Revitalizing Base Closure Communities and Addressing Impacts of Realignment, 78946-78949 [2010-31649]
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Federal Register / Vol. 75, No. 242 / Friday, December 17, 2010 / Proposed Rules
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Drafting Information
Nancy Sutton and other members of
the Regulations and Rulings Division
drafted this notice.
Signed: December 10, 2010.
John J. Manfreda,
Administrator.
[FR Doc. 2010–31655 Filed 12–16–10; 8:45 am]
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DEPARTMENT OF DEFENSE
Office of the Secretary
[Docket ID DoD–2010–OS–0135]
RIN 0790–AI67
32 CFR Part 174
Revitalizing Base Closure
Communities and Addressing Impacts
of Realignment
Office of the Under Secretary of
Defense for Acquisition, Technology,
and Logistics, DoD.
ACTION: Proposed rule.
AGENCY:
Economic Development
Conveyances were created in
amendments to the Base Closure and
Realignment law in 1993, creating a new
tool for communities experiencing
economic dislocation from the closing
of a major employer in the community.
Congress recognized that the existing
authority under the Federal Property
and Administrative Services Act of 1949
(as amended and otherwise known as
the Real Property Act) was not
structured to deal with the unique
challenges of assisting community
economic recovery and job creation of
such large installations, many with
decaying or obsolete infrastructure and
other redevelopment challenges. Section
2715 of Public Law 111–84 changed the
authority of the Department of Defense
to convey property to a local
redevelopment authority (LRA) for
purposes of job generation on a military
installation closed or realigned under a
base closure law, known as an
Economic Development Conveyance
(EDC). Under this revised authority, the
Department is no longer required to seek
to obtain fair market value for an EDC:
An EDC may be for consideration at or
below the estimated fair market value,
including for no consideration. The law
also now explicitly provides authority
for the Department to be flexible
regarding the form of consideration,
including the authority to accept
consideration in the form of revenue
sharing or so-called ‘‘back-end’’ funding.
(i.e., ’’The Secretary may accept, as
consideration, a share of the revenues
that the redevelopment authority
receives from third-party buyers or
lessees from sales and long-term leases
of the conveyed property, consideration
in kind (including goods and services),
real property and improvements, or
such other consideration as the
Secretary considers appropriate.’’)
The revised language also provides
that the Department’s determination of
the consideration may account for the
SUMMARY:
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economic conditions of the local
affected community and the estimated
costs to redevelop the property.
This proposed regulation provides
guidance to implement recent changes
to the law and makes other
improvements that encourage expedited
property transfers for job creation that
allow for the Department to obtain a
share of the revenues obtained.
DATES: Written comments received at
the address indicated below by February
15, 2011 will be accepted.
ADDRESSES: You may submit comments,
identified by docket number and/or
Regulatory Information Number (RIN)
number and title, by any of the
following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail: Federal Docket Management
System Office, 1160 Defense Pentagon,
Room 3C843, Washington, DC 20301–
1160.
Instructions: All submissions received
must include the agency name and
docket number or RIN for this Federal
Register document. The general policy
for comments and other submissions
from members of the public is to make
these submissions available for public
viewing on the Internet at https://
www.regulations.gov as they are
received without change, including any
personal identifiers or contact
information.
FOR FURTHER INFORMATION CONTACT:
Robert Hertzfeld, (703) 604–6020.
SUPPLEMENTARY INFORMATION: The
proposed rule implements these
statutory changes and is also intended
to enable the Military Departments to
expedite the EDC process. Closed
military bases represent a potential
engine of economic activity and job
creation for former host communities.
When disposing of property using this
method, the Military Departments
should use the full breadth of the EDC
authority to structure conveyances that
respond to the job creation and
redevelopment challenges of the
individual community.
The new law no longer requires the
Department to seek Fair Market Value.
