[Federal Register Volume 62, Number 62 (Tuesday, April 1, 1997)]
[Notices]
[Pages 15567-15569]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8136]


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DEPARTMENT OF VETERANS AFFAIRS

Enhanced-Use Lease of Property at the Department of Veterans 
Affairs Medical Center in Atlanta, Georgia

AGENCY: Department of Veterans Affairs.

ACTION: Notice of Designation.

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SUMMARY: The Secretary of the Department of Veterans Affairs is 
designating the Department of Veterans Affairs Medical Center in 
Atlanta, Georgia, for an Enhanced-Use lease development. The Department 
intends to enter into a long-term lease of real property at the Medical 
Center with the Development authority of DeKalb County for the purpose 
of collocating administrative office space for its Veteran Benefits 
Administration Regional Office onto such property and for other ``in-
kind'' consideration.

FOR FURTHER INFORMATION CONTACT: Brian A. McDaniel, Office of Asset and 
Enterprise Development (189), Veterans Health Administration, 
Department of Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC, 
20420, (202) 565-4307.

SUPPLEMENTARY INFORMATION: 38 U.S.C. Sec 8161 et seq., specifically 
provides that the Secretary may enter into an Enhanced-Use lease, if 
the Secretary determines that at least part of the use of the property 
under the lease will be to provide appropriate space for an activity 
contributing to the mission of the Department; the lease will not be 
inconsistent with and will not adversely affect the mission of the 
Department; and the lease will enhance the property. This project meets 
these requirements.

    Approved: March 21, 1997.
Jesse Brown,
Secretary.

Notice of Designation and Intent to Execute an Enhanced-Use Lease With 
the Development Authority of Dekalb County (Georgia) (Enhanced-Use 
Lease Report) for the Collocation of a VBA Regional Office at the VA 
Medical Center, Atlanta, Georgia

Notice

    Pursuant to the provisions of 38 U.S.C. 8161, et seq., ``Enhanced 
Use Leases of Real Property,'' this serves as notice that the Secretary 
of the Department of Veterans Affairs (``the Department'') intends to 
designate approximately six (6) acres (``the Parcel'') and other 
property under the jurisdiction and control of the department on the 
campus of the Atlanta VA Medical Center for development under the terms 
of an Enhanced-Use lease. The Parcel is located in the northwest corner 
of Clairmont Road and Southern Lane, adjacent to the VA Medical Center, 
Atlanta, DeKalb County, Georgia.
    Further, it is the Department's intent that after conclusion of 
successful negotiations with the Development Authority of DeKalb County 
(``Authority''), to enter into an Enhanced-Use lease of the Parcel with 
the Authority. Such lease will include a requirement for collocation of 
the Department's Veterans Benefits Administration Regional Office in 
Atlanta as well as potentially other VA and non-VA uses on the Parcel. 
The Authority, acting pursuant to its statutory responsibilities, may 
provide financing for the development and select a developer with the 
approval of the Department. The developer will construct and operate 
the development which will include both VA and non-VA uses.
    This Notice and Report will be supplemented by a subsequent Report 
to be made not less than 30 days prior to the closing of a development 
agreement between the Department, the Enhanced-Use lessee (the 
Authority) and the developer. The Report will provide updated 
information with respect to the matters contained herein.

Background and Rationale

    Under the provisions of 38 U.S.C. 8161, et seq., the Secretary is 
authorized

[[Page 15568]]

to lease Department-controlled real property to private or other public 
entities over a term not to exceed 35 years, so that the property will, 
in part, provide space for an activity contributing to the mission of 
the Department. As consideration for the lease, the Secretary is 
authorized to accept facilities, services, money, or other ``in-kind'' 
consideration.
    The Department intends to use its Enhanced-Use leasing authority as 
a means to obtain office space (``VARO Space'') for its Regional Office 
activities in Atlanta, Georgia, as well as for other potential 
Department activities. The Regional Office is now located in a 
privately-owned office building leased by the General Services 
Administration. The currently occupied space is located approximately 7 
miles from the VAMC Atlanta campus. By use of the Enhanced-Use lease, 
the Department would lease, on a long-term basis (35 years), all or a 
substantial portion of the Parcel to the Authority. The Authority, in 
turn, would competitively select a developer who will finance, design, 
constrict, manage and operate a mixed-use office complex that would 
include the VARO Space requirement and non-VA uses. While such uses 
would need to be further defined, it is intended that both VA and non-
VA uses will be developed and operated pursuant to local construction 
and land use development requirements, to the extent practicable. Any 
non-VA uses would also be required to be compatible with mission and 
operations of the VARO and the adjoining VA Medical Center. Depending 
on the value of the subject parcel and market opportunity for the non-
VA uses, the developer would provide office space to the VARO at 
favorable terms, as well as other ``in-kind'' consideration.

