Success at Falcon Hill

An Enhanced Use Lease project capitalizing on 550-acres of underutilized real estate at Hill AFB exemplifies how public-private partnerships can deliver a proverbial “win-win” for the federal government and the local community.

  

By Mark Davis, M.SAME 

  


 Falcon Hill

With the downturn in the economy, interest by government contractors to expand or relocate facilities waned. However, a recovering economy is regenerating interest in development projects—and this new interest is benefiting parties on both sides of the installation fence line.

This should be viewed positively, as in some areas of the United States, military installation real estate is underutilized. Many of these same bases are hampered by facilities that are decades out of date and require extraordinary expense for ongoing maintenance and operations.

A solution that addresses both issues is the Enhanced Use Lease (EUL). In an EUL arrangement the government retains ownership of the land while entering into a long-term land lease with a private developer. In turn, the developer uses payment in-kind consideration instead of appropriated funds to pay for replacing deteriorating buildings and infrastructure, saving tax dollars. EUL developments, in many cases, move the base’s perimeter fence inward. This allows the creation of on-base and off-base facilities that are all part of the government-owned property.

 

SHARED BENEFITS

Falcon Hill National Aerospace Research Park at Hill AFB, Utah, is a 550-acre master plan development between the U.S. Air Force and Sunset Ridge Development Partners, a private developer. The public-private partnership exemplifies the potential for shared benefits through EULs.

The Falcon Hill development began with the signing of an EUL agreement in 2008. The Air Force had identified approximately 550-acres of underutilized land that could be leveraged to develop an aerospace research and technology park to benefit both the community and the base. By definition, underutilized means that the land is not considered excess. Because the service may again need the property for future needs, it was incumbent for any development to be synergistic with the base’s needs.

The first portion of the Falcon Hill project was a new base entrance control facility on the west side, along with a new road from the freeway to the entrance. A 150,000-ft² office building then was designed for government contractors working inside the fence, providing greater co-worker accessibility between government and private sector staff. A new security forces facility also was designed and built, which includes a police station, special investigations, fire dispatch station and emergency operations center. The next building (75,000-ft²) being constructed for lease is nearly complete as well as a 10,000-ft² retail facility outside the fence that will be accessible to the public.

 

INSIGHTS TO SUCCESS

The joint project at Falcon Hill started with a clear vision. The team worked very closely with public and private partners to analyze and mitigate everyone's risks and address respective concerns in a controlled and deliberate fashion from contracting through leasing.

A hallmark of successful EULs is the diversity of their leadership and the Falcon Hill project is no different. Planners and designers from federal offices in Washington D.C., and command centers in Texas and at Hill AFB have come together with individual groups that are involved on base—as well as defense contractors that are coming in from outside—to work out all the language of the leases, contracts, agreements and subleases.

The State of Utah and the surrounding communities also have been integral. They have helped to guide the design strategies for the facilities and to assist the developers in meeting and conversing with potential tenants. It is expected that Phase One of the project will infuse $500 million into the Utah economy.

A EUL partnership is dependent on a thoughtful and creative approach to leasing and contracting. The traditional governmental delivery method, in which a project must be defined, funded and approved through Congress, takes years and is not responsive to a market-based economy. While it was a challenge to overcome this method with Falcon Hill, which sometimes threatened to scuttle the work, the project ultimately has been successful thus far by interweaving private industry market pressures with the Air Force’s stewardship of public sector needs.

 

DRIVEN BY DEMAND

The development team involved in Falcon Hill started with a vision for what was to happen outside the fence: office buildings, flex buildings (incorporating office and warehouse), and amenity facilities (hotels, retail and food). The team quickly realized more opportunities were possible than had been anticipated in the original contract.

These ideas included a pedestrian path from on-base parking to off-base amenities like shopping and food. Why? Because, given today’s energy conservation and sustainability ethos, it makes sense to integrate on-base and off-base facilities by creating a more walkable community.

Another key has been flexibility. Local installation stakeholders were open to new design concepts that did not necessarily follow base standard architecture. As a branding element for the EUL, it was important to maintain continuity between all the building components that comprised the development project.

 


Much land on military installations goes underutilized because of the way bases were originally laid out and developed. EULs provide a stimulus opportunity for local economies to be able to leverage that underutilized land to build commerce.


 

ADAPTIVE PLANNING

The various stakeholders have had to remain flexible to respond to change and a challenging economic environment. Even with a signed long-term land lease, as the development of the Falcon Hill moves forward, changes will be necessary to meet emerging requirements.

To be sure, there can be inherent skepticism on the government's side when it is dealing with private industry groups. However, the continued success of EUL projects depends on individual performance and a culture of meeting the needs of all the parties involved in the partnership. This success deepens the collective trust.

The goal is to make Falcon Hill successful enough to prove the validity of the EUL program and provide the opportunity for this type of a delivery system to be adopted at other bases with underutilized land. The Falcon Hill EUL has been vetted by so many people at so many levels that it should stand as a template for future efforts.

 

ENHANCING ASSETS

Much land on military installations goes underutilized because of the way bases were originally laid out and developed. EULs provide a stimulus opportunity for local economies to be able to leverage that underutilized land to build commerce.

The government benefits from the EUL because it receives in-kind replacement of aging facilities. These older buildings are highly inefficient in terms of sustainability, energy use and space planning. With updated facilities, there is a significant reduction in the ongoing cost to the government for energy and maintenance expenses. There may even be opportunities for the government to develop not only individual buildings but entire new campuses in a strategic and energy-efficient way.

Development projects, to be successful, must be driven by the needs of the market. So too for EUL projects, and all public-private initiatives, there must be a mutual benefit for those inside and outside the fence line. There must be a strong incentive to get started—and a strong vision to stay the course.

 


 

Mark Davis, M.SAME, is Principal, Architectural Nexus; 801-924-5000, or This email address is being protected from spambots. You need JavaScript enabled to view it..