AIR F OR CE CIVI L ENGINEER CENTER INS TALLATIO
StakeholderNS ReportDIRECTORATE FY14 Supporting America’s Air Force
s the U.S. Air Force prepares for the new readiness and modernization, to leveraging challenges and opportunities of the new technology and developing robust Acoming decades, it faces sobering 21st partnerships outside the installation gates, century realities: global centers of power are support for the greater Air Force plan begins at more distributed and the terrorism threat more the installation level. dispersed. Most importantly, the emerging With a sharp focus on installation support, environment demonstrates a trend that could AFCEC partners with base and major prove to be the defining one of current times command leaders to ensure the proper — the accelerating pace of change and identification and prioritization of installation dwindling resources. requirements based on mission needs. The Air Force launched a major new plan Supporting the Air Force with “Battle Ready, in 2014. A Call to the Future outlines the Air Built Right” enterprise-wide civil engineering Force’s 30-year strategy, providing a general products and real property services is the goal path forward as the Air Force prepares of the Installations Directorate. for sweeping change. From balancing
2 | Update with Section Name Supporting America’s Air Force Contents To Our Stakeholders ...... 4 Real Property Management ...... 6 2014 transactions by the numbers Mission support Accountability NexGen IT System Real Estate Development...... 9 Public-private partnerships Enhancing energy opportunities Enhanced Use Lease energy projects Public-public ventures Post-Closing Portfolio Management ...... 12 EUL risk mitigation Value-based transactions Utilities Privatization post-award management UP post-award metrics Housing Privatization Portfolio Management...... 15 FY14 Housing statistics ACC Group III Base Realignment and Closure Management ...... 16 BRAC by the numbers … Environmental cleanup Response to emerging contaminants 2015 and Beyond...... 18
All photos courtesy of U.S. Air Force Table of Contents | 3 To our Stakeholders
Though 2014 was another year of transition, it was also a year of many rewarding moments for the Air Force Civil Engineer Center’s Installations Directorate and the greater Air Force civil engineering community. Our mission is to provide enterprise- wide real estate solutions that support today’s and tomorrow’s Air Force missions, our Airmen and their families. We accomplish this through our major business lines: real property management, real estate development, post-closing portfolio management, housing privatization portfolio management, and Base Realignment and Closure (BRAC) management. In October 2014, AFCEC celebrated the agency’s two-year milestone and officially declared Full Operating Capability. That same day, we officially realigned from the Director of Civil Engineers to Air Force Materiel Command, joining the new Air Force Installation and Mission Support Center (Provisional). While there was plenty of organizational change, our installations service capabilities were uninterrupted and we made solid progress on many fronts, to include the execution of the Air Force’s first energy-based Enhanced Use Lease (EUL) at Luke Air Force Base, Arizona. The10-megawatt production facility will commission and power up by spring 2015 and is expected to earn the installation more than $5 million in revenue through the duration of the 30-year lease. On the housing front, we closed our last housing privatization project and initiated a restructure to privatize the few homes that remain, extending the opportunity for high-quality, on-base living to even more of our deserving Airmen and their families. Housing remains a major focus as we continue to manage and oversee these multi- decade privatized housing deals. We also took the first steps toward establishing a real estate clearinghouse process that will forge an even greater economic path for 2015 and beyond.
4 | To Our Stakeholders To our Stakeholders
Innovative programs like EULs and Performance Based Contracts have provided installations As this report more than $73 million in alternate revenue streams and reduced BRAC management costs demonstrates, it by approximately $183 million. While we cannot control the budget climate, we can continue is our mission to working on new ways to ensure the Air Force’s long-term financial goals are met through real provide you with estate optimization and public-public and public-private partnerships. the products and services necessary While many of our stakeholders interact regularly with installations’ program operators, we also to ensure your have a world-class team of legal experts working tirelessly behind the scenes. The vital work installation is ‘Battle performed each day by our legal counsel keeps our programs running smoothly — something Ready, Built Right.’ we’ll continue to depend on in 2015 and beyond. This document not As this report demonstrates, it is our mission to provide you with the products and services only serves as our necessary to ensure your installation is “Battle Ready, Built Right.” This document not only serves report card for 2014, as our report card for 2014, but it also provides our strategy for the coming year. We look forward but it also provides to another great year of serving you, our Airmen, and our installations. our strategy for the coming year. We look forward to Sincerely, another great year of serving you, our Robert E. Moriarty, P.E., SES, DAF Airmen, and our Director, Installations Directorate installations.
