[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8114]


[[Page Unknown]]

[Federal Register: April 6, 1994]


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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.
---------------------------------------------------------------------------

    (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