoring for each parcel. The

following changes and additions are required:

(i) The deed provision will express the profit sharing established

under paragraph (f)(2) of this section, unless explicitly modified by

the Secretary of the Military Department concerned.

(ii) The term of this deed provision in economic development

conveyances will be 15 years unless released earlier by the government

upon satisfaction of the recoupment requirement. The disposing Military

Department will provide a statement, for use at any settlement, on the

local redevelopment authority's compliance with the deed provision. The

Military Department will formally release the provision when the

government has received its share of the sale proceeds.

(iii) The deed provision will forbid ``straw'' transactions (sales

or leases to a cooperating party at a nominal price), transactions at

other than arm's length, and other devices designed to circumvent the

Government's recovery of its share of the net profits. The purpose of

this clause of the deed provision is to provide a basis for the

government to intervene if it appears that a transaction may adversely

affect its interests.

(iv) In calculating the amount of any net profit from a sale or

lease, the local redevelopment authority may include:

(A) Capital costs, as provided in 41 CFR 101-47.4908(b).

(B) Direct and indirect costs related to the particular property

and transaction that are otherwise allowable under 48 CFR part 31

including the allocable costs of operation of the local redevelopment

authority with regard to that property.

(v) The annual report required by the GSA provision will be

deleted, and a clause requiring notification to the disposing Military

Department of sales or leases will be substituted. The notice of sale

or lease will be accompanied by an accounting or financial analysis

indicating the net profit, if any, from a sale, or the estimated annual

profit from a lease. The accounting or financial analysis, and any

other aspect of a transaction by the local redevelopment authority with

respect to property transferred under this part, is subject to

Department of Defense audit.

(5) The Military Department concerned is authorized to negotiate an

up-front settlement of projected recoupment revenues from a conveyance

under this section when such settlement is requested by the

redevelopment authority.

(6) The provisions of this section may not be appropriate for some

of the 1988 and 1991 base closures and realignments, because these

bases are so far along in the property disposal process that certain

actions have been taken or agreed to that are inconsistent with the new

procedures. In cases where the new property disposal process is not

appropriate, the Secretary concerned shall request a waiver from the

ASD(ES) before proceeding with the disposition of the property.

(g) Leasing of real property.

(1) Leasing of real property is an effective way to quickly attract

new jobs to replace those that have been lost by the base closing. In

the past, the requirement to lease at fair market value discouraged the

creation of new jobs. The new process of leasing, at less than fair

market value, where appropriate, will provide new incentives for

redevelopment authorities and businesses alike to spur job creation and

speed economic redevelopment.

(2) The Secretaries of the Military Departments are authorized by

Pub. L. 103-160, section 2906 to lease real and personal property at

closing or realigning bases for consideration of less than the

estimated fair market value, if the Secretary concerned determines:

(i) That a public interest will be served as a result of the lease.

(ii) That securing the estimated fair market rental value from the

lease is not compatible with such public interest.

(3) The Military Departments shall determine the environmental

suitability of property to be leased using the procedures in the DoD

policy entitled ``Procedures for Finding of Suitability to Lease

(FOSL)'' contained in the Deputy Secretary of Defense Memorandum,\2\

``Fast Track Cleanup at Closing Installations'', September 9, 1993, and

any amendments thereto. Regulatory consultation (Environmental

Protection Agency (EPA) and State government) must be completed before

entering into any leases, as specified in the FOSL guidance and when

approved, the Memorandum of Understanding between DoD and EPA will

confirm the FOSL process.

---------------------------------------------------------------------------

\2\Document available from the Office of the Deputy Under

Secretary of Defense (Environmental Security), Pentagon, Washington,

DC 20301.

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(4) The Military Departments are encouraged to redelegate leasing

authority to the level that can best respond to local redevelopment

needs and still exercise prudent and consistent stewardship over these

public assets.

(h) Personal property.

(1) Personal property located on closing bases is often very useful

to the redevelopment of the real property. This section outlines

procedures to allow transfer of personal property with the real

property in many cases. It provides for completing an inventory soon

after the base is approved for closure, consulting with local

officials, and a walkthrough of the base. The community can then

identify the personal property it wishes to retain in its redevelopment

plan. The Department of Defense will keep a great deal of the personal

property at the base while the redevelopment plan is being put

together. Only valid exemptions will be made to this freeze, usually

involving specific military requirements or property which the base

does not own. Emissions trading procedures will be issued separately

and are not covered by the part.

