38 U.S.C. § 8162 — Enhanced-use leases

Page 1369 TITLE 38—VETERANS’ BENEFITS § 8162 property determined to present an opportunity for such lease.’’ ENHANCED USE LEASES Pub. L. 104–110, title II, § 202(c), Feb. 13, 1996, 110 Stat. 771, provided that: ‘‘The Secretary shall submit to Con- gress, not later than March 31, 1997, a report evaluating the operation of the program under subchapter V of chapter 81 of title 38, United States Code.’’ § 8162. Enhanced-use leases (a)(1) The Secretary may in accordance with this subchapter enter into leases with respect to real property that is under the jurisdiction or control of the Secretary. Any such lease under this subchapter may be referred to as an ‘‘en- hanced-use lease’’. The Secretary may dispose of any such property that is leased to another party under this subchapter in accordance with section 8164 of this title. The Secretary may ex- ercise the authority provided by this subchapter notwithstanding section 8122 of this title, sub- chapter II of chapter 5 of title 40, sections 541–555 and 1302 of title 40, or any other provi- sion of law (other than Federal laws relating to environmental and historic preservation) incon- sistent with this section. The applicability of this subchapter to section 421(b) of the Veterans’ Benefits and Services Act of 1988 (Public Law 100–322; 102 Stat. 553) is covered by subsection (c). (2)(A) The Secretary may enter into an en- hanced-use lease on or after the date of the en- actment of this paragraph only if the Secretary determines— (i) that the lease will not be inconsistent with, and will not adversely affect— (I) the mission of the Department; or (II) the operation of facilities, programs, and services of the Department in the area of the leased property; and (ii) that— (I) the lease will enhance the use of the leased property by directly or indirectly benefitting veterans; or (II) the leased property will provide sup- portive housing. (B) The Secretary shall give priority to en- hanced-use leases that, on the leased property— (i) provide supportive housing for veterans; (ii) provide direct services or benefits tar- geted to veterans; or (iii) provide services or benefits that indi- rectly support veterans. (3) The provisions of sections 3141–3144, 3146, and 3147 of title 40 shall not, by reason of this section, become inapplicable to property that is leased to another party under an enhanced-use lease. (4) A property that is leased to another party under an enhanced-use lease may not be consid- ered to be unutilized or underutilized for pur- poses of section 501 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11411). (b)(1) If the Secretary has determined that a property should be leased to another party through an enhanced-use lease, the Secretary shall, at the Secretary’s discretion, select the party with whom the lease will be entered into using such selection procedures as the Secretary considers appropriate. (2) The term of an enhanced-use lease may not exceed 99 years. (3)(A) For any enhanced-use lease entered into by the Secretary, the lease consideration pro- vided to the Secretary shall consist solely of cash at fair value as determined by the Sec- retary. (B) The Secretary shall receive no other type of consideration for an enhanced-use lease be- sides cash. (C) The Secretary may enter into an en- hanced-use lease without receiving consider- ation. (D) The Secretary may not waive or postpone the obligation of a lessee to pay any consider- ation under an enhanced-use lease, including monthly rent. (4) The terms of an enhanced-use lease may provide for the Secretary to use minor construc- tion funds for capital contribution payments. (5) The terms of an enhanced-use lease may not provide for any acquisition, contract, dem- onstration, exchange, grant, incentive, procure- ment, sale, other transaction authority, service agreement, use agreement, lease, or lease-back by the Secretary or Federal Government. (6) The Office of Management and Budget shall review each enhanced-use lease before the lease goes into effect to determine whether the lease is in compliance with paragraph (5). (c) The entering into an enhanced-use lease covering any land or improvement described in section 421(b)(2) of the Veterans’ Benefits and Services Act of 1988 (Public Law 100–322; 102 Stat. 553) or section 224(a) of the Military Con- struction and Veterans Affairs and Related Agencies Appropriations Act, 2008, other than an enhanced-use lease under the Los Angeles Home- less Veterans Leasing Act of 2016, shall be con- sidered to be prohibited by such sections unless specifically authorized by law. (d)(1) Nothing in this