Accordingly, a transfer may be made
below estimated fair market value or
without consideration if the LRA agrees
to reinvest sale or lease proceeds for not
less than seven years and to take title to
the property within a reasonable
timeframe. As such, this regulation
deletes the requirement for the
Department to obtain an appraisal of the
property as part of an EDC conveyance,
including analysis of highest and best
use, for that purpose. This regulation
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places the emphasis of EDCs on the
economic redevelopment of the former
installation. With this regulation, the
Department approaches value by
obtaining a share of the revenues
obtained from the redevelopment of the
property. Experience has shown that
estimates of fair market value for
property at closing installations,
especially those requiring substantial
future investment in redevelopment,
can vary widely due to the uncertainties
inherent in significant long-term
redevelopment projects and differences
in projected costs and revenues over a
potential 20–30 year development cycle
that may occur on many large closing
installations. Elimination of the
requirement to determine estimated fair
market value and related appraisal
requirements should expedite the
conveyance process and remove what
has been a common source of conflict
and delays between the community and
the Department. Accordingly, the
proposed rule establishes as DoD policy
a requirement that, for every EDC, the
LRA must reinvest sale or lease
proceeds for not less than seven years
and take title to the property within a
reasonable timeframe. This makes the
determination of fair market value of the
property unnecessary for purposes of
establishing EDC terms and conditions
that comply with statutory
requirements. Consequently, it also
eliminates the need to establish a
process by which the fair market value
of property to be conveyed by EDC must
be determined. However, the proposed
rule does not interfere with the ability
of the Secretary concerned to obtain and
use any information deemed
appropriate, including market analysis,
construction estimates, a real estate
proforma, and appraisals, to ensure that
decisions regarding property disposal
are properly informed. If the proposed
conveyance does not meet the
requirements for an EDC, or if the LRA
does not agree to reinvest sale or lease
proceeds for not less than seven years
and to take title to the property within
a reasonable timeframe, the Secretary
concerned may pursue a negotiated sale
to a public body at fair market value,
including a negotiated sale for economic
development purposes, under
regulations at 41 CFR Part 102–75.880,
et seq., or competitive public sale.
This regulation seeks to streamline
the process by separating the eligibility
criteria for an EDC from the criteria
guiding the negotiation of the terms and
conditions. It also makes the application
more concise and incorporates
adjustments to reflect current market
conditions and to recognize local
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community investment and risk.
Finally, this proposed regulation
implements the revised EDC authority
in a manner intended to clarify and
streamline the Economic Development
Conveyance process and assist affected
communities in job generation.
Regulatory Procedures
Executive Order 12866, ‘‘Regulatory
Planning and Review’’
It has been certified that 32 CFR part
174 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 section of the economy;
productivity; competition; jobs; the
environment; public health or safety; or
State, local, or tribunal governments or
communities;
(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; or
(4) Raise novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in this Executive Order 12866,
as amended by Executive Order 13422.
Section 202, Pub. L. 104–4, ‘‘Unfunded
Mandates Reform Act’’
It has been certified that 32 CFR part
174 does not contain a Federal mandate
that may result in the expenditure by
State, local and tribunal governments, in
aggregate, or by the private sector, of
$100 million or more in any one year.
Public Law 96–354, ‘‘Regulatory
Flexibility Act’’ (5 U.S.C. 601)
It has been certified that 32 CFR part
174 is not subject to the Regulatory
Flexibility Act (5 U.S.C. 601) because it
would not, if promulgated, have a
significant economic impact on a
substantial number of small entities.
Public Law 96–511, ‘‘Paperwork
Reduction Act’’ (44 U.S.C. Chapter 35)
It has been certified that 32 CFR part
174 does not impose reporting or
recordkeeping requirements under the
Paperwork Reduction Act of 1995.
Executive Order 13132, ‘‘Federalism’’
It has been certified that 32 CFR part
174 does not have federalism
implications, as set forth in Executive
Order 13132. This rule does not have
substantial direct effects on:
(1) The States;
(2) The relationship between the
National Government and the States; or
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(3) The distribution of power and
responsibilities among the various
levels of Government.
List of Subjects in 32 CFR Part 174
Community development;
Government employees; Military
personnel; Surplus Government
property.
Accordingly, 32 CFR Part 174 is
proposed to be amended as follows:
PART 174—[AMENDED]
1. The authority citation for Part 174
continues to read as follows:
Authority: 10 U.S.C. 113 and 10 U.S.C.
2687 note.
2. Section 174.9 is revised to read as
follows:
§ 174.9 Economic development
conveyances.
(a) The Secretary concerned may
transfer real property and personal
property to the LRA for purposes of job
generation on the former installation.
Such a transfer is an Economic
Development Conveyance (EDC).
(b) An LRA is the only entity eligible
to receive property under an EDC.
(c) A completed application will be
used to decide whether the Secretary
concerned will enter into an EDC with
an LRA. An LRA may submit an EDC
application only after it adopts a
redevelopment plan. The Secretary
concerned shall establish a reasonable
time period for submission of an EDC
application after consultation with the
LRA.
(d) The application shall include:
(1) A copy of the adopted
redevelopment plan.
(2) A project narrative including the
following:
(i) A general description of the
property requested.
(ii) A description of the intended
uses.
(iii) A description of the economic
impact of closure or realignment on the
local community.
(iv) A description of the economic
condition of the community and the
prospects for redevelopment of the
property.
(v) A statement of how the EDC is
consistent with the overall
redevelopment plan.
(3) A description of how the EDC will
contribute to short- and long-term job
generation on the installation, including
the projected number and type of new
jobs it will assist in generating.