Air Force Civil Engineer Center — Robert Moriarty, Director, Installations Directorate
To Our Stakeholders | 5 $15,800,000 Readiness and $3,252,000 $232,284 Environmental Estimated value $2,800,000 Rent saved of unconditional Funding pro- through seven Protection 12 gifts processed vided for GSA lease Integration Training in FY14 acquisitions, terminations (REPI) funds courses disposals, in FY14 1,400 awarded provided to appraisals and Real estate installations' boundary actions pro- Air Force Rsurveyseal Property Managementcessed real estate In order to fly, fight and win, the Air Force must continue to make technological professionadvances -to better execute the mission. To meet new mission requirements and the physical space they als world- demand, the Air Force depends on a rapid-response real estate office. wide From acquiring property adjacent to vital Remotely Piloted Aircraft missions at Creech Air Force Base, Nevada, to processing a potable water storage tank gifted to Los Angeles Air Force Base, California, AFCEC’s transactional experts accomplished 1,400 vital actions in support of the greater Air Force mission in FY14. 2014 transactions by the numbers
$15.8 million $3,252,000 $2,800,000 $232,284 24,000 1,400 12 Readiness and Estimated value Funding Rent saved Acreage Real estate Training Environmental of unconditional provided for through seven protected from actions courses Protection gifts processed acquisitions, GSA lease encroachment processed provided to Integration in FY14 disposals, terminations through REPI installations' (REPI) funds appraisals and in FY14 funds secured Air Force real awarded boundary estate surveys professionals worldwide 6 | Real Property Management Support the mission, grow with the The Department mission … of Defense must As the mission changes, so does the Air Force achieve full audit footprint. New missions mean personnel readiness for all shifts, and personnel shifts require changes financial statements in housing and support service infrastructure by 2015. The Air — fluctuations that require real property Force’s real estate management. office is actively examining current AFCEC’s real estate transactions Looking ahead to 2015 and beyond, real processes in an effort to identify opportunities team facilitated the acquisition estate transactions have an important role in aimed at generating auditable financial of 17 acres of property adjacent to Creech AFB, Nevada, in shaping the physical environment for several statements — a process that begins with 2014. Formerly the Indian Springs key missions, including the acquisition of 156 transactions at the base level. Casino, the property’s public acres near Tinker Air Force Base, Oklahoma, in domain and proximity to fleets support of a military construction project for an Financial Improvement and Audit of Remotely Piloted Aircraft, like aircraft hangar compound necessary for the Readiness (FIAR) means: the MQ-1 Predator and MQ-9 future depot maintenance of KC-46A Pegasus g Improved financial management Reaper, posed a potential threat to essential Air Force aerial tankers. operations missions and national security. g Service members possess resources Several years of negotiations Accountability and temporary leasing and needed to carry out their mission With the nation’s fiscal challenges, the easement measures came to a Air Force must streamline its financial g Improved stewardship of resources close in October 2014 when the transactions team finalized the management processes for greater efficiency entrusted by taxpayers $11.45 million acquisition. and effectiveness in executing wartime In FY14, AFCEC’s installations real estate team requirements. The proper allocation of funds assisted both the Air Force Logistics, Installations is vital to national defense, ensuring money and Mission Support Directorate of Civil goes where it is needed, enabling Airmen to Engineers (A4C) and Assistant Secretary of the perform their vital tasks. Producing auditable Air Force Financial Management & Comptroller financial statements is critical in demonstrating in conducting seven base FIAR visits to test responsibility for taxpayer dollars. various aspects of each installation’s real Real Property Management | 7 ith proper processes property processes and record keeping. Results awaited switch from the Automated Civil Wand record keeping were not ideal with an average failure rate of Engineer System to the highly anticipated in place, the Air Force 55 percent. NexGen IT System. AFCEC’s real property and accountability experts have been intimately can better match As the Installations Directorate assumes involved in the design and configuration of the needs of each additional FIAR responsibilities from A4C, NexGen and the data migration work between installation and allocate AFCEC’s real estate subject matter experts systems for the past three years. Once NexGen the necessary resources, will conduct the remaining 85 base visits is fully integrated across primary areas of