1PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION

ASMCNational Capital Region

Professional Development Institute

10 March 2016

1

2PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION

Innovation Insight Sessions: 1040 - 1150

• Mr. Michael Allen, Beacon Global Strategies

• Mr. Scott Forrest, USN

• Ms. Lauren Leo, NASA

• Mr. Mark Ryland, Amazon Web Services

• Mr Phil Searle, Founder, Chazey Partners

• Brig.Gen. Greg Touhill, USAF(Ret), DHS

• Mr. Leif Ulstrup, PrimeHook Technology

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Innovation Insight Sessions

Department of the Navy (DoN)

Public-Private Ventures (PPV)

Program Overview

10 March 2016

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DoN Housing Public - Private Ventures

• Where We Were

• Transformation

• DoN Objectives

• DoN Business Approach

• EconomicsGreat Lakes, IL

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Housing - Old, not adequately maintained, needed extensive renovating or replacement.

Where We Were

Needed - Innovation or Transformation

MILCON - Cost over $20B and 30 to 40 years

MCAS Cherry Point, NC

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• DoN PPV pilot program authorized in 1995

– Limited partnerships

– Private land only

• Military Housing Privatization Initiative (MHPI) authorized in 1996

– Investments

– Conveyance or lease of existing property and facilities

– Differential lease payments

– Direct loans and loan guarantees

– Unit size and type (community standards)

– Ancillary supporting facilities

Transformation

Quantico, VA

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DoN Housing PPV Objectives

• Safe, high-quality and affordable

• Leverage DoN dollars

• Maximize Operations & Maintenance

(O&M) cost avoidance

• Protect value of DoN assets

• Minimize DoN liability

• Participate in key business decisions

• Maintain flexibility

Yuma, Arizona

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DoN Business Approach

• Partnerships

• Investments

• No guarantees

• Outlease of land

• Revitalize existing inventory and address housing deficit

San Diego Unaccompanied Housing

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Asset

Management

Company

Property

Management

Company

Typical Business Model

DoN

• Contributes Equity

• Contributes Land & Facilities

via Ground Lease

DoN

(Member)

Private Entity

(Managing Member)

PURPOSE

Finance, Design, Construct, Acquire, Own,

Lease, Convey, Operate, Manage, Maintain,

and/or Renovate Housing for Service Members

PROJECT HOUSING, LLC

OPERATING AGREEMENT

No longer

Government

Housing

Private Entity

• Establishes the Business Entity – LLC

• Secures 1st Mortgage Debt

• Contributes Equity

Design/Build

Contract

Consulting

Architect

Contract

Asset

Management

Agreement

Property

Management

Agreement

Independent

Architect/Engineer

Design/Build

Contractor

No longer

Government

Contracting

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Economic Anatomy of a PPV

Rent NOI

Loan$

DeveloperEquity

Project CostTDC

GovernmentContribution

•Improvements•Land via lease•Real Property•Loan•Cash

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DoN Role in PPV

• DoN does not “acquire” housing

– Invests in private business entity, a Limited Liability Company

(LLC) which owns and operates project

– DoN is a minority partner with limited liability and specific rights

• Managing Member responsible for day-to-day operations

• DoN consent required on key business decisions– Refinancing or taking out additional debt

– Disposition of Company assets

– Changes in the distribution of cash flow

– Replacement of the Property Manager

– Changes in project ownership

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PPV – Success

• privatized ~62,000 family housing units and

~6,600 unaccompanied spaces

• 73 Installations served

• 337 Neighborhoods

• MILCON would have cost ~$9.9B

• DoN cash investment ~$1.4B

• Lifecycle savings 15%, $4.9B

• Removed DoN from non-core function

Newport, Rhode Island

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PPV Locations

PPV Projects

1) Kingsville Townhomes, LP (K1)

2) Kingsville II, Family Housing Ltd, LP (K2)

3) De Luz Housing, LLC (CP1)

4) Gateway Trident, LLC (E2)

5) San Diego Family Housing, LLC (SDFH)

6) New Orleans Navy Housing, LLC (NO)

7) South Texas Military Housing, LP (ST)

8) Camp Pendleton & Quantico Housing, LLC (CPQH)

9) Ohana Military Communities LLC (HI)

10) Northeast Housing, LLC (NE)

11) Pacific Northwest Communities, LLC (NW)

