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: Office of the Assistant Secretary of Defense for Economic

Security, DoD.

ACTION: Final rule.

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SUMMARY: This rule amends DoD's Revitalizing Base Closure Communities

and Community Assistance regulation, and promulgates guidance required

by Title XXIX of the National Defense Authorization Act for Fiscal Year

1994, including those provisions required by Section 2903. This rule

also establishes policy and procedures, assigns responsibilities, and

delegates authority to implement the President's Program to Revitalize

Base Closure Communities, July 2, 1993. This document does not include

guidance on acquiring property for the cost of environmental cleanup

(Section 2908) or on the substantial changes made in the Base Closure

Community Redevelopment and Homeless Assistance Act of 1994. The

changes stemming from this Act will be made in an accompanying rule,

which will be open for public comment and which will be published by

the Departments of Defense and Housing and Urban Development.

EFFECTIVE DATE: July 20, 1995.

ADDRESSES: Inquiries should be sent to the Office of the Assistant

Secretary of Defense for Economic Security, Room 1D760, The Pentagon,

Washington, DC 20301-3300; email: [email protected]

FOR FURTHER INFORMATION CONTACT:

Robert Hertzfeld, telephone (703) 695-1470; email: [email protected]

SUPPLEMENTARY INFORMATION:

Background

On April 6, 1994, the Office of the Secretary of Defense published

an Interim Final Rule (59 FR 16123) that changed the process for

disposing of real and personal property at closing and realigning

military bases. Four outreach seminars (in Washington, DC, Chicago,

Dallas, and San Francisco) and a public hearing (in Washington, D.C.)

were held between April 28, 1994, and August 15, 1994, to explain the

Interim Final Rule and foster public comments.

On October 26, 1994, the Office of the Secretary of Defense amended

the Interim Final Rule (59 FR 53735). That amendment amended the

previous guidance on ``jobs-centered property disposal'', clarified the

procedures for applying for an economic development conveyance, and

provided guidance for greater flexibility on the compensation to the

federal government for real property conveyed under an economic

development conveyance.

On October 25, 1994, the Congress enacted the Base Closure

Community Redevelopment and Homeless Assistance Act of 1994 (Pub. L.

103-421). That Act exempts certain base closure property from the

procedures contained in the Stewart B. McKinney Homeless Assistance Act

(42 U.S.C. 11301) and creates a new process for the federal government

and local communities affected by base closure to address the needs of

the homeless. This publication does not provide guidance on the

substantial changes made by Public Law 103-421, which will be addressed

in a publication of the Departments of Defense and Housing and Urban

Development.

Approach

This rule marks another step in the Department of Defense's effort

to improve the base closure and reuse process. The rulemaking process

was an open one, in which Department personnel sought advice from

individuals and organizations involved in the reuse process at a public

hearing, at outreach seminars, at conferences, and through written

public comments.

In order to encourage the rapid disposal and reuse of base closure

property, the Department has been working to improve its process

towards one that:

Is based, to the greatest extent possible, on a

comprehensive, community-based planning process;

Encourages formation of and reliance upon local reuse

authorities;

Is targeted towards community needs generated from the

closure of the installation; and,

Allows for common sense decisions by the implementors.

To achieve these goals, the Department developed regulations and

policies around three key themes:

Consultation. The Military Department and the Local

Redevelopment Authority should be in

[[Page 37338]]

constant contact throughout the base closure and reuse process.

Problems can be avoided through consultation.

Partnering. The Military Departments and LRAs should work

together honestly and with full disclosure. Their efforts should be

coordinated to minimize duplicative efforts and avoid

misunderstandings. Mutual goals can be achieved between parties that

treat each other as partners, not adversaries.

Flexibility. To maximize flexibility and allow for site-

specific solutions, these regulations have been generally limited to

those provisions required by law, as well as those that affect other

federal agencies. Discretion has been left, where possible, for

solutions that are most appropriate for a given installation.

These regulations reflect the Administration's effort to create a

flexible process that works better and costs less. Regulations which

are intended to cover all situations straight jacket federal employees

and confuse the public. In order to maintain flexibility while

providing guidance, the Office of the Secretary of Defense prepared a

Base Reuse Implementation Manual for use by the Military Departments.

The Manual, which provides greater detail about the issues addressed in

this part, is available to Local Redevelopment Authorities and other

interested parties. Copies will be available, at cost, from the

National Technical Information Service, 5285 Port Royal Road,

Springfield, VA 22161.

Overview of changes

What has changed in the section on the identification of

interests (``screening'') in real property?

The timetables for federal screening have been clarified

and shortened.

The review criteria have been clearly articulated.

What has changed in the leasing procedures?

The differences between interim and long-term leases have

been clarified.

The term of interim leases have been clarified. These

leases can now last for up to five years, including options to renew.

A termination-at will clause is no longer required.

If property is leased for less than fair market value and

the lease permits the property to be sublet, the rents from the

subleases must be applied to the protection, maintenance, repair,

improvement, and costs related to the property.

What has changed in the handling of personal property?

The regulation has been revised to require the Military

Departments to:

Provide a comprehensive inventory list to the Local

Redevelopment Authority.

Consult with the Local Redevelopment Authority before

establishing the deadlines for removing equipment from the closing

base.

Prohibit the transfer of ordinary fixtures unless not

required for redevelopment.

Permit the transfer of other personal property required

for Military Department use when the LRA objects, only if the transfer

is approved by an Assistant Secretary of the Military Department.

Consult with the redevelopment authority before offering

it a suitable substitute for property being removed.

Two procedures for transfers of personal property not

related to real property have been created.

What has changed regarding Economic Development

Conveyances?

Valuation terms have been clarified.

The requirement for an excess profits clause has been

removed.

What has changed in the section on maintenance, utilities,

and services?

DoD clarified the procedures for determining the initial

levels of maintenance to encourage quick reuse and specified the time

periods for which the Military Departments will sustain the initial

levels of maintenance. The time periods are now greater than the legal

minimums, and the Secretaries of the Military Departments may extend

them (under specific circumstances).

Discussion of Public Comments and Changes

In response to the April 6, 1994, publication of the Interim Final

Rule in the Federal Register, DoD received comments from 126 separate

sources, consisting of redevelopment authorities and local governments,

State and regional governments, public and private organizations,

federal departments and agencies, members of Congress, and individuals.

Almost half of these comments were addressed when the Interim Final

Rule was amended (59 FR 53735, October 26, 1994). This amendment

removed Sec. 91.7(d), ``Jobs-Centered Property Disposal,'' and revised

Secs. 91.7(e), ``economic development conveyance,'' and 91.7(f),

``Profit Sharing.''

The response to the remainder of the comments is divided into

sections corresponding to the regulation.

Identification of Interests in Real Property

The public comments regarding real property screening spanned two

sections of the Interim Final Rule: real property screening and

McKinney Act screening.

Federal agency priority. Several federal entities

suggested that DoD Components and federal agencies have an un-

questioned right to property.

RESPONSE: DoD specified time tables and requirements that federal

agencies must follow to claim base closure property under the priority

accorded to them by the Federal Property and Administrative Services

Act of 1949. If the agencies meet these strict requirements within the

given time tables, their request will be considered prior to others.

