Final Rule on EDCs Sticks Closely to Last Year’s Proposal

There were few surprises in the final rule the Pentagon issued Wednesday implementing the changes Congress approved two years ago to incorporate flexibility in the process of negotiating economic development conveyances (EDCs) in a bid to accelerate redevelopment at BRAC installations.

The rule, published in the Nov. 16 Federal Register, varies from the language of the Dec. 17, 2010, proposed rule in only a few instances, closely following the intent of the changes to the 1990 BRAC statute that Congress passed as part of the fiscal 2010 defense authorization bill.

That law’s key change was to eliminate the requirement for the military services to seek fair market value for an EDC. As a result, the new rule deletes the requirement for DOD to obtain an appraisal of the property as part of an EDC conveyance and, instead, permits the services to conduct the necessary analysis to protect the government’s interest. The analysis should be based on the uses identified in the community reuse plan, rather than an independent analysis of best and highest use, according to the Federal Register notice.

“This regulation emphasizes the use of EDCs to best promote the economic redevelopment of the former installation,” the notice states.

Along with relaxing the requirement to seek fair market value, the law allows the services to attain compensation for BRAC property by sharing the revenues generated by redevelopment, primarily through “back-end” deals such as the one reached this week to transfer property at the former South Weymouth Naval Air Station, Mass.

“Elimination of the requirement to estimate the fair market value, along with related appraisal requirements, should expedite the conveyance process and remove what has been a common source of conflict and delay between the community and the department,” the notice states.

In turn, the final rule requires the LRA to reinvest sale or lease proceeds from an EDC for at least seven years after transfer and take title to the property “within a reasonable timeframe.”


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