2011 Issue

61 F ALCon hILL WILL bring revitalized in- frastructure to the west side of the base. In addition to new roads, build- ings and utilities, it will also provide modern facilities for nearly six thousand base employees and improve mission ef- fectiveness by bringing organizations to- gether into one complex. The Falcon Hill project began with the evaluation of the deteriorating base’s 1200 zone facilities that were originally converted into office space from World War II warehouses. It was determined a complete facility reno- vation for the 130 plus buildings would be uneconomical by costing more than $350 million in taxpayer dollars. The recently amended Military Leasing Act provided “enhancements” to allowgreater flexibility in the use of government lease proceeds and expanded the authority to seek in- kind consideration, thus giving rise to the Enhanced Use Lease, or EUL, program. As a result, a EUL project was determined to be themost advantageous method for the government to provide the critical mission facilities for the base personnel currently occupying the 1200 zone area. On August 14, 2008, the Secretary of the Air Force entered into a master lease of property, master development agree- ment, and other related legal agreements with Sunset Ridge Development Partners LLC, as part of the Hill EUL project. These agreements set forth the terms under which Sunset Ridge can lease land par- cels from the government at the base to develop and operate improvements for private sector commercial tenants. The government designated 499 acres at the base as the EUL master project site and plans to add approximately 51 acres at a later date. During the 50 year term of the master lease, Sunset Ridge will have the option, but not the obligation, to lease the land in stages in order to execute a commercial development project. This master lease grants the lessee a limited, non-possessory interest in the master project site sufficient to allow Sunset Ridge to plan later development. Master planning a large development inside of an existing Air Force base was challeng- ing. Outdated utility systems, prior leased areas within the development, large traffic volumes needing to move through the development to gain access to the base, already congested interchanges, and security related stand-off distances were just a few of the issues that needed to be resolved prior to lease signing. Sunset Ridgeor an approved sitedeveloper will obtain a possessory interest in theprop- erty on a parcel by parcel basis by executing a sitedevelopment lease. Each sitedevelop- ment leasewill include a legal descriptionof theparcel anddefine the terms under which Sunset Ridge is authorized to construct and operate improvements serving commercial tenants, in exchange for payment of in-kind rental consideration to the government. In-kind consideration will be derived from cash flow or net operating revenue gener- ated by each commercial facility and will be used to construct needed replacement Air Force facilities. Upgrading Hill Air Force Base Infrastructure Erik Castle, Lynn Gatipon and Mark Holt It’s been several years in the making, but the $1.5 billion privately funded aerospace research park planned for construction on hill Air Force base’s west side is underway. The planning, financing, construction and operation of such facilities will occur in stages, subject to Sunset Ridge’s determi- nation that proceeding with the develop- ment of any particular facility is financially feasible. To finance the construction of facilities for commercial tenants, Sunset Ridge will secure equity investments and debt financing by leveraging the pro- jected cash flows. Sunset Ridge will also develop the in-kind Air Force facilities in accordance with Air Force design requirements. The govern- ment will own and manage the in-kind facilities once they are completed and accepted by the government. This project was structured to respond to the request by the base that through the EULs at no cost to the Air Force, Sunset Ridge would construct approximately 1,500,000 square feet of office space to replace inadequate facilities. The project is expected to pro- vide the Air Force with approximately $152 million in total in-kind construction value at project build out. The initial scope of in-kind construction includes: the relocation and construction of the base’s west gate, construction of a 36,000 square foot security forces squad- Architect rendition of Falcon Hill development entry road.