12) Mid-Atlantic Military Family Communities LLC (MA)

13) Atlantic Marine Corps Communities, LLC (CLCPS)

14) Midwest Family Housing, LLC (MW)

15) Southeast Housing LLC (SE)

16) Mid-Atlantic San Diego LLC (MASD)

17) Hampton Roads PPV, LLC (HRUH)

18) Pacific Beacon LLC (SDUH)

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13

10

15

12

5

17

1515

15

1515

1515

6

8

15

21

14

14

14

8

4

11

5

55

8

8

55

7

8 18

5

Hawaii

Guam

9

9

Navy Family Marine Corps Family Joint (Navy & Marine Corps) Family Navy UHP

5313

1312

128

13

10 10

10

10

1010

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14Business Sensitive Data as of Dec 2015

Resident Satisfaction

Improved resident satisfaction > 20%

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Halsey Terrace - Before Halsey Terrace - After

Pearl Harbor, HI

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Twentynine Palms

Marine Palms - Before Marine Palms - After

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Thomason Park - Before Thomason Park - After

Quantico, VA

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Kaneohe, HI

Mokapu Court - Before Mokapu Court - After

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MCAS Cherry Point, NC

Slocum Village - Before Slocum Village - After

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Fun &

Lessons Learned

• Congress, CBO & OMB

• Other Stakeholders

• Marketing & Partnering

• Source Selection

• Templates

• Regional/Diverse projects

New Orleans, LA

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Opportunities

And

New Initiatives

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Out-Lease / Enhanced Use Lease

Out-Lease authority, 10 USC 2667, allows lease of underutilized real property for cash or In-kind consideration

• Objectives

–Leverage under-utilized property

–Improve Quality of Life or other base requirements

–Avoid maintenance costs

–Support Navy footprint reduction goals

Moanalua, HI – $16M In-Kind; Part of Commercial/Retail Redevelopment

Port Hueneme, CA – $5M In-Kind/yr for Industrial Lease

Ford Island, HI – $84M Infrastructure Lease

Broadway Complex, CA - $190M In-Kind; Part of $1.2B Development

Kalaeloa, HI – $16M Infrastructure Lease

New London, CT – $57K/yr for Energy EUL

Moanalua

Project Won

ADC’s Base

Redevelopment

Innovation

Award

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Out-Lease / EUL After

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Other Tools & Authorities

Key instruments available include:

•Memorandums of Understanding – 10 U.S.C. 2572

•Memorandums of Agreement – 10 U.S.C. 18235, 18240,

•Mutual Aid Agreements – 42 U.S.C. 1856a

•Cooperative Agreements – 10 U.S.C. 2474, 2684a, 2697

• Intergovernmental Support Agreements – 10 U.S.C. 2679

•Utility Privatization Authority – 10 U.S.C. 2688

•Energy Savings Contracts – 10 U.S.C. 2913

•Sale of electricity from alternate energy and cogeneration

production facilities – 10 U.S.C. 2916

•Education Partnerships – 10 U.S.C. 2194

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Questions?

26PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION26

Luncheon: Atrium Hall

Luncheon Keynote:

Lieutenant General Anthony R. Ierardi, USA

Director, Force Structure, Resources & Assessment, J8 The Joint Staff

Note: Please be seated by 12:00

27PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION27

Luncheon: Atrium Hall

ASMC National Update: Mr. Al Runnels, USA, CDFM, CGFMASMC Executive Director

28PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION

Speed Mentoring

• Government only, Pre-registration

required

• Meridian DE at 1700

• 1.5 CPE Credits

ASMC 2015 Annual Survey

o Invitation Only

o Horizon at 1700 [Concourse Level]

o Host: Mr. Al Runnels, USA, CDFM, CGFMASMC Executive Director

o Mr. Mark Easton, Deputy Chief Financial Officer, Department of Defense

o Mr. Doug Bennett, Principal Deputy, Assistant Secretary of the Air Force, Department of the Air Force

o Mr. Joe Marshall, Principal Deputy, Assistant Secretary of the Navy, Department of the Navy

o Mr. Craig Bennett, Deputy Chief Financial Officer, United States Coast Guard

o VADM Louis Crenshaw, Ret, USN, Moderator

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Post NCR PDI Events

29PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION

With Gratitude to our 2016 Corporate Sponsors