However, DoD remains committed to promoting economic recovery and rapid

job creation in the communities adversely affected by base closures,

while still ensuring that federal resources are available for other

important public uses. To carry out those dual responsibilities, DoD

must maintain the flexibility to determine the highest and best use for

the property.

Fair Market Value. Other federal agencies suggested

waiving the requirement for federal agencies to pay fair market value

for the property.

RESPONSE: DoD will continue to follow current federal policies (41

CFR 101-47.203-7(f)(2)) that require federal agencies to pay fair

market value to DoD for its property, unless specifically granted an

exemption by the Office of Management and Budget.

Timetables. Many comments suggested clarifying timetables

for federal screening and for submitting applications for the property

to the Military Departments.

RESPONSE: DoD revised the rule in response to these requests.

Native American interests. Several comments requested

clarification regarding Native American tribes' participation in the

screening process.

RESPONSE: Native American interests can be addressed at two points

in the screening process. First, Native American tribes can submit

expressions of interest to the Bureau of Indian Affairs (BIA), which is

held to the same tight timetables and criteria as other federal

agencies. Interested Native American tribes should contact BIA for

information about its policy for expressions of interest.

Alternatively, tribal governments may participate in the local

comprehensive planning process and express their interests to the LRA.

Tribes adversely affected by the base closure should be part of the LRA

and should work within this process to see that their needs are

addressed through a single, comprehensive plan.

Local control over the planning process. Comments from

non-federal

[[Page 37339]]

sources criticized the Interim Final Rule for not giving redevelopment

authorities sufficient control over redevelopment and disposal

planning. Their comments focused on the timing for the screening of

property with federal agencies and homeless assistance providers and

the need for coordination between applicants for property and

redevelopment authorities.

RESPONSE: As part of DoD's response to the public comments, the

Department worked with other federal agencies to assist the Congress in

enacting the Base Closure Community Redevelopment and Homeless

Assistance Act of 1994. This law (Pub. L. 103-421) significantly

altered the screening process. The changes stemming from this

legislation will be implemented in a publication by the Departments of

Defense and Housing and Urban Development.

Local Redevelopment Planning

The public comments regarding the local redevelopment plan section

of the Interim Final Rule were primarily editorial, reflecting concern

that this section of the regulation was unclear.

RESPONSE: DoD responded to those comments by clarifying the process

in the section on economic development conveyances. DoD also published

the ``Community Guide to Base Reuse,'' an Office of Economic Adjustment

booklet that contains an overview of the reuse planning process. To

obtain a copy, contact the Office of Economic Adjustment, 400 Army Navy

Drive, Suite 200, Arlington, VA 22202-2884; (703) 604-6131; email:

[email protected].

Leasing of Real Property

The public comments concerning the Interim Final Rule on the

leasing of real property focused primarily on five areas:

Clarify the term of interim leases.

RESPONSE: The Department responded to these concerns by specifying

that a lease may be for up to five years, including options to renew,

when it is entered into prior to completion of final disposal decisions

under the National Environmental Policy Act (NEPA) process. DoD also

specified that the term of a lease entered into after completion of the

final disposal decisions under the NEPA process (a lease in furtherance

of conveyance) may be longer than five years. In addition, the Military

Departments have historically included a termination-at-will clause in

lease documents that would allow the Military Department to terminate

the lease if the property was ever needed for military purposes. This

practice is no longer required.

Reconcile differing leasing practices among the Military

Departments. Comments in this area expressed the concern that the

differing practices led to inconsistent and unequal treatment. Examples

of inconsistencies cited included the lack of standard procedures,

differing termination provisions, and inconsistent policies on

obtaining insurance for the property.

RESPONSE: The Department of Defense responded to these concerns by

developing a uniform policy for the Military Departments to follow.

Thus, the DoD Base Reuse Implementation Manual, intended primarily for

Service implementors, includes a sample lease application package, and

a sample review checklist. Model lease provisions, which will generally

be used by the Military Departments, are also included in this manual.

DoD believes that these improvements will foster a more consistent

approach and quicker response to lease applicants.

Clarify the consideration required for interim leases.

RESPONSE: In response to the comments about consideration, DoD

reiterated in the rule that property could be leased for less than fair

market value if the Secretary of the Military Department determines

that a public interest is served as a result of the lease and the fair

market value of the lease is either unobtainable or not compatible with

the public benefit that would be served.

Clarify the policy on subleasing.

RESPONSE: DoD revised the rule to specify that if the property is

leased for less than fair market value and the lease permits the

property to be sublet, the rents from the subleases must be applied to

the protection, maintenance, repair, improvement, and costs related to

the property.

Improve the leasing process, shortening the time it takes

to conclude a lease agreement. Comments in this area suggested that DoD

should expedite its environmental review process, establish deadlines

for the Military Departments to respond to leasing requests, and

delegate authority to grant interim leases to relatively low levels of

authority within the Departments.

RESPONSE: DoD is convinced that all of the improvements mentioned

above will improve and accelerate the leasing process. Additionally,

DoD will continue to seek other ways to improve the process. For

example, DoD continues to review its environmental review procedures to

hasten that process while ensuring compliance with all pertinent laws

and regulations. Also, DoD has created a tri-Service team to identify

additional opportunities for improvement of the leasing process. In the

meantime, the Military Departments will be encouraged to delegate

leasing authority to the level that can best respond to local needs and

still ensure compliance with statutory and regulatory requirements.

Personal Property

The public comments concerning the personal property section of the

Interim Final Rule concentrated on six areas. Procedures for trading

emission reduction credits are not addressed in this rule. A discussion

on this subject is contained in the DoD Base Reuse Implementation

Manual.

Provide the LRA with a complete inventory. From the

comments, DoD recognized that providing the redevelopment authority

with an incomplete inventory list left the impression that the Military

Departments were trying to hide property from the community.

RESPONSE: To counter that impression and promote trust and

confidence between the Military Departments and Local Redevelopment

Authorities, DoD revised the rule to require the Military Departments

to provide a complete inventory list to the redevelopment authority.

Deadlines. DoD recognized from the comments that the

strict deadlines for removing equipment could leave the communities

with the impression that Military Departments would be insensitive to

the special needs of the community.

RESPONSE: DoD revised the rule to require the Military Departments

to consult with the redevelopment authority before establishing

deadlines for removing equipment from the closing base.

Redistribution. Comments in this area criticized DoD for

giving the Military Departments and the federal government priority for

the personal property over the Local Redevelopment Authority,

especially for those items that were not uniquely military. These

submissions contended that if the communities needed the personal

property for redevelopment purposes, they should have priority for it,

since the Department's base closures created the need for

redevelopment.

On the other hand, others contended that the Military Departments'

authority to redistribute property had been unduly restricted. They

asked that the Military Departments be given top priority for non-

military items needed at another installation.

