Economic Development Conveyances for BRAC Properties

Economic Development Conveyances for BRAC Properties

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April 13, 2023
Economic Development Conveyances for BRAC Properties
Congress has approved five rounds of military base
environmental impacts of the disposal of the property. The
realignments and closures under the Base Realignment and
environmental remediation activities the DOD must
Closure (BRAC) process: in 1988, 1991, 1993, 1995, and
conduct are also based on land use under the plan. The
2005. Since 2005, Congress has not authorized additional
redevelopment plan is distinct from the EDC application
BRAC rounds. Recent funding for prior BRAC rounds has
(discussed below).
focused on properties where environmental remediation is
not complete. A 2022 Government Accountability Office
32 C.F.R. Part 174 stipulates that there is generally to be
(GAO) report found that 17% of BRAC properties closed
only one recognized LRA per BRAC property. Although
under prior rounds awaited environmental remediation
the LRA is responsible for preparing the redevelopment
and/or conveyance.
plan, the DOD may use any of the conveyance mechanisms
identified in regulation to dispose of a BRAC property. The
Regulations for BRAC property disposal identify multiple
LRA may desire an EDC, but neither statute nor regulation
mechanisms for the Department of Defense (DOD) to
bind the DOD to that particular conveyance mechanism.
transfer ownership of (i.e., “convey”) surplus BRAC
property for redevelopment. Those include:
Economic Development Conveyance Process
The Base Closure Act authorizes the DOD to use an EDC
 economic development conveyances (EDCs) at no cost,
to transfer real and personal property at a BRAC property to
below market value, or at cost, in which a local
an LRA for the purposes of job generation.
redevelopment authority (LRA) agrees to certain
conditions designed to generate employment at the
After completing the redevelopment plan, the LRA may
property;
submit an EDC application to the DOD. 32 C.F.R. Part 174
requires, among other things, the EDC application to
 public benefit conveyances;
describe the property’s intended uses; describe how the
EDC will contribute to short- and long-term job generation;
 negotiated sales to state or local governments;
include a business plan with a development timetable and

financial feasibility analysis; and project the number and
conservation conveyances; and
type of new jobs the EDC will help create. The secretary of

the military department with jurisdiction over the property
public sales.
reviews the application and must provide a preliminary
BRAC Property Conveyance Process
determination within 30 days of receiving the application
“to the extent practicable.”
The Defense Base Closure and Realignment Act of 1990
(Base Closure Act, P.L. 101-510, as amended, 10 U.S.C.
Figure 1 presents selected steps for obtaining an EDC.
§2687 note) and DOD regulations (32 C.F.R. Part 174)
Remediation is an additional step prior to conveyance.
outline the DOD’s steps to put a property through the
BRAC process. Those include selecting a property for
Figure 1. Selected Steps to Obtaining an EDC
closure or realignment, closing or realigning the property’s
military mission, remediating environmental issues, and
conveying the property, either to another federal agency or
to a nonfederal entity, for civilian reuse.
LRAs are central to several aspects of the BRAC and EDC
processes. The Base Closure Act defines an LRA as “any
entity ... recognized by the Secretary of Defense as the
entity responsible for developing the redevelopment plan
with respect for the installation.” Once a BRAC property is
approved for closure and declared surplus—meaning no

federal department or agency identifies a need for it—local
governments of jurisdiction typically organize an LRA to
Source: DOD, Base Redevelopment and Realignment Manual
create and execute a redevelopment plan for the property.