(4) A business/operational plan for
the EDC parcel, including at least the
following elements:
(i) A development timetable, phasing
schedule, and cash flow analysis.
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(ii) A market and financial feasibility
analysis describing the economic
viability of the project, including an
estimate of net proceeds over a fifteen
year period and proposed consideration
or payment to the Department of
Defense,
(iii) A cost estimate and justification
for infrastructure and other investments
needed for redevelopment of the EDC
parcel.
(iv) Local investment and proposed
financing plan for the development.
(5) A statement describing why an
EDC will more effectively enable
achievement of the job generation
objectives of the redevelopment plan
regarding the parcel requested for
conveyance than other federal real
property disposal authorities.
(6) Evidence of the LRA’s legal
authority to acquire and dispose of the
property.
(7) Evidence that the LRA has
authority to perform the actions
required of it, pursuant to the terms of
the EDC, and that the officers executing
the EDC documents on behalf of the
LRA have authority to do so.
(8) A commitment from the LRA that
the proceeds from any sale or lease of
the EDC parcel (or any portion thereof)
received by the LRA during at least the
first seven years after the date of the
initial transfer of property, except
proceeds that are used to pay
consideration to the Secretary
concerned under paragraph (h) of this
section, shall be used to support
economic redevelopment of, or related
to, the installation. In the case of phased
transfers, the Secretary concerned may
also require that this commitment apply
during at least the first seven years after
the date of every subsequent transfer of
property to the LRA. The use of
proceeds to pay for, or offset the costs
of, public investment on or related to
the installation for any of the following
purposes shall be considered a use to
support the economic redevelopment of,
or related to, the installation—
(i) Road construction;
(ii) Transportation management
facilities;
(iii) Storm and sanitary sewer
construction;
(iv) Police and fire protection
facilities and other public facilities;
(v) Utility construction;
(vi) Building rehabilitation;
(vii) Historic property preservation;
(viii) Pollution prevention equipment
or facilities;
(ix) Demolition;
(x) Disposal of hazardous materials
generated by demolition;
(xi) Landscaping, grading, and other
site or public improvements; and
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(xii) Planning for or the marketing of
the development and reuse of the
installation.
(9) A commitment from the LRA to
execute the agreement for transfer of the
property and accept control of the
property within a reasonable time, as
determined by the Secretary concerned
after consultation with the LRA, after
the date of the property disposal record
of decision. The determination of
reasonable time should take account of
the ability of the Secretary concerned to
make the deed covenant, or covenant
deferral, required under 42 U.S.C.
9620(h)(3).
(e) The Secretary concerned will
review the application and, to the extent
practicable, provide a preliminary
determination within 30 days whether
the Military Department can accept the
application for negotiation of terms and
conditions, pursuant to the following
determinations:
(1) The LRA submitting the
application has been duly recognized by
the DoD Office of Economic
Adjustment;
(2) The application is complete. With
respect to the elements of the
application specified in paragraphs
(d)(6) and (d)(7) of this section, the
Secretary concerned may accept the
application for negotiation of terms and
conditions without these elements,
provided the Secretary concerned is
satisfied that the LRA has a reasonable
plan in place to provide these elements
prior to transfer of the property; and
(3) The proposed EDC will more
effectively enable achievement of the
job generation objectives of the
redevelopment plan regarding the parcel
requested than other federal real
property disposal authorities.
(f) Upon acceptance of an EDC
application, the Secretary concerned
will determine if the proposed terms
and conditions are fair and reasonable.
The Secretary concerned may propose
and negotiate any alternative terms or
conditions that the Secretary considers
necessary. The following factors will be
considered, as appropriate, in
evaluating the terms and conditions of
the proposed transfer, including price,
time of payment, and other relevant
methods of compensation to the Federal
Government.
(1) Local economic conditions and
adverse impact of closure or
realignment on the region and potential
for economic recovery through an EDC.
(2) Extent of short- and long-term job
generation.
(3) Consistency with the entire
redevelopment plan.
(4) Financial feasibility of the
development, including market analysis
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and need and extent of proposed
infrastructure and other investments.
(5) Extent of state and local
investment, level of risk incurred, and
the LRA’s ability to implement the plan.
Higher risk and investment made by the
LRA should be recognized with more
favorable terms and conditions, to
encourage local investment to support
job generation.
(6) Current local and regional real
estate market conditions, including
market demand for the property.
(7) Incorporation of other Federal
agency interests and concerns,
including the applicability of, and
conflicts with, other Federal surplus
property disposal authorities.
(8) Economic benefit to the Federal
Government, including protection and
maintenance cost savings,
environmental clean-up savings and
anticipated consideration from the
transfer.