[[Page 37340]]

RESPONSE: DoD has struck a balance between these concerns. Personal

property, except ordinary fixtures, required by the Military Department

for the operation of transferring unit, function, component, weapon, or

weapon systems may be removed upon approval of the base commander or

higher authority. Other personal property, except ordinary fixtures,

required by the Military Department for the operation of a unit,

function, component, weapon, or weapon systems at another installation

will be subject to consultation with the community. Where the community

disputes a transfer, the approval by an Assistant Secretary of the

Military Department will be required.

Substitutions. Several comments criticized the provision

that allowed the Military Departments to provide the redevelopment

authority with substitute equipment instead of the actual item

requested. They were concerned that the communities would get stuck

with older, inferior equipment.

RESPONSE: DoD revised the rule to require the Military Departments

and Defense Agencies to consult with the Local Redevelopment Authority

before offering it a suitable substitute.

Complaints. Some comments objected to the dispute

resolution process. They suggested that DoD should establish another

mechanism for resolving disputes--ideally one outside the purview of

the agency that made the initial decision.

RESPONSE: While DoD struck the appeal provision from the rule, it

will continue to direct the Military Departments to use the chain-of-

command to address complaints.

Conveyances of personal property not related to real

property. The remainder of the comments expressed concern over the

apparent lack of guidance for conveying personal property that is not

associated with a real property transfer to the redevelopment

authority. In particular, they wanted to know if a community could

obtain individual items of personal property directly from the closing

base, and, if so, how.

RESPONSE: DoD revised the rule to identify two procedures for

conveying personal property (exclusive of real property) from a closing

base to a Local Redevelopment Authority.

Maintenance, Utilities, and Services

The public comments concerning the levels of maintenance and repair

section of the Interim Final Rule concentrated primarily on how the

Military Departments would determine initial levels of maintenance and

repair and how long they would maintain those levels, and expressed a

concern that the Military Departments would abandon the property if it

was not disposed of before the period of initial maintenance and repair

lapsed.

RESPONSES:

General response: DoD concluded that most of the public

comments were based on misperceptions. For example, some feared that

the levels of maintenance would be inadequate to preserve the property

and that the Military Departments would discontinue maintaining the

property after a specific date. To counter these misperceptions, DoD

clarified the procedures for determining the initial levels of

maintenance. DoD also encouraged the Military Departments to consult

with the Local Redevelopment Authorities in making decisions on the

initial levels of maintenance.

Duration of initial levels of maintenance. The revised

rule also identifies the time periods for which the Military

Departments will sustain the initial levels of maintenance and repair.

Not only may the Secretaries of the Military Departments extend the

periods (under specific circumstances), but the time periods are now

greater than those periods required by law.

Abandonment. DoD specified in the rule that after the

period of the initial levels of maintenance and repair lapses, the

degree of maintenance and repair would revert to not less than those

levels consistent with federal government standards for excess and

surplus property. However, the levels of maintenance and repair may be

lower than the initial levels.

Historic preservation. Some submissions expressed concern

that the regulation does not specifically require the Military

Departments to consult with state historic preservation officers or the

Advisory Council on Historic Preservation before determining the

initial levels of maintenance and repair. DoD recognizes that Defense

and federal regulations implementing Section 106 of the National

Historic Preservation Act already require the Military Departments to

consult with historic preservation activities about preserving historic

property at closing military bases and so chose not to complicate the

process by addressing the issue in this rule.

General Comments on April 6, 1994, Interim Final Rule

The general comments offered advice on implementing the Interim

Final Rule, rather than the content of the Interim Final Rule. In

response to these general comments, the Office of the Secretary of

Defense prepared a Department of Defense Base Reuse Implementation

Manual to provide greater detail and offer examples of how this rule

will be implemented.

Response to public comments on Economic Development Conveyances

The Department received comments on the October 26, 1994, amendment

to the Interim Final Rule (59 FR 53735). Many comments were supportive

of the changes made, but did suggest some technical revisions. Other

comments included:

Standardize terms.

RESPONSE: The term ``present fair market value'' has been used

throughout to avoid confusion.

Specify how much land should be applied for, and when.

RESPONSE: Since the submissions did not provide a powerful

justification for limiting the flexibility of implementors, the

Department decided not to accept this recommendation.

Require arbitration if an agreement on compensation cannot

be reached.

RESPONSE: The statute requires the Military Department, rather than

an arbitrator, to decide what compensation will be. In addition, DoD

does not believe such a provision is necessary because it is committed

to working with communities to assist them with economic redevelopment.

Change the definition of rural.

RESPONSE: The Department did not feel it necessary to change the

definition, because any community that shows a need for a discount can

receive one under the new process. The possibility to receive property

at no cost exists at urban and rural sites, if the property is

determined not to have a positive present fair market value and/or if a

100% discount is determined to be necessary for job creation.

Executive Order 12866

It has been determined that this final rule is not a significant

regulatory action. The final rule raises novel policy issues arising

out of the President's priorities.

Regulatory Flexibility Act

It has been determined that this rule will not have a significant

economic impact on substantial number of small entities. The primary

effect of this rule will be to help base closure communities by

reducing the burden of the government's property disposal process on

them and to accelerate the economic recovery of the relatively small

number of communities that will be affected by the closure or

realignment of a military installation.

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Paperwork Reduction Act

The rule is not subject to the Paperwork Reduction Act because it

imposes no obligatory information requirements beyond internal

Department of Defense use.

List of Subjects in 32 CFR Parts 90 and 91

Community development, Government employees, Military personnel,

Surplus government property.

Accordingly, 32 CFR parts 90 and 91 are revised as follows:

PART 90--REVITALIZING BASE CLOSURE COMMUNITIES

Sec.

90.1 Purpose.

90.2 Applicability.

90.3 Definitions.

90.4 Policy.

90.5 Responsibilites.

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

communities where military bases are slated to close.

\1\ Available from the Office of the Assistant Secretary of

Defense, The Pentagon, Room 1D760, Washington, DC 20301-3300; email:

``[email protected]''

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(b) Implements 107 Stat. 1909, National Defense Authorization Act

for Fiscal Year 1994, Title XXIX and The Base Closure Community

Redevelopment and Homeless Assistance Act of 1994 (Pub. L. 103-421).

(c) Authorizes the publication of DoD 4165.66-M, ``Base Reuse

Implementation Manual,'' in accordance with DoD 5025.1-M, ``DoD

Directive System Procedures,'' August 1994.

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 installation have ceased or have

been relocated. All personnel positions (military, civilian and

contractor) have either been eliminated or relocated, except for

personnel required for caretaking, conducting any ongoing environmental

cleanup, and disposal of the base, or personnel remaining in authorized

enclaves.

(b) Relaignment. 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.

Sec. 90.4 Policy.

It is DoD policy to:

(a) Help communities impacted by base closures and realignments

achieve rapid economic recovery through effective reuse of the assets

of closing and realigning bases--more quickly, more effectively and in

ways based on local market conditions and locally developed reuse

plans. This will be accomplished by quickly insuring that communities

and the Military Departments communicate effectively and work together

to accomplish mutual goals of quick property disposal and rapid job

generation.

(b) This part 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 Title

XXIX of Pub. L. 103-160, or Pub. L. 103-421.

Sec. 90.5 Responsibilities.