(2) Each Military Department and Defense Agency, as appropriate,

shall take an inventory of the personal property, to include its

condition, at closing or realigning bases as early in the closure

process as possible. At realigning bases, the inventory shall be

limited to the personal property located on the real property to be

disposed of by the Military Department or Defense Agency. The purpose

of the inventory is to identify personal property--any property except

land, fixed-in-place buildings, ships, and Federal records--that could

enhance the reuse potential of real property that may be conveyed to

the local redevelopment authority for supporting the economic

redevelopment of the base. The exempted categories of personal property

listed in paragraph (h)(5) of this section shall not be subject to

review by the community. The inventory must be completed by June 1,

1994, for 1988, 1991 and 1993 closures and realignments or within 6

months after the date of approval of 1995 closures.

(3) The inventory shall be taken in consultation with local

redevelopment authority officials. If no local redevelopment authority

exists, consultation shall be offered to the local government in whose

jurisdiction the installation is wholly located, or a local government

agency or State government agency designated for the purpose of such

consultation by the chief executive officer of the State. Based on

these consultations, the base commander is responsible for determining

the items or category of items potentially enhancing the reuse of the

real property and needed to support the redevelopment plan. When the

inventory is completed, base personnel shall offer a ``walkthrough''

with representatives of the local redevelopment authority so that they

can see the type and condition of the property available for reuse.

Disagreements should be resolved within the chain-of-command, with

final authority on resolving personal property issues resting with the

Secretary of the Military Department or Defense Agency Director

responsible for the real property. This authority may be further

delegated.

(4) The Military Departments should make every reasonable effort to

assist affected communities in obtaining the personal property needed

to convert the bases into economically-viable enterprises. Personal

property not subject to the exemptions in paragraph (h)(5) of this

section shall remain at a closing or realigning base until one of the

following time periods expire (whichever comes first):

(i) One week after the date on which the redevelopment plan is

submitted to the applicable Military Department.

(ii) The date on which the local redevelopment authority notifies

the applicable Military Department that a plan will not be submitted.

(iii) Twenty-four months after the dates referred to in paragraph

(h)(2) of this section which for 1988, 1991 and 1993 base closures and

realignments is November 30, 1995, or 24 months after the date of

approval of the 1995 closures and realignments.

(iv) Ninety days before the date of the closure or realignment of

the installation.

(5) Personal property may be removed without regard to these time

periods upon approval of the base commander, or higher authority within

the Military Department, and after notice to the local redevelopment

authority, if the property:

(i) Is required for the operation of a unit, function, component,

weapon, or weapon system transferring to another installation. A

transferring unit or function may take with it any property needed to

function properly as soon as it arrives, provided that suitable

replacement equipment will not be readily obtainable there and moving

it is cost-effective. In addition to this authority for the

transferring unit or function to remove personal property, the major

command having jurisdiction over the installation (e.g., the Army's

Forces Command or the Air Force's Air Combat Command), or the major

claimant having jurisdiction over the installation (e.g., the Navy's

U.S. Atlantic Fleet) also may remove property that is needed

immediately and is indispensable to an organization under its

jurisdiction at another installation for carrying out the

organization's primary mission.

(ii) Is uniquely military in character, and is likely to have no

civilian use (other than use for its material content or as a source of

commonly used components). Classified items; nuclear, biological,

chemical items; weapons and munitions; museum property or items of

significant historic value that are maintained or displayed on loan;

and similar military items fit this exception.

(iii) Is not required for the reutilization or redevelopment of the

installation (as jointly determined by the Military Department

concerned and the redevelopment authority).

(iv) Is stored at the installation for distribution (including

spare parts or stock items). This exception includes materials or parts

used in a manufacturing or repair function but does not include

maintenance spares for equipment to be left in place.

(v) Meets known requirements of an authorized program of another

Federal Department or Agency for which expenditures for similar

property would be necessary, and is the subject of a written request

received from the head of the Department or Agency. In this context,

``expenditures'' means the Federal Department or Agency intends to

obligate funds in the current quarter or next six fiscal quarters. The

Federal Department or Agency must pay packing, crating, handling, and

transportation charges associated with such transfers of personal

property.

(vi) Belongs to nonappropriated fund instrumentalities (NAFI). NAFI

property may be removed at the Military Departments' discretion,

because NAFI property belongs to the Service members collectively and

is not government property. Therefore, it may not be transferred to the

local redevelopment authority under this section. Separate arrangements

for communities to purchase NAFI property are possible and may be

negotiated with the Military Department concerned.

(vii) Is needed elsewhere in the national security interest of the

United States, as determined by the Secretary of the Military

Department concerned. This authority may not be redelegated.

(6) Personal property to be transferred to the local redevelopment

authority in support of its redevelopment plan is not subject to

sections 202 and 203 of Public Law 81-152, ``Federal Property and

Administrative Services Act of 1949, as amended'' of June 30, 1949, 40

U.S.C. 483-484. If the real property is transferred without

consideration, the personal property shall also be transferred without

consideration. If the real property is transferred at or near estimated

fair market value, the value of the personal property shall be included

in the estimated fair market value of the real property. If the

property is conveyed separately from the real property, the value of

the personal property shall be that at which it is carried on the

installation's property account or estimated fair market value as

agreed to between the parties at the time of transfer.