(9) Compliance with applicable
Federal, state, interstate, and local laws
and regulations.
(g) The Secretary concerned will
negotiate the terms and conditions of
each transaction with the LRA. The
Secretary concerned will have the
discretion and flexibility to enter into
agreements that specify the form of
payment and the schedule.
(h)(1) The Secretary concerned may
accept, as consideration, any
combination of the following:
(i) Cash, including a share of the
revenues that the redevelopment
authority receives from third-party
buyers or lessees from sales and longterm leases of the conveyed property
(i.e., a share of the revenues generated
from the redevelopment project);
(ii) Goods and services;
(iii) Real property and improvements;
or
(iv) Such other consideration as the
Secretary considers appropriate.
(2) The consideration may be paid
over time.
(3) All cash consideration for property
at a military installation where the date
of approval of closure or realignment is
before January 1, 2005, shall be
deposited in the account established
under Section 2906(a) of the Defense
Base Closure and Realignment Act of
1990 (part A of title XXIX of Pub. L.
101–510; 10 U.S.C. 2687 note). All cash
consideration for property at a military
installation where the date of approval
of closure or realignment is after January
1, 2005, shall be deposited in the
account established under Section
2906A(a) of the Defense Base Closure
and Realignment Act of 1990 (part A of
title XXIX of Pub. L. 101–510; 10 U.S.C.
2687 note).
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(4) The Secretary concerned may use
in-kind consideration received from an
LRA at any location under control of the
Secretary concerned.
(i) The LRA and the Secretary
concerned may agree on a schedule for
sale of parcels and payment
participation.
(j) Additional provisions shall be
incorporated in the conveyance
documents to protect the Department’s
interest in obtaining the agreed upon
consideration, which may include such
items as predetermined release prices,
accounting standards or other
appropriate clauses designed to ensure
payment and protect against fraudulent
transactions. Every agreement for an
EDC shall contain provisions allowing
the Secretary concerned to recoup from
the LRA such portion of the proceeds
from its sale or lease as the Secretary
concerned determines appropriate if the
LRA does not use the proceeds to
support economic redevelopment of or
related to the installation for the period
specified in paragraph (d)(8) of this
section. The Secretary concerned and an
LRA may enter into a mutually agreed
participation agreement which may
include input by the Secretary
concerned on the LRA’s disposal of EDC
parcels.
(k) The Secretary concerned may take
account of property value but is not
required to formally determine the
estimated fair market value of the
property for any EDC. The consideration
negotiated should be based on a
business plan and development proforma that assumes the uses in the
redevelopment plan. The Secretary
concerned may determine the nature
and extent of any additional information
needed for purposes of negotiation. To
the extent not prohibited by law,
information used should be shared with
the LRA.
(l) After evaluating the application
based upon the criteria specified in
paragraph (f) of this section, and
negotiating terms and conditions, the
Secretary concerned shall present the
proposed EDC to the Deputy Under
Secretary of Defense (Installations and
Environment) for formal coordination
before announcing approval of the
application.
§ 174.10
[Removed and Reserved]
3. § 174.10 is removed and reserved:
Dated: December 10, 2010.
Patricia L. Toppings,
OSD Federal Register Liaison Officer,
Department of Defense.
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ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R03–OAR–2009–0876; FRL–9240–4]
Approval and Promulgation of Air
Quality Implementation Plans; West
Virginia; Permits for Construction and
Major Modification of Major Stationary
Sources of Air Pollution for the
Prevention of Significant Deterioration
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
EPA is proposing to approve
a State Implementation Plan (SIP)
revision submitted by the West Virginia
Department of Environmental Protection
on July 20, 2009. This revision will
establish nitrogen oxides (NOX) as a
precursor to ozone, add the Federally
equivalent provisions to the rules for the
Prevention of Significant Deterioration
(PSD) as they pertain to ‘‘reasonable
possibility’’ and delete certain references
to pollution control projects (PCPs) and
clean units (CUs) to make the West
Virginia PSD program consistent with
the Federal PSD regulations. This action
is being taken under the Clean Air Act
(CAA).
DATES: Written comments must be
received on or before January 18, 2011.
ADDRESSES: Submit your comments,
identified by Docket ID Number EPA–
R03–OAR–2009–0876 by one of the
following methods:
A. https://www.regulations.gov. Follow
the online instructions for submitting
comments.
B. E-mail: mccauley.sharon@epa.gov.
C. Mail: EPA–R03–OAR–2009–0876,
Kathleen Cox, Associate Director, Office
of Permits & Air Toxics, Mailcode
3AP10, U.S. Environmental Protection
Agency, Region III, 1650 Arch Street,
Philadelphia, Pennsylvania 19103.