use ensuring each mission throughout FY15 to administer the same — real property and space management, receives adequate real process and record keeping tests. estate support. operations and supply management, project Using test results, the Installations management, energy management, and cost Directorate will: accounting — the data collection tool will greatly improve tracking and accountability g Identify shortfalls efforts. For users at every level, improved g Develop and track corrective action visibility of items will increase accuracy and plans enable improved resource allocation, which greatly reduces risk to missions and the Airmen g Provide training as necessary who execute them. With proper processes and record keeping in place, the Air Force can better match the Initial operating capability for the NexGen IT needs of each installation and allocate the System is scheduled for summer 2015 with final necessary resources, ensuring each mission operational capability planned for late 2016. receives adequate real estate support. NexGen IT System Exciting changes are on the horizon as the real estate team prepares for the long-
8 | Real Property Management Real Estate Development Real property optimization is essential in the Air Force’s pursuit to make every dollar count. In today’s economy, installations can’t afford to overlook material assets like available non-excess land and facilities. AFCEC’s strategic asset utilization experts strive to leverage Air Force real es- tate assets to their fullest potential. $280 To date, the Air Force projects $280 million in net present value from executed value-based million transactions. With four more EUL projects planned for execution in 2015, that number is expected to climb to $334 million. net present Public-private partnerships While obtaining monetary return for value a prospective EUL is typically the first arrangement that comes to mind, AFCEC’s real estate experts are trained to also identify non-monetary opportunities that bring even greater value back to the base and ultimately the mission. For Eglin Air Force Base, Florida, leasing 17 acres of geographically separated beachfront property to the Emerald Breeze Brig. Gen. David Harris, 96th Test Wing commander, Resort Group not only added an additional participates in the opening of the Emerald Breeze $334 revenue stream to fund infrastructure upgrades Hotel on Okaloosa Island in May 2014. The hotel and repairs, but it also improved the 96th Test is the third of three finalized enhanced use lease million Wing’s telemetry operations at no cost to the projects at Eglin Air Force Base, Florida. Rent for the use of Air Force land provides payment-in-kind base. Fixed atop the rooftop infrastructure funds to accomplish facility projects that would estimated and enclosed in a protective dome is the test otherwise not be funded. wing’s telemetric equipment — equipment that previously sat at ground level. 2015 value
Real Estate Development | 9 The revenue that we generate from these enhanced use leases goes to fill in the gap of budget shortfalls that we have to repair our infrastructure, to make improvements to properties and to do quality-of-life-type projects around the base.
— Glenn Wagner Lead Project Manager Eglin Air Force Base, Fla.
Five floors of hotel The Holiday Inn Destin West Resort was the first new hotel to open on Okaloosa Island in 15 years. The provide the base to our 152-room hotel, located on Eglin Air Force Base, Florida, property, boasts a lazy river, waterfalls and telemetry antennas; private balconies. Money generated from the lease agreement goes directly back to the base to fund now our antennas have infrastructure needs. increased range and increased throughput for Enhancing energy opportunities the test and evaluation Working in step with AFCEC’s Energy Directorate, our business development team identified mission. several non-excess land parcels at various Air Force bases ideal for potential renewable energy opportunities. In 2014, AFCEC’s project managers facilitated negotiations and agreements for — Brig. Gen. David Harris projects at five installations; the first deal closed in May 2014 at Luke Air Force Base, Arizona. 96th Test Wing Commander, Eglin Air Force Base, Fla. 10 | Real Estate Development Enhanced Use Lease energy projects
Estimated Parcel(s) Energy Production Project Lease The enhanced use Installation base size source potential status period lease is an opportunity return to generate revenue internal to the base, Luke AFB, 100.3 Photovoltaic 10 Signed 30 years $5 million which there’s always bills Ariz. acres solar arrays megawatts that remain unpaid on Robins AFB, Photovoltaic 10 Agreement any installation. We’re 51 acres 20 years TBD Ga. solar arrays megawatts to lease trying to close that gap, perhaps get some of Joint Base those MILCON projects McGuire- that we don’t see being Mixed-use 550 Negotiating Dix- 293 acres TBD TBD funded in the near energy park megawatts lease(s) Lakehurst, future. N.J. — Matthew Bell Eglin AFB, Photovoltaic 30 Negotiating Chief of Portfolio 240 acres TBD TBD Fla. solar arrays megawatts lease Optimization Joint Base McGuire-Dix- Edwards AFB, 3,288 Photovoltaic 175 Negotiating TBD TBD Lakehurst, N.J. Calif. acres solar arrays megawatts lease
