Enhanced Use Lease (EUL)

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Enhanced Use Leases

 

Eisenhower RidgeThe enhanced use lease concept is being utilized by the federal government as a means to privatize government property in order to economize on certain property operations. The VA project referred to above is an example of an enhanced use lease project involving a 75-year lease of the otherwise underutilized land and buildings.

VA Outlines it's intent

New Tools for Federal Agencies

Several speakers at the conference mentioned the relative absence of incentives to reward effective capital asset management in the federal government. In the final session, Robert Neary, Jr., of the Department of Veterans Affairs, outlined his agency's nine-year experience with a program that allows his department to convert its underperforming assets into productive assets by leasing its properties and/or facilities for up to 75 years to private or other public entities. David Bibb, of the General Services Administration (GSA), discussed proposed legislation that would give federal agencies important new tools for managing capital assets. Stanley Langfeld, also at GSA, described the government-wide real property information sharing program.

ENHANCED-USE LEASING PROGRAM

Summary of a Presentation by Robert Neary, Jr., Associate Chief Strategic Management Officer, Officeof Strategic Management, Department of Veterans Affairs

The Department of Veterans Affairs (VA) has reengineered its operations during the last five or six years. Much of the physical infrastructure used by its health care system was designed for in-patient hospital care, not the out-patient care that is such a large part of the care it delivers today. Some of its physical infrastructure is located in areas where the veteran population is less than projected. For these reasons the VA has closed some 50,000 hospital beds since 1995. During the same period the number of veterans throughout the nation using the VA for their health care has increased by 25 percent.

VA hospitals are often located in the vicinity of medical schools and large medical complexes in relatively affluent locations. Partly because of the shift of its service model from in-patient to out-patient service, some of its properties and facilities are partially vacant or underused. In 1991 Congress approved a three-year pilot program designed to make more productive those underperforming assets that the VA is not prepared to dispose of. The enhanced-use leasing program gave the VA authority to lease underused property and facilities to private or other public entities for up to 35 years in return for cash or in-kind consideration, such as services, goods, equipment, or facilities. The VA has used this authority to enter into 16 lease agreements. About 60 proposals are being considered.

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