Reuse of Underutilized Government Assets – Enhanced Use Leasing: A Powerful Tool to Government to Enhance Budgets and Benefit Mission Execution

Common problems facing today’s public agencies are constrained budgets, aging assets, costs, and properly balancing competing interests to continue to deliver quality service to the public in a safe and effective manner. Agencies routinely evaluate the condition and utilization of assets and seek to minimize the costs of maintenance of facilities. Too often, asset managers seek to retire or dispose of underutilized buildings, land, and other assets to eliminate costs and realize a short-term one-time payment. While the agencies do receive a short-term benefit by disposing of underutilized assets, agencies should consider a long-term solution to better serve its core mission. The Enhance Use Lease is one alternative available to agencies and military departments

What is an Enhanced Use Lease? An enhanced use lease is a ground or building lease of underutilized real property owned by a federal military department in exchange for fair market consideration. Enhanced use leases are authorized under 10 U.S.C. § 2667 and each military department has implemented enhanced use leasing expertise and offices. The enhanced use lease operates similarly to a commercial lease. The government landlord leases and the third-party tenant occupies the premises for a period of time under certain terms and conditions in exchange for rent. What differentiates the enhanced use lease from ordinary commercial leases is the fact that the Government can negotiate into the lease as rent, consideration to be received in the form of in-kind services (ie “enhanced”), including construction of facilities, maintenance, and other services expressed in the legislation.

Why enhanced use leases? Enhanced use leases have several benefits which agencies should consider:

1. Provides for a beneficial reuse of underutilized assets
2. Generates revenue in the form of consideration (either as Cash or in-kind services)
3. Removes maintenance responsibilities and costs of the asset over time
4. Consideration received from the use of land directly benefits the installation providing the land (as opposed to a disposal in which the payment received goes to the general treasury)
5. The EUL use typical provides indirect services which benefit the mission or installation
6. Revenues received by the installation helps off set budget shortfall
7. In-kind services negotiated into the lease can provide services or facilities to the installation which alleviates the need for installation leadership to find sources of funding for those projects)

MCFA has worked with clients to utilize EUL’s since the programs inception. The DoD has executed several successful and diverse enhanced use project over the years, including the Government and Technology Enterprise at Aberdeen Proving Ground and utility scale solar facility at Joint Base McGuire-Dix-Lakehurst, with the guidance of MCFA.

Despite its long tenure, EUL use in facility management continues to be emphasized by the federal government and DoD. Its use is expressly called out by DoD to be used to create open collaborative campuses between government, industry, and academic researches and the DoD laboratories. This emphasis recognizes the impact to leverage existing assets to obtain private funding to improve facilities, provide revenue, and advance the mission.

Trump Infrastructure Investment Plan : Public-Private Partnerships (P3s) and Leverage

There has been a lot of talk over the last few months in the AEC industry over the Trump Tax Plan. The plan has received a lot of criticism – all flash and no cash. The administration focused heavily on Infrastructure investment being a critical part of economic improvement, but the plan calls for a shockingly small $200 million. The administration has said their plan is not meant to fund infrastructure, but to create competition and planning at the state and local level to compete for federal dollars and leverage local tax base and public-private partnerships to get projects done.

This leverage is accomplished by lifting restrictions currently constraining ways federal and state agencies can engage private companies over infrastructure. The plan expands grant access and broadens existing Federal credit programs, such as Private Activity Bonds, to include a more diverse range of infrastructure asset improvements to attract more private companies. It also expands agency authority, such as the USACE, to engage in long-term contracts that are conducive to large-scale infrastructure investments.

By and large, this plan enables government agencies to engage private companies over infrastructure projects more freely; to create Public-Private Partnerships (P3). The conditions set by this plan counterbalance low federal funding with incentives, such as Federal credit programs or stable long-term contracts, that attract experts in the private sector. These incentives promise a fair profit for private companies, in exchange for their expertise or financial backing that ensures a project’s completion. These scenarios are a win-win when this exchange is a fair agreement between parties.