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

shall issue DoD Instructions as necessary, to further implement

applicable public laws effecting base closure implementation, and shall

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

Defense in Public Law 103-421 (108 Stat. 4326 et. seq.); Public Law

103-160, Title XXIX (107 Stat. 1909 et. seq.); Public Law 101-510,

Section 2905 (104 Stat. 1813 et. seq.); and Public Law 100-526, Section

204 (102 Stat. 2627 et. seq.), are hereby delegated to the Assistant

Secretary of Defense for Economic Security and may be delegated

further.

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

with responsibilities related to base closures of the policies set

forth in this part.

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.

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

Sec. 91.1 Purpose.

This part prescribes procedures to implement ``Revitalizing Base

Closure Communities'' (32 CFR part 90), the President's five-part

community reinvestment program, and real and personal property disposal

to assist the economic recovery of communities impacted by base

closures and realignments. The expeditious disposal of real and

personal property will help communities get started with reuse early

and is therefore critical to timely economic recovery.

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

United 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 Realignment Act (Pub. L. 100-

526, 102 Stat. 2623, 10 U.S.C. 2687 note), or the Defense Base Closure

and Realignment Act of 1990 (Pub. L. 101-510, Part A of Title XXIX of

104 Stat. 1808, 10 U.S.C. 2687 note).

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

been relocated. All personnel positions (military, civilian, and

contractor) have either been eliminated or relocated, except for

personnel required for caretaking, conducting any ongoing environmental

cleanup, and disposal of the base, or personnel remaining in authorized

enclaves.

(c) Consultation. Explaining and discussing an issue, 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

[[Page 37342]]

under Title XXIX of 104 Stat. 1808, 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.

(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) Local Redevelopment Authority (LRA). Any authority or

instrumentality established by state or local government and recognized

by the Secretary of Defense, through the Office of Economic Adjustment,

as the entity responsible for developing the redevelopment plan with

respect to the installation or 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) Communities in the Vicinity of the Installation. The

communities that constitute the political jurisdictions (other than the

State in which the installation is located) that comprise the

redevelopment authority for the installation.

(k) Installation. A base, camp, post, station, yard, center,

homeport facility for any ship, or other activity under the

jurisdiction of the Department of Defense, including any leased

facility. Such term does not include any facility used primarily for

civil works, rivers, and harbors projects, flood control, or other

project not under the primary jurisdiction or control of the Department

of Defense.

Sec. 91.4 Policy.

It is DoD policy to help communities impacted by base closures and

realignments achieve rapid economic recovery through effective reuse of

the assets of closing and realigning bases--more quickly, more

effectively and in ways based on local market conditions and locally

developed reuse plans. This will be accomplished by quickly ensuring

that communities and the Military Departments communicate effectively

and work together to accomplish mutual goals of quick property disposal

and rapid job generation. 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 Title XXIX of Public Law 103-160, or Public Law 103-

421.

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 through the publication of a manual or other such guidance

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 and 484) for the utilization and disposal of excess and surplus

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 delegated to the

Secretaries of the Military Departments, who may delegate this

authority further.

\2\ Available from the Office of the Assistant Secretary of

Defense (Economic Security), The Pentagon, Room 1D760, Washington,

DC 20301-3300; e mail: [email protected]

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

Economic Security by Sec. 90.5 of this chapter are hereby redelegated

to the Secretaries of the Military Departments, unless otherwise

provided within this part or other DoD directive, instruction, manual

or regulation. These authorities may be delegated further.

Sec. 91.7 Procedures.

(a) Identification of interest in real property. (1) To speed the

economy recovery of communities affected by closures and realignments,

it is DoD policy to identify DoD and federal interests in real property

at closing and realigning military bases as quickly as possible. The

Military Department having responsibility for the closing or realigning

base shall identify such interests. The Military Department will keep

the Local Redevelopment Authority (LRA) informed of these interests.

This section establishes a uniform process, with specified timelines,

for identifying real property which is excess to the Military

Department for use by other Departments of Defense (DoD) Components and

other federal agencies, and for the disposal of surplus property for

various purposes.

(2) Upon the President's submission of the recommendations for base

closures and realignments to the Congress in accordance with the

Defense Base Closure and Realignment Act of 1990 (Pub. L. 101-510), the

Military Department shall send out a notice of potential availability

to the other DoD Components, and other federal agencies. The notice of

potential availability is a public document and should be made

available in a timely basis, upon request. Federal agencies are

encouraged to review this list, and to evaluate whether they may have a

requirement for the listed properties. The notice of potential

availability should describe the property and buildings that may be

available for transfer. Installations which wholly or in part are

comprised of withdrawn and reserved public domain lands should

implement paragraph (a)(12) of this section at the same time.

(3) Military Departments should consider LRA input in making

determinations on the retention of property (size of cantonment area),

if provided. Generally, determinations on the retention of property (or

size of the cantonment area) should be completed prior to the date of

approval of the closure or realignment.

(4) Within one week of the date of approval of the closure or

realignment, the Military Department shall issue a formal notice of

availability to other DoD Components and federal agencies covering

closing and realigning installation buildings and property available

for transfer to other DoD Components and federal agencies. Withdrawn

public domain lands, which the Secretary of the Interior has determined

are suitable for return to his jurisdiction, will not be included in

the notice of availability.

(5) Within 30 days of date of the notice of availability, any DoD

Component or federal agency is required to provide a written, firm

expression of interest for buildings and property. An expression of

interest must explain the

[[Page 37343]]

intended use and the corresponding requirement for the buildings and

property.

(6) Within 60 days of the date of the notice of availability, the

DoD Component or federal agency expressing interest in buildings or

property must submit an application for transfer of such property to

the Military Department or federal agency.

(i) Within 90 days of the notice of availability, the FAA should

survey the air traffic control and air navigation equipment at the

installation to determine what is needed to support the air traffic

control, surveillance, and communications functions supported by the

Military Department, and to identify the facilities needed to support

the National Airspace System. FAA requests for property to manage the

National Airspace System will not be governed by paragraph (a)(9) of

this section. Instead, such requests will be governed by the

requirements of 41 CFR 101-47.308-2, to determine the transfer of

property necessary for control of the airspace being relinquished by

the Military Department.

(7) The Military Department will keep the LRA informed of the

progress in identifying interests. At the same time, the LRA is

encouraged to contact federal agencies which sponsor public benefit

transfers for information and technical assistance. The Military

Department will provide points of contact at the federal agencies to

the LRA.

(8) Federal agencies and DoD Components are encouraged to discuss

their plans and needs with the LRA, if an LRA exists. DoD Components

and federal agencies are encouraged to notify the Military Department

of the results of this non-binding consultation. The Military

Departments, the Base Transition Coordinator, and the Office of

Economic Adjustment Project Manager are available to help facilitate

communication between the federal agencies, DoD Components, and the

LRA.

