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Fort Meade, EUL
Fort Meade, EUL
The Enhanced Use Lease (EUL) acreage to be developed for office buildings located along the perimeter of the installation. The property to be leased is mostly vacant land. The Army competitively selected Trammell Crow as the private developer to build a 540,000 million square foot office park.
The GATE at Aberdeen Proving Ground
The GATE at Aberdeen Proving Ground
St. John Properties, in partnership with Aberdeen Proving Ground (APG), is developing The Government and Technology Enterprise (The GATE), a state-of-the-art office and technology business park for lease to government sector and non-government users. APG, a leading R&D and testing center for the U.S. Army, boasts some of the most sophisticated testing firms, defense contractors and other Army and Department of Defense units working on advanced research activities to complement APG's missions and help make it a Center for Excellence.
Central Utility Plant - Ft. Detrick, MD
Central Utility Plant - Ft. Detrick, MD
Chevron Energy Solutions and Keenan Development announced the commer- cial operation of a $100 million central utility plant to provide chilled water, continuous steam, electricity and standby emergency power to reliably meet the needs of the National Interagency Biodefense Campus laboratory and bio- defense research work at Ft. Detrick in Frederick, MD. This plant is the first energy project established through the Department of Defense's enhanced-use lease authority, which allows private companies to develop non-essential military property for commercial use. Chevron Energy Solutions, who operates the facility, designed and built the plant. Keenan Development owns the plant and leases the land from Ft. Detrick. "This plant will help ensure continued progress in biomedical research and other critical defense work at Ft. Detrick,"
Desert Proving Ground Yuma
Desert Proving Ground Yuma
In July 2009, General Motors and the U.S. Army officially opened GM's test facility in the southwest on the Army's Yuma Proving Ground. The opening marked the end of most construction activity and the beginning of a cooperative arrangement hammered out 2 years ago. The agreement will provide GM with a suitable test facility following the closing of their long standing Mesa Proving Ground. In the agreement GM has leased a portion of the Yuma Proving Ground from the government on which several test roads and support facilities have been built. Both the Army and GM will have access to road systems they currently did not have on their property. A win – win for both groups.

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EUL Frequently Asked Questions

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Answer: If audited financial statements have been prepared for your corporation or partnership, we do ask that you provide them in your proposal. However, if they are not available, we ask that you provide a complete and current personal financial statement for all the officers/partners of the significant parties (including contractors, architects and other partners, if applicable) of your development team.

Answer: Part of the development team should be out looking for potential tenants during the Business and Lease Plan phase of the process, but no space leases can be signed until after the ground lease is executed.

Answer: OMB is the Office of Management and Budget; responsible for evaluating leases done by the government to determine whether they’re capital (agency would have to obligate entire value of obligation up from and money set aside) or operating (standard lease recognized by all) lease. All leases would have to go through the scoring process. Generally, a lease will run 12-17 years.

The land lease has to be kept separate from the building lease. Once the land lease is together, it will be shown to OMB. There are the 75/90 tests – 75 percent test is based on useful life of the building. The term of lease can’t be more than 75 percent of life of the building; 90 percent lease can’t be more than 90 percent of the cost of the building. GSA knows how to apply these tests.

Answer: We do not require specific equity investments by the developer. The selected developer will bring forward the best deal for the Army. This includes putting together the best financing package. Lenders will decide the equity requirements.

Answer: "Budget scoring" is a term that refers to the act of measuring federal spending obligations against amounts appropriated. Under the Anti-Deficiency Act, no agency can obligate the Government to pay more than the amount appropriated to it by Congress. The Office of Management and Budget (OMB), House and Senate Budget Committees, and Congressional Budget Office collaborate on the rules that govern this scoring process. OMB guidelines require that obligations be made for the “full economic cost” of an action at the time an obligation is made. For leases, actions are divided into “capital leases,” which OMB views as equivalent to the purchase of an asset for the purposes of budgeting; and “operating leases” which are leases under which the asset is used for a period of time that does not contain or imply the risks of ownership.

When the Government purchases a capital asset – defined by OMB as land, structures, equipment or intellectual property that have an estimated life of two years or more – scorekeeping requires that the Government budget for the entire cost of that asset (“asset cost”) in the fiscal year in which it is purchased.

For operating leases, funds are “scored” (or obligated) in the year in which the budget authority is first made available in the amount necessary to cover the Government's legal obligations. The specific capital/operating lease rules are contained in OMB Circular A-11, Appendices A and B, (revised in July 2003), (http://www.whitehouse.gov/omb/circulars/a11/current_year/a11_toc.html). If these criteria are not met, then the lease will be scored for budget purposes as a “capital lease” and an amount equal to the “asset cost” (entire cost of the asset”) must be budgeted-for in the first year (recorded up-front) of the lease.

Budgetary scoring impacts two areas of this project. The first is the ground lease itself. There is no scoring associated with a USC Title 10 Section 2667 Ground Lease as long as the installation gets fair market value for the land as in-kind consideration or cash. The second area where scoring applies is if there is any federal leasing of space in the new building(s). The OMB criteria (see A-11 reference above) help the government determine whether the project is really just federal construction in disguise—in which case it would be put in on the books as a capital lease—or whether it really is just an operating expenditure of the federal government like anything else that it would lease, in which case they would account for it as an operating lease.

Although the installation does not guarantee occupancy of space in any new building(s), in order to avoid capital lease treatment, we need to make sure that we sever the ground lease for this project from any potential lease-back, and that when we do the lease-back, it complies with all the operating lease scoring rules. For this reason, although developers do not have to be experts in scoring, it would be helpful for them to have some knowledge of the scoring process and to be familiar with Appendix B of Circular A-11.

Answer: Taxation is a case by case, locality by locality determination. However, in general there would be no real property taxes since the development is on the military installation. Military installations make a payment in lieu of taxes to the local jurisdictions where they are located to provide help for infrastructure use, schools, etc., that may be used by the service men and women living on the base. The Enhanced Use Lease sites are located on the installations and the garrison provides services to the site, such as police and fire protection among others that would be provided by the city or county. For these reasons EUL sites would typically not be taxed.

Regarding zoning and permitting, military installations are not subject to local zoning or building permit codes. In many cases the military standards are as strict or more strict than the local codes. In the case of EUL's the developer is required to meet the local or installation code, whichever is greater. The Army provides the reviews for compliance.

Development and tenants locating in an EUL project must be compatible and complementary to the missions of the installation. The Garrison Commander has the right of refusal on any private sector tenants leasing in an EUL building.

Answer: It is the responsibility of the developer to put together a package and to come in with what they believe is their strongest team.

Answer: Yes, we see this regularly when multiple firms will blend skills to bring forward the best product. We expect to see this type of partnership in future proposals.

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