Public-public ventures leased by Grand Forks County, into an While the Installations Directorate’s business unmanned aerial system (UAS) business park lines deal heavily in the private sector, there for UAS testing, training and research. The deal, is equal focus on procuring strong public- which is expected to earn the base several public partnerships. A real estate deal currently million dollars and bring thousands of new jobs underway at Grand Forks Air Force Base, North to the region, is scheduled to be signed in FY15. Dakota, converts non-excess base property, Real Estate Development | 11 Post-closing Portfolio Management From handling financial return from EULs and easements, to the post-award management of utilities privatization deals, Installations’ specialized team of portfolio managers oversee the long- term health and sustainability of all business line ventures.
EUL Risk mitigation: to proceed or not to proceed? Early determination on the viability of a Projection Tool will gauge project-specific costs potential project is critical. In an effort to save across all phases of the process and inform the valuable time, resources and manpower, real estate development division’s decision AFCEC’s portfolio management team making process. The tool will also provide developed a tool to provide leadership with leadership with a long-term view, including the financial data necessary to help make the sustainability of the overall Air Force value- a “go” or “no-go” decision earlier in the EUL based transaction portfolio and highlight process and project long-term costs . Once where mitigation is needed. functional in late FY15, the Level of Effort
Nellis AFB, Nevada — Fitness Center Hill AFB, Utah — Office space
Eglin AFB, Florida — Emerald Breeze Hotel
12 | Post-closing Portfolio Management Value-based transactions
Installation Forecasted NPV at closing
Hill AFB, Utah, Commercial EUL $136,122,837
Nellis AFB, Nev., Water Reclamation Facility EUL $35,736,859
Eglin AFB, Fla., Emerald Breeze Hotel EUL $16,307,999
Eglin AFB, Fla., MidBay Bridge Easement $29,438,935
Luke AFB, Ariz., Solar EUL $3,077,915
Eglin AFB, Fla., WRF EUL $6,548,764
Eglin AFB, Fla., NWFR Airport EUL $5,850,893
Joint Base San Antonio, Texas, Commercial EUL $47,113,560
Total portfolio forecasted over lease term $280,197,762
To further mitigate risk for both the Air Force and development communities, program managers identified and evaluated planning efficiencies that were implemented in the FY14 edition of the EUL Playbook and added as lessons learned to the EUL generic documents and overall program business practices. Utilities Privatization post-award management Building sustainable Air Force installations requires an investment in dependable, energy-efficient utility systems. Through AFCEC’s utilities privatization (UP) program, the Air Force obtains safe and reliable utility systems that meet current industry standards by ensuring the right investment at the right time. When AFCEC declared initial operating capability in 2012, the Installations Directorate was charged with oversight of the post-award performance of the UP program’s portfolio. Over the past two years, AFCEC’s portfolio management experts worked to stand up a program that allows monitoring enterprise portfolio performance and identification of systemic or programmatic issues. Initial metrics are planned around four strategic objectives measuring cost and value, reliability, sustainability, and compliance. The $3.6 billion portfolio currently contains 66 utility systems. UP post-award metrics Cost/Value Reliability In addition to creating a centralized repository for UP projects, the team • % Variance to Budget • Outages also made headway in 2014 on an assessment tool that reports on the • Actual Cost vs. GSCE • Performance Trends • Cost Avoidance • Customer Satisfaction four system metrics necessary for the Air Force’s ability to meet mission • Procurement Cost requirements. The assessment tool will evaluate program health without • Oversight Cost financial, contractual or manning dependence in comparison to the traditional post-award site visits model. Program leaders project the UP portfolio management program to reach full operating capability by Sustainability Compliance January 2016. Once fully implemented, the program will allow leaders • Legal • Best Practices • Regulatory • Life-cycle Analysis Air Force-wide complete visibility on overall and system-by-system • Program/Process performance. Requirements