(9) A request for property from a DoD Component or federal agency

must contain the following information:

(i) A completed GSA Form 1334, Request for Transfer (for requests

from other DoD Components a DD Form 1354 is required). This must be

signed by the head of the Component of the Department or Agency

requesting the property. If the authority to acquire property has been

delegation, a copy of the delegation must accompany the form;

(ii) A statement from the head of the requesting Component or

agency that the request does not establish a new program (i.e., one

that has never been reflected in a previous budget submission or

Congressional action);

(iii) A statement that the requesting Component or agency has

reviewed its real property holdings and cannot satisfy this requirement

with existing property. This review must include all property under the

requester's accountability, including permits to other federal agencies

and outleases to other organizations;

(iv) A statement that the requested property would provide greater

long-term economic benefits than acquisition of a new facility or other

property for the program;

(v) A statement that the program for which the property is

requested has long-term viability;

(vi) A statement that considerations of design, layout, geographic

location, age, state of repair, and expected maintenance costs of the

requested property clearly demonstrate that the transfer will prove

more economical over a sustained period of time than acquiring a new

facility;

(vii) A statement that the size of the property requested is

consistent with the actual requirement;

(viii) A statement that fair market value reimbursement to the

Military Department will be made within two years of the initial

request for the property, unless this obligation is waived by the

Office of Management and Budget and the Secretary of the Military

Department or a public law specifically provides for a non-reimbursable

transfer. However, requests from the Military Departments or DoD

Components do not need an Office of Management and Budget waiver; and

(ix) A statement that the requesting DoD Component or federal

agency agrees to accept the care and custody costs for the property on

the date the property is available for transfer, as determined by the

Military Department.

(10) The Military Department will make it decision on a request

from a federal agency, Military Department, or DoD Component based upon

the following factors, from the Federal Property Management Regulations

(41 CFR 101-47.201-2):

(i) The paramount consideration shall be the validity and

appropriateness of the requirement upon which the proposal is based;

(ii) The proposed federal use is consistent with the highest and

best use of the property;

(iii) The requested transfer will not have an adverse impact on the

transfer of any remaining portion of the base;

(iv) The proposed transfer will not establish a new program or

substantially increase the level of an agency's existing programs;

(v) The application offers fair market value for the property,

unless waived;

(vi) The proposed transfer addresses applicable environmental

responsibilities to the satisfaction of the Military Department; and

(vii) The proposed transfer is in the best interest of the

Government.

(11) When there are more than one acceptable applications for the

same building or property, the Military Department responsible for the

installation should first consider the needs of the military to carry

out its mission. The Military Department should then consider the

proposal's economic development and job creation potential and the

LRA's comments, as well as the other factors in the determination of

highest and best use.

(12) Closing or realigning installations may contain ``public

domain lands'' which have been withdrawn by the Secretary of the

Interior from operation of the public land laws and reserved for the

Defense Department's use. Lands deemed suitable for return to the

public domain are not real property governed by the Federal Property

and Administrative Services Act of 1949, as amended (40 U.S.C. 472),

and are not governed by the property management and disposal provisions

of the Base Closure and Realignment Act of 1988 (Pub. L. 100-526) and

Defense Base Closure and Realignment Act of 1990 (Pub. L. 101-510).

Public domain lands are under the jurisdiction of the Secretary of the

Interior and administered by the Bureau of Land Management (BLM) unless

the Secretary of the Interior has withdrawn the lands and reserved them

for another federal agency's use.

(i) The Military Department responsible for a closing or realigning

installation will provide the BLM with the notice of potential

availability, as well as information about which, if any, public domain

lands will be affected by the installation's closing.

(ii) The BLM will review the notice of potential availability to

determine if any installations contain withdrawn public domain lands.

Before the date of approval of the closure or realignment, the BLM will

review its land records to identify any withdrawn public domain lands

at the closing installations. Any records discrepancies between the BLM

and Military Departments should be resolved within this time period.

The BLM will notify the Military Departments as to the final agreed

upon withdrawn and reserved public domain lands at installations.

[[Page 37344]]

(iii) Upon agreement as to what withdrawn and reserved public

domain lands are affected at closing installations, the BLM will

initiate a screening of DOI agencies to determine if these lands are

suitable for programs of the Secretary of the Interior.

(iv) Military Departments will transmit a Notice of Intent to

Relinquish (see 43 CFR part 2372) to the BLM as soon as it is known

that there is no DoD Component interest in reusing the public domain

lands. The BLM will complete the suitability determination screening

process within 30 days of receipt of the Military Department's Notice

of Intent to Relinquish. If a DoD Component is approved to reuse the

public domain lands, the BLM will be notified and BLM will determine if

the current authority for military use of these lands needs to be

modified/amended.

(v) If BLM determines the land is suitable for return, they shall

notify the Military Department that the intent of the Secretary of the

Interior is to accept the relinquishment of the Military Department.

(vi) If BLM determines the land is not suitable, the land should be

disposed of pursuant to base closure law.

(13) The Military Department should make its surplus determination

within 100 days of the issuance of the notice of availability, and

shall inform the LRA of the determination. If requested by the LRA, the

Military Department may postpone the surplus determination for a period

of no more than six months after the date of approval of the closure of

realignment.

(i) In unusual circumstances, extensions beyond six months can be

granted by the Assistant Secretary of Defense of Economic Security.

(ii) Extensions of the surplus determination should be limited to

the portions of the installation where there is an outstanding

interest, and every effort should be made to make decisions on as much

of the installation as possible, within the specified timeframes.

(14) Once the surplus determination has been made, the Military

Department shall:

(i) Follow the procedures outlined in paragraph (b) of this

section, if applicable.

(ii) Or, for installations approved for closure or realignment

after October 25, 1994, and installations approved for closure or

realignment prior to October 25, 1994, that have elected, prior to

December 24, 1994, to come under the process outlined in the Base

Closure Community Redevelopment and Homeless Assistance Act of 1994,

follow the procedures outlined in paragraph (c) of this section.

(15) Following the surplus determination, but prior to the disposal

of property, the Military Department may, at its discretion, withdraw

the surplus determination and evaluate a federal agency's late request

for excess property.

(i) Transfers under this paragraph shall be limited to special

cases, as determined by the Secretary of the Military Department.

(ii) Requests shall be made to the Military Department, as

specified under paragraphs (a)(8) and (a)(9) of this section, and the

Military Department shall notify the LRA of such late request.

(iii) Comments received from the LRA and the time and effort

invested by the LRA in the planning process should be considered when

the Military Department is reviewing a late request.

(b) Homeless screening for properties not covered by the Base

Closure Community Redevelopment and Homeless Assistance Act of 1994.

(1) This section outlines the procedure created for the identification

of real property to fulfill the needs of the homeless by section

2905(b)(6) of Pub. L. 101-510, as amended by Public Law 103-160

(referred to as the Pryor Amendment). It applies to BRAC 88, 91 and 93

bases if the LRA did not elect to be subject to the alternate homeless

assistance screening procedure contained in the Base Closure Community

Redevelopment and Homeless Assistance Act of 1994.

(2) The Military Department shall sponsor a workshop or seminar in

the communities which have closing or realigning bases, unless such a

workshop or seminar has already been held. These workshops or seminars

will be conducted prior to the Federal Register publication by HUD of

available property to assist the homeless.