(7) In addition to the exemptions in paragraph (h)(5) of this

section, the Military Department or Defense Agency is authorized to

substitute an item similar to one requested by the redevelopment

authority. The substitute items may be drawn from another installation

or from the Defense Reutilization and Marketing Service. It is the

responsibility of the Military Department or Defense Agency that owns

the property to find a similar item that may be suitable as a

substitute. In this context, ``similar'' means the original and the

proposed substitute item are designed and constructed for the same

specific purpose. However, before substituting another item for the one

being requested, the base commander shall consult with the

redevelopment authority.

(8) Personal property that is not needed by a major command (or its

subordinates), a Federal Agency, or a local redevelopment authority (or

a State or local jurisdiction in lieu of a local redevelopment

authority) shall be transferred to a Defense Reutilization and

Marketing Office for processing in accordance with the Federal Property

and Administrative Services Act of 1949, as amended, 40 U.S.C. 483 et

seq.

(i) Minimum level of maintenance and repair to support nonmilitary

purposes.

(1) Facilities and equipment located on closing bases are often

important to the eventual reuse. This section provides procedures to

protect their condition while the redevelopment plan is being put

together. The level of maintenance will be determined in consultation

with the redevelopment authority.

(2) Public Law 103-160, section 2902 states that the Secretary may

not reduce the level of maintenance and repair of facilities or

equipment at the installation below the minimum levels required to

support the use of such facilities or equipment for nonmilitary

purposes, except when the Secretary of the Military Department

concerned determines that such reduction is in the National Security

interest of the United States. This requirement remains in effect until

one of the time periods in paragraph (h)(4) of this section has

expired.

(3) The initial minimum level of maintenance and repair to support

non-military purposes shall be determined during consultation between

the Military Department and the redevelopment authority. This level and

the property to which it applies shall be reviewed with the local

redevelopment authority when it presents its final development plan.

Where agreement cannot be reached, the Secretary of the Military

Department concerned shall determine the level of maintenance required.

In no case shall the level of maintenance and repair:

(i) Exceed the standard at the time of approval of the closure or

realignment.

(ii) Require any improvements to the property to include

construction, alteration, or demolition, except that required by

environmental restoration.

(4) The negotiated minimum maintenance agreement must be tailored

to the specific non-military uses, but shall include the following:

(i) Maintaining the facilities and equipment that are likely to be

utilized in the near term at a level that shall prevent undue

deterioration and allow transfer to the local redevelopment authority.

(ii) Not delaying the scheduled closure date of the installation.

Dated: March 31, 1994.

BILLING CODE 5000-04-M

Appendix A to Part 91

TR06AP94.003

BILLING CODE 5000-04-C

Appendix B to Part 91.--Closure and Transition Timeline for a Notional Brac 1993 Base That Closes on September 30, 1997

[Dates are completion dates--First of the month]

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1993 1994 1995 1996 1997 1998 1999

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1. Closure approved................................... Dec.........

2. Real property screening:

a. Within DoD..................................... ............ Apr.........

b. With other Federal Agenices.................... ............ June........

c. State and Local (public benefit conveyances)... ............ June........

3. McKinney Act screening:

a. MiDeps report surplus to HUD................... ............ June........

b. HUD publishes list of suitable prop............ ............ Aug.........

c. Providers express interest..................... ............ Oct.........

d. Applications submitted to HHS.................. ............ ............ Jan.........

e. HHS approves/disapproves application........... ............ ............ Feb.........

f. RDA expresses interest in unclaimed property ............ ............ ............ Feb.........

(remaining surplus property relisted by HUD).

4. Jobs-centered property disposal:

a. Begin appraisals of properties with job ............ June........

potential.

b. Advertise for expressions of interest.......... ............ Oct.........

c. MilDeps notify RDA of bases to be sold......... ............ ............ Apr.........

d. RDA ask MilDep to reconsider................... ............ ............ June........

5. Local redevelopment plan completed................. ............ ............ ............ Feb.........

6. Conveyance of real property:

a. Leases (FOSL), as available.................... ............ June........

b. Clean parcel (CERFA) identification............ ............ ............ Dec.........

c. EIS Completed (ROD)............................ ............ ............ ............ ............ Feb.........

d. Transfer/Sale (FOST)--parcels or whole, as ............ ............ ............ ............ ............ Mar......... (and

available. beyond).

7. Personal property:

a. Inventory complete............................. ............ June........

b. Longest personal property can be frozen........ ............ ............ ............ June........

8. Base Closes (missions leave)....................... ............ ............ ............ ............ ............ Sept .......

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[FR Doc. 94-8114 Filed 4-5-94; 8:45 am]

BILLING CODE 5000-04-M