D. Hand Delivery: At the previouslylisted EPA Region III address. Such
deliveries are only accepted during the
Docket’s normal hours of operation, and
special arrangements should be made
for deliveries of boxed information.
Instructions: Direct your comments to
Docket ID No. EPA–R03–OAR–2009–
0876. EPA’s policy is that all comments
received will be included in the public
docket without change, and may be
made available online at https://
www.regulations.gov, including any
personal information provided, unless
the comment includes information
claimed to be Confidential Business
Information (CBI) or other information
whose disclosure is restricted by statute.
SUMMARY:
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78949
Do not submit information that you
consider to be CBI or otherwise
protected through https://
www.regulations.gov or e-mail. The
https://www.regulations.gov Web site is
an ‘‘anonymous access’’ system, which
means EPA will not know your identity
or contact information unless you
provide it in the body of your comment.
If you send an e-mail comment directly
to EPA without going through https://
www.regulations.gov, your e-mail
address will be automatically captured
and included as part of the comment
that is placed in the public docket and
made available on the Internet. If you
submit an electronic comment, EPA
recommends that you include your
name and other contact information in
the body of your comment and with any
disk or CD–ROM you submit. If EPA
cannot read your comment due to
technical difficulties and cannot contact
you for clarification, EPA may not be
able to consider your comment.
Electronic files should avoid the use of
special characters, any form of
encryption, and be free of any defects or
viruses.
Docket: All documents in the
electronic docket are listed in the
https://www.regulations.gov index.
Although listed in the index, some
information is not publicly available,
i.e., CBI or other information whose
disclosure is restricted by statute.
Certain other material, such as
copyrighted material, is not placed on
the Internet and will be publicly
available only in hard copy form.
Publicly available docket materials are
available either electronically in https://
www.regulations.gov or in hard copy
during normal business hours at the Air
Protection Division, U.S. Environmental
Protection Agency, Region III, 1650
Arch Street, Philadelphia, Pennsylvania
19103. Copies of the State submittal are
available at the West Virginia
Department of Environmental
Protection, Division of Air Quality, 601
57th Street, SE., Charleston, West
Virginia 25304.
FOR FURTHER INFORMATION CONTACT:
Sharon McCauley, (215) 814–3376, or by
e-mail at mccauley.sharon@epa.gov.
SUPPLEMENTARY INFORMATION:
Throughout this document, whenever
‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean
EPA. On July 20, 2009, the State of West
Virginia submitted a revision to its State
Implementation Plan (SIP) to replace the
current SIP-approved version of
45CSR14, entitled, Permits for
Construction and Major Modification of
Major Stationary Sources of Air
Pollution for the Prevention of
Significant Deterioration.
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]]>Agencies
[Federal Register Volume 75, Number 242 (Friday, December 17, 2010)]
[Proposed Rules]
[Pages 78946-78949]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31649]
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DEPARTMENT OF DEFENSE
Office of the Secretary
[Docket ID DoD-2010-OS-0135]
RIN 0790-AI67
32 CFR Part 174
Revitalizing Base Closure Communities and Addressing Impacts of
Realignment
AGENCY: Office of the Under Secretary of Defense for Acquisition,
Technology, and Logistics, DoD.
ACTION: Proposed rule.
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SUMMARY: Economic Development Conveyances were created in amendments to
the Base Closure and Realignment law in 1993, creating a new tool for
communities experiencing economic dislocation from the closing of a
major employer in the community. Congress recognized that the existing
authority under the Federal Property and Administrative Services Act of
1949 (as amended and otherwise known as the Real Property Act) was not
structured to deal with the unique challenges of assisting community
economic recovery and job creation of such large installations, many
with decaying or obsolete infrastructure and other redevelopment
challenges. Section 2715 of Public Law 111-84 changed the authority of
the Department of Defense to convey property to a local redevelopment
authority (LRA) for purposes of job generation on a military
installation closed or realigned under a base closure law, known as an
Economic Development Conveyance (EDC). Under this revised authority,
the Department is no longer required to seek to obtain fair market
value for an EDC: An EDC may be for consideration at or below the
estimated fair market value, including for no consideration. The law
also now explicitly provides authority for the Department to be
flexible regarding the form of consideration, including the authority
to accept consideration in the form of revenue sharing or so-called
``back-end'' funding. (i.e., ''The Secretary may accept, as
consideration, a share of the revenues that the redevelopment authority
receives from third-party buyers or lessees from sales and long-term
leases of the conveyed property, consideration in kind (including goods
and services), real property and improvements, or such other
consideration as the Secretary considers appropriate.'')
The revised language also provides that the Department's
determination of the consideration may account for the economic
conditions of the local affected community and the estimated costs to
redevelop the property.