(i) Not later than the date upon which the determination of surplus

is made, the Military Department shall complete any determinations or

surveys necessary to determine whether any building is available to

assist the homeless. The Military Department shall then submit the list

of properties available to assist the homeless to HUD.

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

property to assist the homeless in accordance with the Stewart B.

McKinney Homeless Assistance Act, 42 U.S.C. 11411, (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 or realigns.

(iii) The listing of properties in the Federal Register under this

procedure shall contain the following statement. (The listing of 1988

base closure properties that will be reported to HUD shall refer to

section 204(b)(6) of Public Law 100-526 instead of section 2905(b)(6)

of Public Law 101-510):

The properties contained in this listing are closing and

realigning military installations. This report is being accomplished

pursuant to section 2905(b)(6) of Public Law 101-510, as amended by

Public Law 103-160. In accordance with section 2905(b)(6), 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.

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

in which to submit expressions of interest to HHS 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

expression 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.

(4) During this screening process (from 60 to 175 days following

the 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; or,

(iii) HHS rejects all applications received for a specific

property.

(5) The Military Department should promptly inform the affected

LRA, the Governor of the State, local governments, and agencies which

support public benefit conveyances of the date the surplus property

will be available for community reuse if:

(i) No provider expresses an interest to HHS in a property with the

allotted 60 days;

(ii) There are expressions of interest by homeless assistance

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

within the subsequent

[[Page 37345]]

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

HHS has granted an extension); or

(iii) HHS rejects all applications for a specific property at any

time during the 25 day HHS review period.

(6) The LRA shall have 1 year from the date of notification under

paragraph (b)(5) of this section to submit a written expression of

interest to incorporate the remainder of the property into a

redevelopment plan.

(7) During the allotted 1-year period for the LRA 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. 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 consistent with paragraph (g) of this

section.

(8) If the LRA does not express in writing its interest in a

specific property during the allotted 1-year period or it notifies the

Military Department it is not interested in the property, 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 procedures of the McKinney Act.

(c) Reserved. Additional regulations will be promulgated in a

publication of the Departments of Defense and Housing and Urban

Development to address state and local screening and approval of

redevelopment plans for installations covered by the Base Closure

Community Redevelopment and Homeless Assistance Act of 1994 (Pub. L.

103-421).

(d) Local Redevelopment Authority and the Redevelopment Plan. (1)

The LRA should have broad-based membership, including, but not limited

to, representatives from those jurisdictions with zoning authority over

the property. Generally, there will be one recognized LRA per

installation.

(2) The LRA should focus primarily on developing a comprehensive

redevelopment plan based upon local needs. The plan should recommend

land uses based upon an exploration of feasible reuse alternatives. If

applicable, the plan should consider notices of interest received under

the provisions of the Base Closure Community Redevelopment and Homeless

Assistance Act of 1994 (Pub. L. 103-421). This section shall not be

construed to require a plan that is enforceable under state and local

land use laws, nor is it intended to create any exemption from such

laws.

(3) The Military Department will develop a disposal plan and

complete the appropriate environmental documentation no later than 12

months from receipt of the redevelopment plan. The local redevelopment

plan will generally be used as the basis for the proposed action in

conducting environmental analyses required by under the National

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

disposal plan will specifically address the methods for disposal of

property at the installation, including conveyances for homeless

assistance, public benefit transfers, public sales, Economic

Development Conveyances and other disposal methods.

(i) In the event there is no LRA recognized by DoD and/or if a

redevelopment plan is not received from the LRA within 15 months from

the determination of surplus under paragraph (a)(13) of this section,

(unless an extension of time has been granted by the Assistant

Secretary of Defense for Economic Security), the applicable Military

Department shall proceed with the disposal of property under applicable

property disposal and environmental laws and regulations.

(e) Economic development conveyances. (1) Section 2903 of Public

Law 103-160 gives the Secretary of Defense the authority to transfer

property to local redevelopment authorities for consideration in cash

or in kind, with or without initial payment, or with only partial

payment at time of transfer, at or below the estimated present fair

market value of the property. This authority creates an additional tool

for local communities to help spur economic opportunity through a new

real property conveyance method specifically designed for economic

development, referred to as the ``Economic Development Conveyance''

(EDC).

(2) The EDC can only be used when other surplus federal property

disposal authorities for the intended land use cannot be used to

accomplish the necessary economic redevelopment.

(3) An LRA is the only entity able to receive property under an

EDC.

(4) A properly completed application will be the basis for a

decision on whether an LRA will be eligible for an EDC. An application

should be submitted by the LRA after a Redevelopment Plan is adopted by

the LRA. The Secretary of the Military Departments shall establish a

reasonable time period for submission of the EDC application after

consultation with the LRA. The Military Departments will review the

applications and make a decision whether to make an EDC based on the

criteria specified in paragraph (e)(7) of this section. The terms and

conditions of the EDC will be negotiated between the Military

Departments and the LRA. Bases in rural areas shall be conveyed with no

consideration if they meet the standards in paragraph (f)(5) of this

section.

(5) The application should explain why an EDC is necessary for

economic redevelopment and job creation. In addition to the elements in

paragraph (e)(5) of this section, after Military Department review of

the application, additional information may be requested to allow for a

better evaluation of the application. The application should also

contain the following elements:

(i) A copy of the adopted redevelopment plan.

(ii) A project narrative including the following:

(A) A general description of property requested.

(B) A description of the intended uses.

(C) A description of the economic impact of closure or realignment

on the local communities.

(D) A description of the financial condition of the community and

the prospects for redevelopment of the property.

(E) A statement of how the EDC is consistent with the overall

Redevelopment Plan.

(iii) A description of how the EDC will contribute to short- and

long-term job creation and economic redevelopment of the base and

community, including projected number, and type of new jobs it will

assist in creating.

(iv) A business/operational plan for the EDC parcel, including such

elements as:

(A) A development timetable, phasing schedule and cash flow

analysis.

(B) A market and financial feasibility analysis describing the

economic viability of the project, including an estimate of net

proceeds over a fifteen-year period, the proposed consideration or

payment to the Department of Defense, and the estimated present fair

market value of the property.

(C) A cost estimate and justification for infrastructure and other

investments needed for the development of the EDC parcel.

(D) Local investment and proposed financing strategies for the

development.

(v) A statement describing why other authorities--such as public or

negotiated sale and public benefit transfers for education, parks,

public health, aviation, historic monuments,

[[Page 37346]]

prisons, and wildlife conservation--cannot be used to accomplish the

economic development and job creation goals.

(vi) If a transfer is requested for less than the estimated present

fair market value (``FMV''), with or without initial payment at the

time of transfer, then a statement should be provided justifying the

discount. The statement should include the amount and form of the

proposed consideration, a payment schedule, the general terms and

conditions for the conveyance, and projected date of conveyance.

(vii) A statement of the LRA's legal authority to acquire and

dispose of the property.

(6) Upon receipt of an application for an EDC, the Secretary of the

Military Department will determine whether an EDC is needed to spur

economic development and job creation and examine whether the terms and

conditions proposed are fair and reasonable. The Military Department

may also consider information independent of the application, such as

views of other federal agencies, appraisals, caretaker costs and other

relevant material. The Military Department may propose and negotiate

any alternative terms or conditions that it considers necessary.