Description of Enhanced-Use Lease Provisions

    The Department proposes to lease the site through an ``Enhanced-Use 
lease'' to the Authority for a term consisting of up to thirty-five 
(35) years under such terms and conditions as authorized in the 
Department's Enhanced-Use leasing authority. The terms of the 
arrangement will generally be as follows:
    Under the Enhanced-Use leasing authority, it is the Department's 
intent to lease, on a long-term basis (up to 35 years), the Parcel to 
the Authority, an instrumentality of DeKalb County. Participation by 
the Authority will permit the project to obtain lower cost financing 
than if financed through commercial sources. Under this arrangement, 
the Authority will lease the Parcel from the Department for the purpose 
of selecting a developer and thereafter assigning its interest to such 
developer. The Authority may provide financing to the developer who 
would construct both VA and non-VA uses. Any provided financing would 
be through ``revenue bonds'' issued by the Authority. The Department 
shall retain approval of the selection of the developer and of the 
development plan. Should the Authority be subsequently unable or 
chooses not to participate, the Department intends to select a 
developer/lessee through a solicitation process.
    The selected developer will be responsible for the development of 
the Parcel in accordance with the parameters in the Enhanced-Use lease 
and an approved development plan. In addition, the developer will be 
responsible for the financing, design, construction, operation and 
maintenance of the VARO Space. The VARO Space would then be provided 
for use by the Regional Office on a ``lease-back'' arrangement for a 
certain duration on such terms and conditions as agreed upon by the 
parties. Such terms will include provision of VARO Space including 
costs such as parking and the VARO Space tenant build-out will be 
reflected in the rent proposed by the developer.
    In return for the development rights permitted under the Enhanced-
Use lease and the lease-back of VARO Space, the developer will provide 
fair consideration to the Department. Such consideration may be in the 
form of cash, or in the form of in-kind consideration, such as a 
favorable lease-back rent, discounted operation and maintenance costs, 
or the provision of goods, services or benefits to the Department, 
including construction, repair, maintenance, remodeling, or other 
physical improvements of Department facilities, or the provision of 
office, storage, or other usable space. The amount and type of 
consideration to be provided by the developer will depend on the value 
of the land involved. The developer would be legally and financially 
responsible for the operation, maintenance, and repair of any 
properties and improvements placed under its control by reason of the 
Enhanced-Use lease.
    In addition to the VARO Space, the Enhanced-Use lease will contain 
provisions allowing for a defined amount of non-VA development. Such 
development shall be constructed and operated at the developer's own 
risk and expense. Such additional development shall, to the extent 
practicable as determined by the Department, be required to comply with 
local laws and other requirements pertaining to construction, use and 
occupancy. Further, any non-VA uses would also be required to be 
compatible (and not inconsistent) with the mission and operations of 
the VARO and the adjoining VA Medical Center. At the conclusion of the 
Enhanced Use lease, all of the improvements on the site will become the 
property of the Department.