Facilitating a win-win scenario isn’t always so easy. MCFA has experience navigating the roadblocks on both sides of Public-Private Partnerships. After procurement and political victories at the initial stages, the devil’s in the detail-oriented later stages of the project. Despite hang-ups, however, MCFA believes that P3’s are worthwhile avenues to explore on any project. This administrations emergent infrastructure plan goes a long way to making those roads a little less bumpy.

Microgrid – No Small Achievement

The official Department of Energy definition of Microgrid is:

“a group of interconnected loads and distributed energy resources (including demand management, storage, and generation) within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid, and that connects and disconnects from such grid to enable it to operate in both grid-connected or “island” mode.”

In plain English, a microgrid is a generator configured to work in both grid-parallel and island mode. This is the key distinction between Distributed Generation/On-Site Generation and a “Microgrid”— a diesel generator isn’t a microgrid, because it cannot generate power in grid parallel mode. Most solar energy systems aren’t microgrids because they can’t operate in island mode. A Combined Heat Power (CHP) system that can operate in island mode, however, is a microgrid.

The Benefits of a Microgrid are harder to define, thanks to a ton of different types of microgrids, but, generally speaking, good microgrids share three values:
• Create economic value during normal operations — they make your utility bills go down and/or generate revenue by selling electricity to the grid.
• Provide resiliency during grid outages.
• Reduce Greenhouse Gas (GHG) emissions — not all microgrids do this, but sustainability is a key selling point of almost every microgrid that gets built.

The Talent Crunch

The US is experiencing low unemployment rates and many are thrilled, however, you might find this environment challenging if you are an employer or a recruiter looking to expand or even start to create your network of talent.
So, what do you do when you find yourself recruiting in the talent crunch? Here are a few trends to consider when approaching recruitment for your business.

Speed and Simplicity
Speed and simplicity are the new currency. Long gone are the days of writing cover letters and filling out lengthy job applications. Job descriptions today look more like a tweet than a narrative. When candidates show interest in a career opportunity, they want the recruitment and engagement process to be quick and simple. Prospective employees are not willing to wait, even for the perfect job with the best fit.

Continual Engagement
Resumes lost to a black hole, lack of feedback during the interview or networking process, and unanswered emails are not acceptable anymore. These may deter future engagement or, worse, prompt a bad candidate review. Yes, candidates are now reviewing employers, so get back to them and become engaged! The moment a potential candidate lands on your website, speaks with someone at your company, or submits formal interest, the review process begins. So, it is necessary to reply to interested parties and keep in touch with potential candidates. Consider keeping candidates interested by sharing future opportunities and exciting company projects — this is a minimum in today’s market.

The GIG Economy
The mindset of many career seekers is now more project based. The trend towards a gig economy is undeniable. A gig economy is an environment where temporary, short-term, and project based assignments are fulfilled by an independent workforce. People like the idea that they have flexibility with the work they do. This flexibility may be with their hours, the length of time they engage with a company, or the projects they support. A gig economy offers ever-changing career opportunities to those in the market.

Company Culture
There has been a lot of talk in the business and HR world around company culture, inspiring debates on every topics including the pros and cons of a basketball hoop in the foyer of your business. An easy way to focus culture within an organization is to be true to your mission and business. Think about who are you as a company and what type of company you strive to develop into and show that culture to your potential candidates. Bring them to your worksite, try a working interview, let them see and experience your environment and decide if it is a right fit for both of you. This is how you help ensure successful candidate engagement and placement. You have screened for the ability, you know the candidate can do the job, so why not determine if they are the right “fit” for your company. The environment of a company is a strong determining factor if an employee will accept an offer and become a successfully contributor to your company or move on. It is better for both parties involved to know from from the start if your culture is a good match.

Happy recruiting!