(7) The following factors will be considered, as appropriate, in

evaluating the application and the terms and conditions of the proposed

transfer, including price, time of payment and other relevant methods

of compensation to the federal government.

(i) Adverse economic impact of closure or realignment on the region

and potential for economic recovery after an EDC.

(ii) Extent of short- and long-term job generation.

(iii) Consistency with overall Redevelopment Plan.

(iv) Financial feasibility of the development, including market

analysis and need and extent of proposed infrastructure and other

investments.

(v) Extent of state and local investment, level of risk incurred,

and the LRA's ability to implement the plan.

(vi) Current local and regional real estate market conditions.

(vii) Incorporation of other federal agency interests and concerns,

and applicability of, and conflicts with, other federal surplus

property disposal authorities.

(viii) Relationship to the overall Military Department disposal

plan for the installation.

(ix) Economic benefit to the federal government, including

protection and maintenance cost savings and anticipated consideration

from the transfer.

(x) Compliance with applicable federal, state, and local laws and

regulations.

(8) Before making an EDC, the Military Department must prepare an

estimate of the present fair market value of the property, which may be

expressed as a range of values. The Military Department shall consult

with the LRA on valuation assumptions, guidelines and on instructions

given to the person(s) making the estimation of value. The Military

Department is fully responsible for completion of the valuation. The

Military Department, in preparing the estimate of present fair market

value shall include, to the extent practicable, the uses identified in

the local redevelopment plan.

(f) Consideration for economic development conveyances. (1) For

conveyances made pursuant to Sec. 91.7(e), Economic development

conveyances, the Secretary of the Military Department will review the

application for an EDC and negotiate the terms and conditions of each

transaction with the LRA. The Military Departments will have the

discretion and flexibility to enter into agreements that specify the

form, amount, and payment schedule. The consideration may be at or

below the estimated present fair market value, with or without initial

payment, in cash or in-kind and paid over time.

(2) An EDC must be one of the two following types of agreements:

(i) Consideration within the estimated range of present fair market

value, as determined by the Secretary of the Military Department.

(ii) Consideration below the estimated range of present fair market

value, when proper justification is provided and when the Secretary of

the Military Department determines that a discount is necessary for

economic redevelopment and job creation.

(3) If the consideration under an EDC is within the range of value

listed in paragraph (f)(2)(i) of this section, the amount paid in the

future should take into account the time value of money and include

repayment of interest. Any transaction that waives or delays interest

payments will be considered as a transaction below the present fair

market value under paragraph (f)(2)(ii) of this section, and as such

must be justified as necessary for economic development and job

creation.

(4) Additional provisions may be incorporated in the conveyance

documents to protect the Department's interest in obtaining the agreed

upon compensation, including such items as predetermined release

prices, or other appropriate clauses designed to ensure payment and

protect against fraudulent transactions.

(5) In a rural area, as defined by this rule, any EDC approved by

the Secretary of the Military Department shall be made without

consideration if the base closure will have a substantial adverse

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

installation and on the prospect for their economic recovery.

(6) In those instances in which an EDC is made for consideration

below the range of the estimated present fair market value of the

property--or if the estimated present fair market value is expressed as

a range of values, below the lowest value in that range--the Military

Department shall prepare a written explanation of why the estimated

present fair market value was not obtained. Additionally, the Military

Departments must prepare a written statement explaining why other

federal property transfer authorities could not be used to generate

economic redevelopment and job creation.

(g) Leasing of real property. (1) Leasing of real property prior to

the final disposition of closing and realigning bases may facilitate

state and local economic adjustment efforts and encourage economic

redevelopment.

(2) In addition to leasing property at fair market value, to assist

local redevelopment efforts the Secretaries of the Military Departments

may also lease real and personal property located at a military

installation to be closed or realigned under a base closure law,

pending final disposition, for less than fair market value if the

Secretary concerned determines that:

(i) A public interest will be served as a result of the lease; and

(ii) The fair market value of the lease is unobtainable, or not

compatible with such public benefit.

(3) Pending final disposition of an installation, the Military

Departments may grant interim leases which are short-term leases that

make no commitment for future use or ultimate disposal. When granting

an interim lease, the Military Department will generally lease to the

LRA but can lease property directly to other entities. If the interim

lease is entered into prior to completion of the final disposal

decisions under the National Environmental Policy Act (NEPA) process,

the term may be for up to five years, including options to renew, and

may contain restrictions on use. Leasing should not delay the final

disposal of the property. After completion of the final disposal

decisions, the term of the lease may be longer than five years.

[[Page 37347]]

(4) If the property is leased for less than fair market value to

the LRA and the interim lease permits the property to be subleased, the

interim lease shall provide that rents from the subleases will be

applied by the lessee to the protection, maintenance, repair,

improvement and costs related to the property at the installation

consistent with 10 U.S.C. 2667.

(h) Personal property. (1) This section outlines procedures to

allow transfer of personal property to the LRA for the effective

implementation of a community reuse plan.

(2) Each Military Department and DoD Component, as appropriate,

will take an inventory of the personal property, including its

condition, within 6 months after the date of approval of closure or

realignment. This inventory will be limited to the personal property

located on the real property to be disposed of by the Military

Department or DoD Component. The inventory will be taken in

consultation with LRA officials. If there is no LRA, the Military

Department will offer to provide a consultation for the local

government in whose jurisdiction the installation is wholly located or

for a local government agency or a state government agency designated

for that purpose by the chief executive officer of the state. Based on

these consultations, the base commander will determine the items or

category of items that have the potential to enhance the reuse of the

real property.

(3) Except for property subject to the exemptions in paragraph

(h)(5) of this section, personal property with potential to enhance the

reuse of the real estate shall remain at a base being closed or

realigned until disposition is otherwise determined by the Military

Department. This determination will be made no earlier than 90 days

after the Military Department receives an adopted redevelopment plan or

when notified by the LRA that there will be no redevelopment plan.

(4) National Guard property demonstrably identified as being

purchased with state funds is not available for reuse planning or

subject to transfer for redevelopment purposes, unless so identified by

the state property officer. National Guard property purchased with

federal funds is subject to inventory and may be made available for

redevelopment planning purposes.

(5) Personal property may be removed upon approval of the base

commander or higher authority, within and as prescribed by the Military

Department, after the inventory required in paragraph (h)(2) of this

section has been sent to the redevelopment authority, when:

(i) The property, other than ordinary fixtures, is required for the

operation of a transferring unit, function, component, weapon, or

weapons system;

(ii) The property is required for the operation of a unit,

function, component, weapon, or weapon system at another installation

within the Military Department, subject to the following conditions:

(A) Ordinary fixtures, including but not limited to such items as

blackboards, sprinklers, lighting fixtures, and electrical and plumbing

systems, shall not be removed under paragraph (h)(5)(ii) of this

section; and,

(B) Other personal property may be removed under paragraph

(h)(5)(ii) of this section only after the Military Department has

consulted with the LRA and, with respect to disputed items, upon the

approval of an Assistant Secretary of the Military Department.