Public Hearing

    On September 9, 1996, a public hearing was held at The Pete Wheeler 
Auditorium on the campus of the Atlanta VA Medical Center. The public 
hearing began at 7:00 p.m. and concluded at approximately 9:00 p.m. 
Department representatives at the meeting included Mr. Gary Hickman, 
Director, VARO Atlanta; and Dr. Bailey Francis, Acting Director, VAMC 
Atlanta. The Department received very strong positive response from: 
Mr. Pete Wheeler, Commissioner Georgia Department of Veterans Affairs; 
Mr. John Gwisdak, State Veterans of Foreign Wars; Mr. Robert Morris, 
Georgia Department of Veterans Services, and other veterans on the 
basis that such proposal will result in VARO Space that will correct 
existing space deficiencies, as well as provide better access and 
parking for disabled veterans, compared to the existing VARO leased 
space or the new Atlanta Federal Center (AFC) controlled by the U.S. 
General Services Administration (GSA). These speakers noted that a VBA 
Regional Office move to the AFC would result in an inefficient and 
counterproductive VARO office layout, a corresponding substantial 
increase in VARO's payments to GSA, and inadequate parking and access 
for disabled veterans who would be visiting the VARO.
    Benefits cited by these speakers with respect to the proposed 
collocation were the potential for improving timeliness in VARO claim-
processing, and the potential for financial savings as a result of the 
``Enhanced-Use'' of the Parcel, and the prospect for obtaining VARO 
Space at lower costs than by other methods thus, alleviating budget 
problems. Mr. David Chesnut, General Counsel to the Authority, 
expressed support for the project. Mr. Chesnut noted that such proposed 
collocation would result in increased employment within DeKalb County, 
will further the Authority's objectives for sustained, planned growth 
of economic opportunities within the County, as well as promote the 
general welfare of the local community and the State. Mr. Chesnut 
expressed the Authority's position that it was prepared to participate 
as an Enhanced-Use lessee.

[[Page 15569]]

    Also speaking at the public hearing were members from adjacent and 
nearby neighborhood organizations. While some acknowledged the 
potential benefits of collocating VARO services to veterans, other 
speakers expressed concerns as to the potential size and intensity of 
the Enhanced-Use development and any corresponding adverse impacts on 
traffic, lighting, storm water run-off, as well as on other 
environmental and community issues or resources. The VARO Director 
provided assurances that the Department will undertake appropriate 
environmental reviews of any proposed development and that such 
development will, to the extent practicable, comply with local 
requirements pertaining to land use, construction and occupancy. In 
addition, the Director, VARO Atlanta, expressed a willingness to work 
with the organizations so that the local community can have input into 
the overall planning of the development.

Summary of Cost-Benefit and Other Economic Factors in Support of 
the Enhanced-Use Lease

    In analyzing the cost-benefit and economic aspects of obtaining the 
VARO Space by means of an Enhanced-Use lease, the Department examined 
the life-cycle costs to the Government of this approach in comparison 
with leasing the subject space.
    The analysis revealed that an Enhanced-Use lease with the Authority 
appears to be the most cost-beneficial option. Input into this analysis 
for lease costs was derived using similar criteria from various 
sources. For instance, assessment of market opportunities was derived 
from an appraisal of the subject Parcel conducted by an independent 
appraiser; and private sector lease and construction costs were based 
on industry surveys.
    Information received from the commercial sector supporting this 
analysis include: (1) the current upswing in the commercial leasing 
market in Atlanta makes commercial leasing with no residual value to VA 
economically unattractive; (2) demand and development costs for 
administrative office space and for other uses in the sub-market in 
which the Parcel is located; (3) non-VA use in the development will 
result in a broader allocation of development costs among its user/
tenants, thus resulting in lower costs to the Department; and (4) 
access to lower cost financing through the Authority than what would be 
typically available through commercial sources will result in lower 
development expenses and corresponding charges passed to the users/
tenants including the Department.

Description of How The Proposed Lease Will--

    (1) Contribute cost-effectively to be consistent with and not 
adversely affect the mission of the Department.
    The Department anticipates that, using an Enhanced Use lease, it 
would obtain its VARO Space at a lower cost and in a shorter time 
period than could be realized through ``traditional'' VA construction 
or commercial leasing.
    The Enhanced-Use lease will be consistent with and not adversely 
affect the mission of the Department by providing both benefits and 
medical services on a single campus resulting in increased convenience 
to veterans receiving services from a Regional Office, as well as the 
VA Medical Center.
    (2) Affect services to veterans.
    The Enhanced-Use lease provides that the developer must design, 
construct, operate and maintain space for exclusive use by VBA on the 
Parcel, thus providing significantly enhanced service to veterans 
through the convenience of collocation with the VA Medical Center. In 
addition, development of the Parcel for VBA Space will provide for 
adequate parking and access for disabled veterans who would be visiting 
the VARO. Finally, any financial benefits gained as a result of lower 
lease-back rates for VBA Space and/or income stream from private non-VA 
development has the potential to fund services to veterans not 
currently provided and/or expanding services currently in existence.

[FR Doc. 97-8136 Filed 3-31-97; 8:45 am]
BILLING CODE 8320-01-M