14 | Post-closing Portfolio Management FY14 Housing Privatization Housing Portfolio Management Statistics Airmen are at the heart of the Air Force mission. In order to recruit and retain the best and the brightest, the Air Force must actively work to construct a desirable lifestyle for Airmen and their families. 53,240 Total number of The Air Force’s housing program closed its final housing privatization project in 2014 and initiated homes in the Housing a restructure to privatize the few homes that remain outside the inventory. Privatization inventory ACC Group III 101 new units and a new community center. as of FY14 The Air Force privatized a total of 775 housing At Dyess AFB, 501 minor renovations are units in FY14 for ACC Group III, which includes scheduled for homes conveyed in the deal; Dyess Air Force Base, Texas, and Moody Air the installation will also see updates to a Force Base, Georgia — a total developmental number of amenities, including dog parks, cost of $64.8 million. walking trails and several outdoor sports fields. 1,081 Obsolete units Residents at both installations can expect What began over 20 years ago as the Air a number of enhancements and updated Force’s number one quality of life initiative demolished in FY14 amenities in the coming years. New home is now entering a new phase. For 2015 and construction is planned for Moody AFB with beyond, the Installations Directorate is actively shifting the HP focus from execution to post- closing management, ensuring the continued viability of each 800 development in the years to come. New homes delivered in FY14
U.S. Air Force Staff Sgt. Cleon Windley, 27th Special Operations Support Squadron host aviation resource manager, and his family cut the ribbon at a commemorative move-in ceremony 522 hosted by Balfour Beatty Communities Renovations completed Oct. 16, 2014, at Cannon Air Force Base, in FY14 New Mexico. After the ceremony, the Windley’s received a thorough tour of their new home by members of BBC. Base Realignment and Closure Management The proper and timely return and reuse of realigned or closed bases is essential to the greater Air Force mission. It not only disposes of excess infrastructure and frees up resources, but it also BRAC ensures that the remaining infrastructure is appropriate for a 21st century military. by the numbers In FY14, BRAC completed the Air Force’s 32nd, 33rd and 34th whole base transfers. With the transfers of former Air Force Research Laboratory-Mesa in Arizona, former Griffiss Air Force Base 84,700 in Rome, New York, and former Mather Air Force Base near Sacramento, California, BRAC has Acreage transferred back to achieved 96-percent property transfer back to local communities. local communities — roughly the size of the city of BRAC funds were 100 percent obligated in FY14 with $126.5 million funding 92 projects. The Detroit. funds, which were consolidated from two appropriations into one account, provided increased program efficiency.
4,782 Environmental cleanup is time-consuming, and time is money Sites that meet Office of the The BRAC program’s strategic use Secretary of Defense’s of Performance Based Contracts (OSD’s) response complete requirements has drastically reduced program management costs and accelerated site cleanup. Since FY04, BRAC reduced cleanup costs by $183 million and closed 2020 an additional 222 sites. Year BRAC achieves With 91 percent of BRAC’s environmental 100% property transfer cleanup sites meeting the OSD’s response complete requirement, the Air Force BRAC program has already surpassed 92 Number of OSD’s goal of 90 percent response projects funded in FY14 complete by FY18. In the years beyond that, BRAC projects its response complete The last remaining facilities at the former Griffiss Air Force Base, New York, were officially transferred to the Rome Whole Base rates to hit 98 percent and 99 percent in 34 FY18 and FY21, respectively. community in a ceremony on Jan. 22, 2014. The parcel, Transfers complete known as Building 101, is a hangar and apron area used for aircraft repair and maintenance. 16 | Base Realignment and Closure Management Response to emerging contaminants Beginning FY14, the Air Force launched a multi-base response to evaluate the presence of Perfluorinated Compounds, or PFCs, across Air Force bases. With no federal mandates regarding PFCs and evolving regulatory standards, the emerging contaminant became a Air Force fire fighters participate concern Air Force-wide. in a live-fire training exercise using aqueous film-forming With BRACs extensive environmental cleanup and remediation experience, as well as their foam. The foam has been long-standing working relationship with the Environmental Protection Agency, the Air Force used by the Department of quickly established a three-step evaluation process that included 39 preliminary assessments Defense and the private sector to extinguish petroleum fires and sampling at 21 bases with former fire training areas where aqueous film-forming foam, a since 1970, and is a source of source of PFCs, was used. Results at a few BRAC bases sampled have confirmed the existence perfluorinated compounds, of PFCs at levels above the EPA preliminary health advisory levels. As additional bases are or PFCs, a family of synthetic sampled throughout 2015, BRAC will conduct pathway evaluations for confirmed release sites to chemicals now considered better determine the potential risk to human health and work with regulatory agencies on the ‘emerging contaminants.’ appropriate path forward. PFCs are a class of synthetic fluorinated organic chemicals used in many industrial and consumer products such as nonstick cookware, waterproof fabric, some food packaging and firefighting foam. PFCs are considered emerging contaminants because they do not have toxicity values or cleanup standards; there are currently no studies to determine the impact of PFCs to human health. AFCEC is taking proactive measures to address growing concerns over PFCs. We are working in coordination with state and federal regulators such as the Environmental Protection Agency to identify affected sites and, when necessary, take responsive action.
Base Realignment and Closure Management | 17 2015 and Beyond
some of the best qualified within the Department of Defense. The Air Force will benefit from this higher professional standard through greater real estate competencies and increased flexibility in meeting future requirements brought about by evolving technology. The Installations Directorate will modify individual development plans at all grade levels to better prepare realty specialists for this increased responsibility and review In order to continue providing the enterprise- career development challenges and solutions. wide real estate solutions the Air Force depends, the Installations Directorate identified Looking beyond the real estate profession, a number of key focus areas that require installations’ staff will continue to grow continued growth and improvement starting at a business-minded culture throughout the heart of the directorate — our people. the directorate, focusing on personal development as well as improving business Air Force real estate career development processes, products and services. will advance over the next few years as the directorate sets a higher standard for both The ability to accurately track and allocate professional and career development. The resources is critical for an effective military directorate will encourage senior realty force, which is why improving real estate FIAR specialists (GS-13 and above) to obtain compliance in FY15 is a top priority. Looking Facility Engineering Acquisition Professional beyond accountability, the directorate is Development Coding, raising the bar for also focused on systematically obtaining the the 1170 career program. This will ensure highest and best use of all real estate property senior Air Force realty specialists remain beginning with non-excess parcels. Each
18 | 2015 and Beyond parcel of land will be independently evaluated In a similar fashion, the long-term portfolio by a committee of real estate and business management of real property transactions professionals for its potential uses. Through and utilities privatization will see continued the clearinghouse approach, Installations will improvement in tracking, budgeting and more accurately select projects and land reporting areas to ensure the Air Force uses that bring the highest and best value accurately receives and accounts for all real back to the Air Force. This new process is property improvements. crucial to supporting the Air Force Community Partnership Program as more and more Air Closing Force land is examined for potential joint use to The next year offers many challenges as the Air trim base operating costs. Force stands up the Installation Management Support Center. Regardless of realignments, While a number of programs are earmarked for reorganizations or any other organizational near-term change, others are focused on long- changes that may be on the horizon, our term sustainability. More than 20 years ago, Air commitment remains the same — to provide Force housing was on the short list of programs uninterrupted support to our customers. that desperately required rapid improvement. Through privatization and well-organized While the 2014 Stakeholder’s report outlines our portfolio management processes, the Air Force intended plan for the coming years, the final housing program has vastly improved. In order path is ultimately driven by the needs of the Air to continue providing Airmen with quality Force. With a team of dedicated engineers, family housing, the health of the HP program real estate experts and business professionals must be protected through continued site standing by, the Installations Directorate will visits, regular performance ratings and reviews, continue to develop solutions and deliver and operational and financial oversight. By capabilities necessary for Airmen to Fly, Fight accomplishing this, installations can ensure the and Win. homes remain in great shape throughout the full course of the program and that out-year development plans come to fruition.
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