This proposed regulation provides guidance to implement recent
changes to the law and makes other improvements that encourage
expedited property transfers for job creation that allow for the
Department to obtain a share of the revenues obtained.
DATES: Written comments received at the address indicated below by
February 15, 2011 will be accepted.
ADDRESSES: You may submit comments, identified by docket number and/or
Regulatory Information Number (RIN) number and title, by any of the
following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Federal Docket Management System Office, 1160
Defense Pentagon, Room 3C843, Washington, DC 20301-1160.
Instructions: All submissions received must include the agency name
and docket number or RIN for this Federal Register document. The
general policy for comments and other submissions from members of the
public is to make these submissions available for public viewing on the
Internet at https://www.regulations.gov as they are received without
change, including any personal identifiers or contact information.
FOR FURTHER INFORMATION CONTACT: Robert Hertzfeld, (703) 604-6020.
SUPPLEMENTARY INFORMATION: The proposed rule implements these statutory
changes and is also intended to enable the Military Departments to
expedite the EDC process. Closed military bases represent a potential
engine of economic activity and job creation for former host
communities. When disposing of property using this method, the Military
Departments should use the full breadth of the EDC authority to
structure conveyances that respond to the job creation and
redevelopment challenges of the individual community.
The new law no longer requires the Department to seek Fair Market
Value. Accordingly, a transfer may be made below estimated fair market
value or without consideration if the LRA agrees to reinvest sale or
lease proceeds for not less than seven years and to take title to the
property within a reasonable timeframe. As such, this regulation
deletes the requirement for the Department to obtain an appraisal of
the property as part of an EDC conveyance, including analysis of
highest and best use, for that purpose. This regulation
[[Page 78947]]
places the emphasis of EDCs on the economic redevelopment of the former
installation. With this regulation, the Department approaches value by
obtaining a share of the revenues obtained from the redevelopment of
the property. Experience has shown that estimates of fair market value
for property at closing installations, especially those requiring
substantial future investment in redevelopment, can vary widely due to
the uncertainties inherent in significant long-term redevelopment
projects and differences in projected costs and revenues over a
potential 20-30 year development cycle that may occur on many large
closing installations. Elimination of the requirement to determine
estimated fair market value and related appraisal requirements should
expedite the conveyance process and remove what has been a common
source of conflict and delays between the community and the Department.
Accordingly, the proposed rule establishes as DoD policy a requirement
that, for every EDC, the LRA must reinvest sale or lease proceeds for
not less than seven years and take title to the property within a
reasonable timeframe. This makes the determination of fair market value
of the property unnecessary for purposes of establishing EDC terms and
conditions that comply with statutory requirements. Consequently, it
also eliminates the need to establish a process by which the fair
market value of property to be conveyed by EDC must be determined.
However, the proposed rule does not interfere with the ability of the
Secretary concerned to obtain and use any information deemed
appropriate, including market analysis, construction estimates, a real
estate proforma, and appraisals, to ensure that decisions regarding
property disposal are properly informed. If the proposed conveyance
does not meet the requirements for an EDC, or if the LRA does not agree
to reinvest sale or lease proceeds for not less than seven years and to
take title to the property within a reasonable timeframe, the Secretary
concerned may pursue a negotiated sale to a public body at fair market
value, including a negotiated sale for economic development purposes,
under regulations at 41 CFR Part 102-75.880, et seq., or competitive
public sale.
This regulation seeks to streamline the process by separating the
eligibility criteria for an EDC from the criteria guiding the
negotiation of the terms and conditions. It also makes the application
more concise and incorporates adjustments to reflect current market
conditions and to recognize local community investment and risk.
Finally, this proposed regulation implements the revised EDC authority
in a manner intended to clarify and streamline the Economic Development
Conveyance process and assist affected communities in job generation.
Regulatory Procedures
Executive Order 12866, ``Regulatory Planning and Review''
It has been certified that 32 CFR part 174 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 section of the
economy; productivity; competition; jobs; the environment; public
health or safety; or State, local, or tribunal governments or
communities;
(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; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
this Executive Order 12866, as amended by Executive Order 13422.
Section 202, Pub. L. 104-4, ``Unfunded Mandates Reform Act''
It has been certified that 32 CFR part 174 does not contain a
Federal mandate that may result in the expenditure by State, local and
tribunal governments, in aggregate, or by the private sector, of $100
million or more in any one year.
Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)
It has been certified that 32 CFR part 174 is not subject to the
Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if
promulgated, have a significant economic impact on a substantial number
of small entities.
Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)
It has been certified that 32 CFR part 174 does not impose
reporting or recordkeeping requirements under the Paperwork Reduction
Act of 1995.