Once finalized, the DOD also uses the redevelopment plan
as its basis to prepare the environmental review analysis
According to the Base Closure Act, conveyance of a BRAC
under the National Environmental Policy Act (42 U.S.C.
property under an EDC may be “for consideration at or
§4321 et seq.) in order to evaluate the potential
below the estimated fair market value or without
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Economic Development Conveyances for BRAC Properties
consideration.” If the LRA makes some form of payment (a
Congress has periodically amended EDC stipulations—
“consideration”), the DOD may accept a share of the
particularly the DOD’s authority to transfer BRAC
revenues that the LRA receives from sales and long-term
properties with below-market or no-cost EDC. As discussed
leases of the conveyed property, in-kind payments, real
below, these changes occasionally reflected Congress’s
property and improvements, or other consideration that the
intent to ensure appropriate justification for using EDCs.
Secretary of Defense or secretary of the transferring
military department deems appropriate.
In the 106th Congress, the National Defense Authorization
Act for Fiscal Year 2000 (P.L. 106-65) included a provision
Per 32 C.F.R. Part 174, the terms and conditions of a
authorizing below-market or no-cost EDCs under specified
transfer may take into account nine different factors. Most
conditions. However, in the 107th Congress, some Members
of the factors address economic considerations—those
voiced concerns about the EDC provisions in P.L. 106-65.
relating to the redevelopment of the property but also
Referring to those provisions, the committee report
including the benefit to the federal government. However,
accompanying S. 1416—the Senate Committee on Armed
others are based on the potential impact on other federal
Services’ version of the FY2002 defense authorization
agency interests and compliance with applicable state or
bill—stated, “When the Department of Defense requested
local laws and regulations.
this legislative change, its stated intent was to apply
stringent criteria to this new authority.... Since enactment of
The Base Closure Act requires an LRA that receives a
this new authority, every conveyance of base closure
BRAC property under a no-cost or below-market EDC to
property has been at no cost to the recipient. The
agree to use proceeds from any sale or lease of the property
Committee urges the Department of Defense to ... ensure
or a portion of the property made within seven years after
that conveyances for economic development at less than
the transfer date to support the economic development of
fair market value, in particular those to be conveyed at no
the property site. Uses of those proceeds that qualify as
cost, merit such treatment.”
supporting economic development are:
The related adopted version of the defense authorization
 road construction;
bill—the National Defense Authorization Act for Fiscal
Year 2002 (P.L. 107-107)—required that the DOD “seek to
 building or maintaining transportation management
obtain consideration ... in an equal amount to the fair
facilities;
market value of the property.” P.L. 107-107 did not prohibit
the DOD from transferring BRAC properties with below-
 storm and sanitary sewer construction;
market or no-cost EDCs. However, the law’s conference
report expressed Congress’s intent

to “require the Secretary
building or maintaining police and fire facilities and
of Defense to obtain fair market value for economic
other public facilities;
development conveyances in most cases, unless the

Secretary determines the circumstances warrant a below-
utility construction;
cost or no-cost conveyance.”
 building rehabilitation;
The National Defense Authorization Act for Fiscal Year

2010 (P.L. 111-84) again amended EDCs’ criteria. The law
historic property preservation;
allowed the continued use of below-market or no-cost
 building or maintaining pollution prevention equipment
EDCs. However, the law added conditions to a below-
or facilities;
market or no-cost EDC, stipulating that the DOD’s
determination of how to price an EDC “may account for the
 demolition;
economic conditions of the local affected community and
the estimated costs to redevelop the property.”
 disposal of hazardous materials and hazardous waste
generated by demolition;
Congress’s oversight of EDCs may entail certain questions.
One may involve the short- and long-term impacts of an
 landscaping, grading, and other site or public
EDC. For example, a below-market or no-cost EDC may
improvements; and
lessen the federal government’s short-term financial return.
However, if the EDC recipient is able to quickly generate
 planning for or marketing the redevelopment.
jobs or real estate gains, taxes from those outcomes may
prove more valuable to the federal government than the
Policy Considerations
unrealized revenue from the below-market or no-cost EDC.
As Congress has not authorized any new BRAC rounds
Another question may be whether the federal government is
since 2005, its interest in EDCs may be in oversight of the
seeking to maximize its financial return or prioritize local
use of EDCs at BRAC properties still awaiting conveyance.
economic development, which could affect how the DOD
(According to GAO, 1,486 BRAC properties awaited
prices and distributes EDCs. As Congress provides
remediation and/or conveyance as of September 2022.) This
oversight of EDCs, these may be relevant concerns.
oversight may include determining the conditions under
which the DOD transfers a BRAC property using an EDC.
Adam G. Levin, Analyst in Economic Development Policy
IF12381
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Economic Development Conveyances for BRAC Properties

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