(iii) The property 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). This property consists of

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;

(iv) The property is not required for the reutilization or

redevelopment of the installation (as jointly determined by the

Military Department concerned and the redevelopment authority);

(v) The property is stored at the installation for distribution

(including spare parts or stock items). This property includes

materials or parts used in a manufacturing or repair function but does

not include maintenance spares for equipment to be left in place;

(vi) The property meets known requirements of an authorized program

of another federal department or agency that would have to purchase

similar items, and the property is the subject of a written request

received from the head of the other Department or Agency. If the

authority to acquire personal property has been delegated, a copy of

the delegation must accompany the request. In this context, purchase

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;

(vii) The property belongs to nonappropriated fund

instrumentalities (NAFI) and other non-Defense Department activities.

Such property may be removed at the Military Departments' discretion

because it does not belong to the Defense Department and, therefore, it

may not be transferred to the redevelopment authority under this

section. For NAFI property, separate arrangements for communities to

purchase such property are possible and may be negotiated with the

Military Department concerned; and,

(viii) The property 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

below the level of an Assistant Secretary. In exercising this

authority, the Secretary may transfer the property to any entity of the

Department of Defense or other federal agency.

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

section, the Military Department or DoD Component is authorized to

substitute an item similar to one requested by the redevelopment

authority.

(7) Personal property not subject to the exemptions in paragraph

(h)(5) of this section may be conveyed to the redevelopment authority

as part of an economic development conveyance for the real property if

the Military Department makes a finding that the personal property is

necessary for the effective implementation of the redevelopment plan.

(8) Personal property may also be conveyed separately to the LRA

under an economic development conveyance for personal property. This

type of economic development conveyance can be made if the Military

Department determines that the transfer is necessary for the effective

implementation of a redevelopment plan with respect to the

installation. Such determination shall be based on the LRA's timely

application for the property, which should be submitted to the Military

Department upon completion of the redevelopment plan. The application

must include the LRA's agreement to accept the personal property after

a reasonable period. The transfer will be subject to reasonable

limitations and conditions on use.

(i) The Military Department will restrict the LRA's ability to

acquire personal property at less than fair market value solely for the

purpose of releasing or reselling it, unless the LRA will lease or sell

the personal property to entities which will place it into productive

use in accordance with the

[[Page 37348]]

redevelopment plan. The LRA must retain personal property conveyed

under an EDC for less than fair market value for at least one year if

it is valued at less than $5,000, or at least two years if valued at

more than $5,000. Any proceeds from such leases or sales must be used

to pay for protection, maintenance, repair or redevelopment of the

installation. The LRA will be required to certify its compliance with

the provisions of this section at the end of each fiscal year for no

more than two years after transfer. The certification may be subject to

random audits by the Government.

(9) Personal property that is not needed by the Military Department

or a federal agency or conveyed to a redevelopment authority (or a

state or local jurisdiction in lieu of a local redevelopment authority)

will be transferred to the Defense Reutilization and Marketing Office

for processing in accordance with 41 CFR parts 101-43 through 101-45,

``Federal Property Management Regulations,'' and DoD 4160.21-M.\3\

\3\ Copies may be obtained from the Defense Logistics Agency,

Attn: DLA-XPD, Alexandria, VA 22304-6100.

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(10) Useful personal property determined to be surplus to the needs

of the federal government by the Defense Reutilization and Marketing

Office and not qualifying for transfer to the redevelopment authority

under an economic conveyance may be donated to the community or

redevelopment authority through the appropriate State Agency for

Surplus Property (SASP). Personal property donated under this procedure

must meet the usage and control requirements of the applicable SASP.

Property subsequently not needed by the community or redevelopment

authority shall be disposed of as required by its SASP.

(i) Maintenace, utilities, and services. (1) Facilities and

equipment located on bases being closed are often important to the

eventual reuse of the base. This section provides maintenance

procedures to preserve and protect those facilities and items of

equipment needed for reuse in an economical manner that facilitates

based redevelopment.

(2) In order to ensure quick reuse, the Military Department, in

consultation with the LRA, will establish initial levels of maintenance

and repair needed to aid redevelopment and to protect the property for

the time periods set forth below. Where agreement between the Military

Department and the LRA cannot be reached, the Secretary of the Military

Department will determine the required levels of maintenance and repair

and its duration. In no case will these initial levels of maintenance:

(i) Exceed the standard of maintenance and repair in effect on the

date of closure or realignment approval;

(ii) Be less than maintenance and repair required to be consistent

with federal government standards for excess and surplus properties

(i.e., 41 CFR 101-47.402 and 41 CFR 101-47.4913); or,

(iii) Require any property improvements, including construction,

alteration, or demolition, except when the demolition is required for

health, safety, or environmental purposes, or is economically justified

in lieu of continued maintenance expenditures.

(3) The initial levels of maintenance and repair shall be tailored

to the redevelopment plan, and shall include the following provisions:

(i) The facilities and equipment that are likely to be utilized in

the near term will be maintained at levels that shall prevent undue

deterioration and allow transfer to the LRA.

(ii) The scheduled closure or realignment date of the installation

will not be delayed.

(4) The Military Department will not reduce the agreed upon initial

maintenance and repair levels unless it establishes a new arrangement

(e.g., termination of caretaking upon leasing of property) in

consultation with the LRA.

(5) The Military Department will determine the length of time it

will maintain the initial levels of maintenance and repair for each

closing or realigning base. This determination will be based on factors

such as the closure/realignment date and the timing of the completion

of the National Environmental Policy Act (NEPA) documentation on the

proposed disposal (such as a finding of no significant impact and

disposal decision following an environmental assessment or the record

of decision following an environmental impact statement).

(i) For a base that has not closed prior to the publication of this

rule, and where the Military Department has completed the NEPA analysis

on the proposed disposal before the operational closure of that base,

the time period for the initial levels of maintenance and repair

normally will extend no longer than one year after operational closure

of the base.

(ii) For a base that has not closed prior to the publication of

this rule, and where the base's operational closure precedes the

completion of the NEPA analysis on the proposed disposal, the time

period for the initial levels of maintenance and repair will normally

extend no longer than one year after operational closure or 180 days

after the Secretary of the Military Department approves the NEPA

analysis.

(iii) For a based that closed prior to the publication of this

rule, the time period for the existing levels of maintenance will

normally extend no longer than one year from the date of the

publication of this rule or six years after the date of approval of the

closure or realignment (whichever comes first).

(6) The Military Department may extend the time period for the

initial levels of maintenance and repair for property still under its

control for an additional period, if the Secretary of the Military

Department determines that the Local Redevelopment Authority is

actively implementing its redevelopment plan, and such levels of

maintenance are justified.

(7) Once the time period for the initial or extended levels of

maintenance and repair elapses, the Military Department will reduce the

levels of maintenance and repair to levels consistent with federal

government standards for excess and surplus properties (i.e., 41 CFR

101-47.402 and 41 CFR 101-47.4913).

Dated: July 14, 1995.

L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, Department of Defense.

[FR Doc. 95-17737 Filed 7-19-95; 8:45 am]

BILLING CODE 5000-04-M