Executive Order 13132, ``Federalism''
It has been certified that 32 CFR part 174 does not have federalism
implications, as set forth in Executive Order 13132. This rule does not
have substantial direct effects on:
(1) The States;
(2) The relationship between the National Government and the
States; or
(3) The distribution of power and responsibilities among the
various levels of Government.
List of Subjects in 32 CFR Part 174
Community development; Government employees; Military personnel;
Surplus Government property.
Accordingly, 32 CFR Part 174 is proposed to be amended as follows:
PART 174--[AMENDED]
1. The authority citation for Part 174 continues to read as
follows:
Authority: 10 U.S.C. 113 and 10 U.S.C. 2687 note.
2. Section 174.9 is revised to read as follows:
Sec. 174.9 Economic development conveyances.
(a) The Secretary concerned may transfer real property and personal
property to the LRA for purposes of job generation on the former
installation. Such a transfer is an Economic Development Conveyance
(EDC).
(b) An LRA is the only entity eligible to receive property under an
EDC.
(c) A completed application will be used to decide whether the
Secretary concerned will enter into an EDC with an LRA. An LRA may
submit an EDC application only after it adopts a redevelopment plan.
The Secretary concerned shall establish a reasonable time period for
submission of an EDC application after consultation with the LRA.
(d) The application shall include:
(1) A copy of the adopted redevelopment plan.
(2) A project narrative including the following:
(i) A general description of the property requested.
(ii) A description of the intended uses.
(iii) A description of the economic impact of closure or
realignment on the local community.
(iv) A description of the economic condition of the community and
the prospects for redevelopment of the property.
(v) A statement of how the EDC is consistent with the overall
redevelopment plan.
(3) A description of how the EDC will contribute to short- and
long-term job generation on the installation, including the projected
number and type of new jobs it will assist in generating.
(4) A business/operational plan for the EDC parcel, including at
least the following elements:
(i) A development timetable, phasing schedule, and cash flow
analysis.
[[Page 78948]]
(ii) A market and financial feasibility analysis describing the
economic viability of the project, including an estimate of net
proceeds over a fifteen year period and proposed consideration or
payment to the Department of Defense,
(iii) A cost estimate and justification for infrastructure and
other investments needed for redevelopment of the EDC parcel.
(iv) Local investment and proposed financing plan for the
development.
(5) A statement describing why an EDC will more effectively enable
achievement of the job generation objectives of the redevelopment plan
regarding the parcel requested for conveyance than other federal real
property disposal authorities.
(6) Evidence of the LRA's legal authority to acquire and dispose of
the property.
(7) Evidence that the LRA has authority to perform the actions
required of it, pursuant to the terms of the EDC, and that the officers
executing the EDC documents on behalf of the LRA have authority to do
so.
(8) A commitment from the LRA that the proceeds from any sale or
lease of the EDC parcel (or any portion thereof) received by the LRA
during at least the first seven years after the date of the initial
transfer of property, except proceeds that are used to pay
consideration to the Secretary concerned under paragraph (h) of this
section, shall be used to support economic redevelopment of, or related
to, the installation. In the case of phased transfers, the Secretary
concerned may also require that this commitment apply during at least
the first seven years after the date of every subsequent transfer of
property to the LRA. The use of proceeds to pay for, or offset the
costs of, public investment on or related to the installation for any
of the following purposes shall be considered a use to support the
economic redevelopment of, or related to, the installation--
(i) Road construction;
(ii) Transportation management facilities;
(iii) Storm and sanitary sewer construction;
(iv) Police and fire protection facilities and other public
facilities;
(v) Utility construction;
(vi) Building rehabilitation;
(vii) Historic property preservation;
(viii) Pollution prevention equipment or facilities;
(ix) Demolition;
(x) Disposal of hazardous materials generated by demolition;
(xi) Landscaping, grading, and other site or public improvements;
and
(xii) Planning for or the marketing of the development and reuse of
the installation.
(9) A commitment from the LRA to execute the agreement for transfer
of the property and accept control of the property within a reasonable
time, as determined by the Secretary concerned after consultation with
the LRA, after the date of the property disposal record of decision.
The determination of reasonable time should take account of the ability
of the Secretary concerned to make the deed covenant, or covenant
deferral, required under 42 U.S.C. 9620(h)(3).
(e) The Secretary concerned will review the application and, to the
extent practicable, provide a preliminary determination within 30 days
whether the Military Department can accept the application for
negotiation of terms and conditions, pursuant to the following
determinations:
(1) The LRA submitting the application has been duly recognized by
the DoD Office of Economic Adjustment;
(2) The application is complete. With respect to the elements of
the application specified in paragraphs (d)(6) and (d)(7) of this
section, the Secretary concerned may accept the application for
negotiation of terms and conditions without these elements, provided
the Secretary concerned is satisfied that the LRA has a reasonable plan
in place to provide these elements prior to transfer of the property;
and
(3) The proposed EDC will more effectively enable achievement of
the job generation objectives of the redevelopment plan regarding the
parcel requested than other federal real property disposal authorities.
