Enhanced-Use Lease (EUL) Benefits
Benefits to Developers and Local Community
An EUL provides the developer (lessee) with the long-term property interest necessary to secure financing through the capital markets, and allows the developer to amortize any capital investment made to the property or facility. Although the underlying land is still federal property, the facility is subject to state and local taxes, which results in an increased tax base for the local community. This in turn facilitates the local community’s ability to provide needed services along with substantial private investment, new long-term sources of revenues for the local economy, jobs, and tax revenues for the local, state and federal sectors.
Benefits to VA
The initial results of this program include significant cost savings. VA’s EUL program is unlike those of traditional government, which offers little more than a revenue return in proportion to the depletion of the leased asset. VA’s EUL program encourages innovative public/private partnerships. In return for the lease, VA must obtain fair consideration (monetary and/or in-kind) in various forms including but not limited to revenue, facilities, space, or services.
Generally, when an agency generates revenue connected to real property, proceeds must be deposited in the U.S. Treasury. Under the EUL program, funds received as consideration do not have to be returned to the Treasury, but may be kept by VA. This provides the incentive necessary to encourage government property managers to be creative and aggressively pursue opportunities to partner with both private and non-profit entities.
The success of the EUL program depends on sound development of economics. The program works best when government requirements are defined in business terms. This allows the private and non-profit sector to construct and operate in its customary manner. VA then benefits from the efficiencies of organizations and delivery processes that reflect best practices. VA continually improves its process to deliver the highest and best use for its assets over time.
A key component of the EUL program is close coordination with and involvement of the local government and community as full partners in the development process. For example, VA must hold a public hearing at the location of any proposed EUL to obtain Veteran and local community input. VA also must provide a notice to its Congressional oversight committees prior to entering into an enhanced-use lease. Close collaboration with community leaders and interested stakeholders enables VA to address concerns early in the planning and development process.