ALTERNATIVE FINANCING Real Estate Workshop Argonne National Laboratory, 5 May 2015 Scott L. Whiteford Director, Real Estate and Personal Property Policy

Alternative Financing – What is it? Differing ideas: – OMB: Any non-routine financing proposal. – GSA: Goal of using the best skills and capabilities of public and private sector to provide same or better level of service, at a cost savings to the public. – DOE: Obtain use of privately-developed capital assets through a lease. 2

Alternative Financing – Who has it? Department of Defense (DOD): – 10 USC 2667: Outleasing/Enhanced Use Lease (EUL) – 10 USC : Housing privatization – 10 USC 18240: DOD reserve component property exchange National Aeronautics and Space Administration (NASA): – 51 USC 20145: EUL 3

Alternative Financing - What is required? OMB Circular A-11, Appendix B: Budgetary Treatment of Lease-Purchases and Leases of Capital Assets – OMB Review for Scoring: Total payments over the term exceed $50 million Non-routine financing proposal with unusual concepts/characteristics (ex. establishment of LLC; projects constructed on, located on Government land) – “Lease-Purchase”, “Capital Lease” Scored in first year at NPV of Government’s total obligations over contract life – Operating Lease Not scored Must meet six criteria: – Private sector market for the asset – Not built specifically for the Government, general purpose – Total lease payments must not exceed 90% of value of the asset – No bargain-price purchase option – Ownership must remain with the lessor and not be transferred shortly after lease term – Lease term does not exceed 75% of economic life of asset 4

Alternative Financing – DOE projects PROGRAMLOCATIONPROJECTDATE OMB APPROVE? COMMENTS 1ScienceOak Ridge Oak Ridge Computational Science 11/1/2001YES 2ScienceOak Ridge Oak Ridge Res. Office Bldg. 11/1/2001YES 3ScienceOak Ridge Oak Ridge Engr. Tech. Facility 11/1/2001YES 4ScienceOak Ridge Oak Ridge Multi-Program Res. 9/1/2004YES 5NNSAOak Ridge Jack Case/New Hope Ofc. Ctr. 8/1/2005YES White House pushed OMB to approve 6ScienceBrookhaven Housing Complex 2006NOcost too high 7ScienceArgonne Argonne Theory/Comp. Science Bldg. 1/1/2007YES 8NEINL INL Science & Tech Facility 2007NO withdrawn by Program (A-11 criteria not met) 9SciencePNNL PNNL Biological Sciences Bldg. 9/12/2007YES Congressional intervention 10SciencePNNLPNNL CSF Bldg.9/12/2007YES Congressional intervention 11ScienceOak Ridge Multi. Comput. Data Ctr. 2009NO 12NNSALos Alamos Science & Technology Ctr 2010NO withdrawn by Program (high cost) 13NNSAY-12/Oak Ridge Complex Command Ctr 2010NOwithdrawn by Program (A-11 criteria not met) 5

Alternative Financing - Hurdles No DOE projects since 2007 – Value of lease payments under 90% of value of asset Use private sector cost estimate for value of asset, not Government cost – Private sector market for asset – General purpose asset, not built for Government-specific use 6

Alternative Financing - Success Work where they work, not a panacea Leverage Government capabilities Focus on complimentary or synergistic uses Address performance milestones Address conclusion of transaction 7

Current Projects – TeAM Facility, NREL – ASC Facility, PANTEX – LVOC, Sandia/Livermore/LLNL – NCMC, SRS – Discovery Park, BNL 8