(f) Upon acceptance of an EDC application, the Secretary concerned
will determine if the proposed terms and conditions are fair and
reasonable. The Secretary concerned may propose and negotiate any
alternative terms or conditions that the Secretary considers necessary.
The following factors will be considered, as appropriate, in evaluating
the terms and conditions of the proposed transfer, including price,
time of payment, and other relevant methods of compensation to the
Federal Government.
(1) Local economic conditions and adverse impact of closure or
realignment on the region and potential for economic recovery through
an EDC.
(2) Extent of short- and long-term job generation.
(3) Consistency with the entire redevelopment plan.
(4) Financial feasibility of the development, including market
analysis and need and extent of proposed infrastructure and other
investments.
(5) Extent of state and local investment, level of risk incurred,
and the LRA's ability to implement the plan. Higher risk and investment
made by the LRA should be recognized with more favorable terms and
conditions, to encourage local investment to support job generation.
(6) Current local and regional real estate market conditions,
including market demand for the property.
(7) Incorporation of other Federal agency interests and concerns,
including the applicability of, and conflicts with, other Federal
surplus property disposal authorities.
(8) Economic benefit to the Federal Government, including
protection and maintenance cost savings, environmental clean-up savings
and anticipated consideration from the transfer.
(9) Compliance with applicable Federal, state, interstate, and
local laws and regulations.
(g) The Secretary concerned will negotiate the terms and conditions
of each transaction with the LRA. The Secretary concerned will have the
discretion and flexibility to enter into agreements that specify the
form of payment and the schedule.
(h)(1) The Secretary concerned may accept, as consideration, any
combination of the following:
(i) Cash, including a share of the revenues that the redevelopment
authority receives from third-party buyers or lessees from sales and
long-term leases of the conveyed property (i.e., a share of the
revenues generated from the redevelopment project);
(ii) Goods and services;
(iii) Real property and improvements; or
(iv) Such other consideration as the Secretary considers
appropriate.
(2) The consideration may be paid over time.
(3) All cash consideration for property at a military installation
where the date of approval of closure or realignment is before January
1, 2005, shall be deposited in the account established under Section
2906(a) of the Defense Base Closure and Realignment Act of 1990 (part A
of title XXIX of Pub. L. 101-510; 10 U.S.C. 2687 note). All cash
consideration for property at a military installation where the date of
approval of closure or realignment is after January 1, 2005, shall be
deposited in the account established under Section 2906A(a) of the
Defense Base Closure and Realignment Act of 1990 (part A of title XXIX
of Pub. L. 101-510; 10 U.S.C. 2687 note).
[[Page 78949]]
(4) The Secretary concerned may use in-kind consideration received
from an LRA at any location under control of the Secretary concerned.
(i) The LRA and the Secretary concerned may agree on a schedule for
sale of parcels and payment participation.
(j) Additional provisions shall be incorporated in the conveyance
documents to protect the Department's interest in obtaining the agreed
upon consideration, which may include such items as predetermined
release prices, accounting standards or other appropriate clauses
designed to ensure payment and protect against fraudulent transactions.
Every agreement for an EDC shall contain provisions allowing the
Secretary concerned to recoup from the LRA such portion of the proceeds
from its sale or lease as the Secretary concerned determines
appropriate if the LRA does not use the proceeds to support economic
redevelopment of or related to the installation for the period
specified in paragraph (d)(8) of this section. The Secretary concerned
and an LRA may enter into a mutually agreed participation agreement
which may include input by the Secretary concerned on the LRA's
disposal of EDC parcels.
(k) The Secretary concerned may take account of property value but
is not required to formally determine the estimated fair market value
of the property for any EDC. The consideration negotiated should be
based on a business plan and development pro-forma that assumes the
uses in the redevelopment plan. The Secretary concerned may determine
the nature and extent of any additional information needed for purposes
of negotiation. To the extent not prohibited by law, information used
should be shared with the LRA.
(l) After evaluating the application based upon the criteria
specified in paragraph (f) of this section, and negotiating terms and
conditions, the Secretary concerned shall present the proposed EDC to
the Deputy Under Secretary of Defense (Installations and Environment)
for formal coordination before announcing approval of the application.
Sec. 174.10 [Removed and Reserved]
3. Sec. 174.10 is removed and reserved:
Dated: December 10, 2010.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2010-31649 Filed 12-16-10; 8:45 am]
BILLING CODE 5001-06-P
