City-Base vs other innovative

1
City-Base vs other innovative mechanisms

• DTI conference
• San Antonio, Tejas
• 17-18 Oct 2006
• Tom Rumora, REACT USA, Inc.

2
City-Base definition

• Community / military collaboration involving
  transfer of ownership / operations / management /
  development responsibility for an active military
  installation to a public or private entity in
  order to create mutual benefits.
• (Potential variations Owner / manager might be
  city, county, state, special entity, or private
  enterprise. Many types of facilities could be
  city-based not just military bases.)

3
Objectives

• Demonstrate efficient facility mgmt model
• Cut operating costs (privatize everything!)
• Enhance medical / science missions
• Improve quality-of-life
• Generate revenue for mutual benefit
• Attract complementary activities
• Control destiny (head start on BRAC)

4
City-Base overview

• Federal efficient facilities legislation (2000
  / 01)
• State authority, City Board / staff / funding
• No-cash sale / lease-back (joint appraisal)
• Rent operating cost (no profit / reserves)
• 100-year term (breakeven at 20 years)
• Net revenue sharing after expenses
• Incredible commitment to keeping military jobs !
• Focused on cost / efficiency
• Conveyance ceremony Jul 2002
• (9-11 changed security / lease issues)

5
City-Base overview (contd)

• Rent 5 / s.f. x 2,000,000 s.f. 10 mil
• (BRAC implementation cost 250 mil)
• 90 mil deferred maintenance (50 buildings)
• 170 families pay BHA (850/mo) for housing
• BDA paid impact aid to Lackland Schools
• Utility systems sold to public utility companies
• AF / City / BDA / utility companies share costs
• AF cut 100 CE jobs (100 x 100k 10 mil/yr)
• Security guards vs SP (20 x 50k 1 mil/yr)
• Go-to-jail resistance proved unwarranted

6
Results

• 50 mil retail center, 550,000 s.f.
• 25 mil RD / mfg build-to-suit, 250,000 s.f.
• 25 mil City-County EOC, 30,000 s.f.
• 12 mil reinvestment from retail land sale
• 10 mil stormwater system (City)
• Science-based charter school (Gates Found.)
• Proposed 50 mil 175-bed healthcare complex
• Timeline from conveyance 3-4 years !!!

7
City-Base strengths

• DoD wanted to allow at all installations !
• Congress authorized 6 additional test sites !
• EUL on entire installation ! (plus ownership)
• Privatize housing, utilities, facilities all at
  once !
• Stabilize / cut military operating costs !
• Enable art-of-the-possible deals !
• Facilitate commercial best practices !
• Community facilities, military missions !
• Show patriotism / commitment / innovation !

8
City-Base requirements

• Political clarity / unity to offset resistance
• Awareness of risk / reward balance
• Desire to control destiny, in any scenario
• Long-term commitment and resources
• Collaborative / innovative stakeholders
• Realistic business plan decision criteria
• Tenacious continuity, creative adaptibility

9
Alternatives for net gainers

• Approve bond issues and/or new taxes
• Re-prioritize budgets
• Seek private investors / developers
• Pursue EUL
• Pursue MilCon exchange
• Pursue 2667 facility maintenance
• Create City-Base
• Other ?

10
Alternatives for net losers

• Avoid action, let Service use /dispose
• Adopt plans, hold buyer to compliance
• Self-develop after clean-up / conveyance
• Take early transfer (variant of City-Base)
• Partner with private investors / developers
• Create City-Base for disposed property
• Other ?

11
Alternatives for dodgers

• Wait to see impact of next BRAC
• Seek expert advice on options / risks
• Partner with private investors / developers
• Pursue 2667
• Pursue MilCon exchange
• Pursue EUL
• Pursue City-Base
• Other ?

12
Privatization issues

• Garbage collection / disposal
• Street cleaning / striping
• Emergency Medical Service
• Envir. clean-up (early transfer)
• Facility utilization (EUL)
• Water / sanitary sewer
• Storm Sewer
• Gas
• Electric
• Animal control
• Fire protection
• Library
• Impact aid to schools
• Personal property
• Signage
• Central heating / cooling plant

• Airfield fixed-base operator
• Vehicle leasing / repair
• Pest control
• Recycling
• Laundry / drycleaning
• Classrooms
• Dorms / Barracks
• Streets and parking areas
• Hospital construction
• Housing
• Grounds maintenance
• Historic preservation
• Engineering
• Security guards
• Recreation facilities
• Daycare

13
Conference comments / needs

• Funding creativity needed to implement BRAC
• No time to waste, second year underway
• Real savings is in personnel cuts
• Alone and unafraid, limited information sharing
• Student through-put small town population
• 27 to 67 tenants need facility coordination
• Flexible / modular floor plans needed
• Joint basing aids BOS efficiency
• Plan to succeed, and plan to fail

14
Decision matrix
City-Base offers broad, streamlined, efficient
resolution of numerous BOS issues.
15
Summary

• Comments
• 2005 gainers / dodgers may be future losers
• Ideal base might be largely GOCO / virtual
• City-Base was a successful experiment !
• Texas and others should use it ! ! !
• Recommendations
• OEA should fund mechanisms manual
• DTI should create innovation clearinghouse
• Stakeholders need deal making training

16
City-Base an unprecedented, innovative, and
little understood efficiency mechanism for
community / military collaboration.

• DTI conference
• San Antonio, Tejas
• 17-18 Oct 2006
• Tom Rumora, REACT USA, Inc.
• trumora_at_reactusa.com
• 906-360-0671

17
Authorities

• FY2000 Defense Appropriations Act - PL 106-79
  113 Stat 1212, Section 8168 Base Efficiency
  Project, Oct 1999
• FY2001 Military Const. Appropriation Act PL
  106-246 114 Stat 520, Sect 136, which supercedes
  8168, Jul 2000

18
Key documents

• Joint appraisal
• Purchase and Sale Agreement
• Lease
• Deed Without Warranty
• CCRs
• Bill of Sale for Utilities / Personal Property
• Joint Development Plan