subchapter authorizes the Secretary to enter into an enhanced-use lease that provides for, is contingent upon, or otherwise authorizes the Federal Government to guarantee a loan made by a third party to a les- see for purposes of the enhanced-use lease. (2) Nothing in this subchapter shall be con- strued to abrogate or constitute a waiver of the sovereign immunity of the United States with respect to any loan, financing, or other financial agreement entered into by the lessee and a third party relating to an enhanced-use lease. (Added Pub. L. 102–86, title IV, § 401(a), Aug. 14, 1991, 105 Stat. 417; amended Pub. L. 106–117, title II, § 208(a), (b), Nov. 30, 1999, 113 Stat. 1567; Pub. L. 106–400, § 2, Oct. 30, 2000, 114 Stat. 1675; Pub. L. 107–95, § 10(b), Dec. 21, 2001, 115 Stat. 920; Pub. L. 107–217, § 3(j)(5), Aug. 21, 2002, 116 Stat. 1300; Pub. L. 108–178, § 4(i)(1), Dec. 15, 2003, 117 Stat. 2642; Pub. L. 110–161, div. I, title II, § 224(c), Dec. 26, 2007, 121 Stat. 2272; Pub. L. 112—154, title II, § 211(b)(1), (c)(1), (d), Aug. 6, 2012, 126 Stat. 1180, 1181; Pub. L. 114–58, title VI, § 601(25), Sept. 30, 2015, 129 Stat. 539; Pub. L. 114–226, §§ 2(m)(2)— 3(b), Sept. 29, 2016, 130 Stat. 930; Pub. L. 115–182, title II, § 212, June 6, 2018, 132 Stat. 1461; Pub. L. 117–168, title VII, § 705(a), (b), Aug. 10, 2022, 136 Stat. 1799, 1800.) Page 1370 TITLE 38—VETERANS’ BENEFITS § 8162 Editorial Notes REFERENCES IN TEXT Section 421(b) of the Veterans’ Benefits and Services Act of 1988, referred to in subsecs. (a)(1) and (c), is sec- tion 421(b) of Pub. L. 100–322, title IV, May 20, 1988, 102 Stat. 553, which is not classified to the Code. The date of the enactment of this paragraph, referred to in subsec. (a)(2)(A), is the date of enactment of Pub. L. 117–168, which was approved Aug. 10, 2022. Section 224(a) of the Military Construction and Vet- erans Affairs and Related Agencies Appropriations Act, 2008, referred to in subsec. (c), is section 224(a) of title II of div. I of Pub. L. 110–161, Dec. 26, 2007, 121 Stat. 2272, which is not classified to the Code. No act with the title ‘‘Los Angeles Homeless Vet- erans Leasing Act of 2016’’, referred to in subsec. (c), has been enacted. However, a bill, H.R. 3484, entitled ‘‘Los Angeles Homeless Veterans Leasing Act of 2016’’, was introduced in the House of Representatives on Sept. 10, 2015, during the 114th Congress. That bill con- tained provisions similar to section 2 of Pub. L. 114–226, Sept. 29, 2016, 130 Stat. 926, known as the ‘‘West Los An- geles Leasing Act of 2016’’. Section 2(m)(2) of Pub. L. 114–226 amended this section; the remainder of section 2 of Pub. L. 114–226 is not classified to the Code. AMENDMENTS 2022—Subsec. (a)(2). Pub. L. 117–168, § 705(a), amended par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘The Secretary may enter into an enhanced- use lease only for the provision of supportive housing and if the lease is not inconsistent with and will not adversely affect the mission of the Department.’’ Subsec. (b)(2). Pub. L. 117–168, § 705(b), substituted ‘‘99 years’’ for ‘‘75 years’’. 2018—Subsec. (b)(6). Pub. L. 115–182, which directed the general amendment of ‘‘section 8162(b)(6)’’ without specifying the Code title to be amended, was executed by generally amending par. (6) of subsec. (b) of this sec- tion, to reflect the probable intent of Congress. Prior to amendment, par. (6) read as follows: ‘‘The Secretary may not enter into an enhanced-use lease without cer- tification in advance in writing by the Director of the Office of Management and Budget that such lease com- plies with the requirements of this subchapter.’’ 2016—Subsec. (b)(3)(D). Pub. L. 114–226, § 3(a), added subpar. (D). Subsec. (c). Pub. L. 114–226, § 2(m)(2), inserted ‘‘, other than an enhanced-use lease under the Los Angeles Homeless Veterans Leasing Act of 2016,’’ before ‘‘shall be considered’’. Subsec. (d). Pub. L. 114–226, § 3(b), added subsec. (d). 2015—Subsec. (a)(2). Pub. L. 114–58 inserted ‘‘if’’ after ‘‘housing and’’. 2012—Subsec. (a)(2). Pub. L. 112–154, § 211(b)(1), amend- ed par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘The Secretary may enter into an enhanced- use lease only if— ‘‘(A) the Secretary determines that— ‘‘(i) at least part of the use of the property under the lease will be to provide appropriate space for an activity contributing to the mission of the Depart- ment; ‘‘(ii) the lease will not be inconsistent with and will not adversely affect the mission of the Depart- ment; and ‘‘(iii) the lease will enhance the use of the prop- erty; or ‘‘(B) the Secretary determines that the implemen- tation of a business plan proposed by the Under Sec- retary for Health for applying the consideration under such a lease to the provision of medical care and services would result in a demonstrable improve- ment of services to eligible veterans in the geo- graphic service-delivery area within which the prop- erty is located.’’ Subsec. (b)(1). Pub. L. 112–154, § 211(c)(1)(A), sub- stituted ‘‘If the Secretary has determined that a prop- erty should be leased to another party through an en- hanced-use lease, the Secretary shall, at the Sec- retary’s discretion, select the party with whom the lease will be entered into using such selection proce- dures as the Secretary considers appropriate.’’ for sub- pars. (A) and (B) which read as follows: ‘‘(A) If the Secretary has determined that a property should be leased to another party through an enhanced- use lease, the Secretary shall select the party with whom the lease will be entered into using selection pro- cedures determined by the Secretary that ensure the integrity of the selection process. ‘‘(B) In the case of a property that the Secretary de- termines is appropriate for use as a facility to furnish services to homeless veterans under chapter 20 of this title, the Secretary may enter into an enhanced-use lease with a provider of homeless services without re- gard to the selection procedures required under sub- paragraph (A).’’ Subsec. (b)(3). Pub. L. 112–154, § 211(c)(1)(B), amended par. (3) generally. Prior to amendment, par. (3) read as follows: ‘‘(3)(A) Each enhanced-use lease shall be for fair con- sideration, as determined by the Secretary. Consider- ation under such a lease may be provided in whole or in part through consideration in-kind. ‘‘(B) Consideration in-kind may include provision of goods or services of benefit to the Department, includ- ing construction, repair, remodeling, or other physical improvements of Department facilities, maintenance of Department facilities, or the provision of office, stor- age, or other usable space.’’ Subsec. (b)(4). Pub. L. 112–154, § 211(c)(1)(C), sub- stituted ‘‘Secretary to use minor’’ for ‘‘Secretary to— ‘‘(A) obtain facilities, space, or services on the leased property; and ‘‘(B) use minor’’. Subsec. (b)(5), (6). Pub. L. 112–154, § 211(c)(1)(D), added pars. (5) and (6). Subsec. (c). Pub. L. 112–154, § 211(d), struck out par. (1) designation, substituted ‘‘The’’ for ‘‘Subject to para- graph (2), the’’ and struck out par. (2) which provided conditions under which entering into enhanced-use lease covering any land or improvement described in section 421(b)(2) of the Veterans’ Benefits and Services Act of 1988 (Pub. L. 100–322) would not be considered prohibited under such section. 2007—Subsec. (c)(1). Pub. L. 110–161 inserted ‘‘or sec- tion 224(a) of the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2008’’ after ‘‘section 421(b)(2) of the Veterans’ Benefits and Services Act of 1988 (Public Law 100–322; 102 Stat. 553)’’ and substituted ‘‘such sections’’ for ‘‘that section’’. 2003—Subsec. (a)(3). Pub. L. 108–178 struck out comma after ‘‘of title 40’’. 2002—Subsec. (a)(1). Pub. L. 107–217, § 3(j)(5)(A), sub- stituted ‘‘subchapter II of chapter 5 of title 40, sections 541–555 and 1302 of title 40’’ for ‘‘section 321 of the Act of June 30, 1932 (40 U.S.C. 303b), sections 202 and 203 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 483, 484)’’. Subsec. (a)(3). Pub. L. 107–217, § 3(j)(5)(B), substituted ‘‘sections 3141–3144, 3146, and 3147 of title 40’’ for ‘‘the Act of March 3, 1931 (40 U.S.C. 276a et seq.)’’. 2001—Subsec. (b)(1). Pub. L. 107–95 designated existing provisions as subpar. (A) and added subpar. (B). 2000—Subsec. (a)(4). Pub. L. 106–400 substituted ‘‘McKinney-Vento Homeless Assistance Act’’ for ‘‘Stewart B. McKinney Homeless Assistance Act’’. 1999—Subsec. (a)(2). Pub. L. 106–117, § 208(a), inserted subpar. (A) designation before ‘‘the Secretary’’, redes- ignated subpars. (A) to (C) as cls. (i) to (iii), respec- tively, and realigned the margins, substituted ‘‘; or’’ for period at end of cl. (iii), and added subpar. (B). Subsec. (b)(2). Pub. L. 106–117, § 208(b)(1), substituted ‘‘may not exceed 75 years.’’ for ‘‘may not exceed—’’ ‘‘(A) 35 years, in the case of a lease involving the construction of a new building or the substantial re- habilitation of an existing building, as determined by the Secretary; or Page 1371 TITLE 38—VETERANS’ BENEFITS § 8163 ‘‘(B) 20 years, in the case of a lease not described in subparagraph (A).’’ Subsec. (b)(4). Pub. L. 106–117, § 208(b)(2), added par. (4) and struck out former par. (4) which read as follows: ‘‘Any payment by the Secretary for the use of space or services by the Department on property that has been leased under this subchapter may only be made from funds appropriated to the Department for the activity that uses the space or services. No other such payment may be made by the Secretary to a lessee under an en- hanced-use lease unless the authority to make the pay- ment is provided in advance in an appropriation Act.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2012 AMENDMENT Pub. L. 112—154, title II, § 211(b)(2), Aug. 6, 2012, 126 Stat. 1180, provided that: ‘‘(A) IN GENERAL.—Paragraph (2) of section 8162(a) of title 38, United States Code, as amended by paragraph (1), shall take effect on January 1, 2012, and shall apply with respect to enhanced-use leases entered into on or after such date. ‘‘(B) PREVIOUS LEASES.—Any enhanced-use lease that the Secretary has entered into prior to the date de- scribed in subparagraph (A) shall be subject to the pro- visions of subchapter V of chapter 81 of such title, as in effect on the day before the date of the enactment of this Act [Aug. 6, 2012].’’ Pub. L. 112—154, title II, § 211(c)(2), Aug. 6, 2012, 126 Stat. 1181, provided that: ‘‘Paragraph (3) of section 8162(b), as amended by paragraph (1)(B) of this sub- section, shall take effect on January 1, 2012, and shall apply with respect to enhanced-use leases entered into on or after such date.’’ EFFECTIVE DATE OF 2007 AMENDMENT Pub. L. 110–161, div. I, title II, § 224(d), Dec. 26, 2007, 121 Stat. 2272, provided that: ‘‘This section [amending this section], including the amendment made by this section, shall apply with respect to fiscal year 2008 and each fiscal year thereafter.’’ EFFECTIVE DATE OF 2003 AMENDMENT Amendment by Pub. L. 108–178 effective Aug. 21, 2002, see section 5 of Pub. L. 108–178, set out as a note under section 5334 of Title 5, Government Organization and Employees. EFFECTIVE DATE OF 2001 AMENDMENT Pub. L. 107–95, § 10(c), Dec. 21, 2001, 115 Stat. 920, pro- vided that: ‘‘The amendments made by subsection (b) [amending this section] shall apply to leases entered into on or after the date of the enactment of this Act [Dec. 21, 2001].’’ § 8163. Hearing and notice requirements regard- ing proposed leases (a) If the Secretary proposes to enter into an enhanced-use lease with respect to certain prop- erty, the Secretary shall conduct a public hear- ing before entering into the lease. The hearing shall be conducted in the community in which the property is located. At the hearing, the Sec- retary shall receive the views of veterans service organizations and other interested parties re- garding the proposed lease of the property and the possible effects of the uses to be made of the property under a lease of the general character then contemplated. The possible effects to be ad- dressed at the hearing shall include effects on— (1) local commerce and other aspects of the local community; (2) programs administered by the Depart- ment; and (3) services to veterans in the community. (b) Before conducting such a hearing, the Sec- retary shall provide reasonable notice to the congressional veterans’ affairs committees and to the public of the proposed lease and of the hearing. The notice shall include the following: (1) The time and place of the hearing. (2) Identification of the property proposed to be leased. (3) A description of the proposed uses of the property under the lease. (4) A description of how the uses to be made of the property under a lease of the general character then contemplated— (A) would— (i) contribute in a cost-effective manner to the mission of the Department; (ii) not be inconsistent with the mission of the Department; (iii) not adversely affect the mission of the Department; and (iv) affect services to veterans; or (B) would result in a demonstrable im- provement of services to eligible veterans in the geographic service-delivery area within which the property is located. (5) A description of how those uses would af- fect services to veterans. (c)(1) If after a hearing under subsection (a) the Secretary intends to enter into an enhanced- use lease of the property involved, the Secretary shall notify the congressional veterans’ affairs committees, the Committees on Appropriations of the House of Representatives and the Senate, and the Committees on the Budget of the House of Representatives and the Senate of the Sec- retary’s intention to enter into such lease, shall publish a notice of such intention in the Federal Register, and shall submit to the congressional veterans’ affairs committees a copy of the pro- posed lease. With respect to a major enhanced- use lease, upon the request of the congressional veterans’ affairs committees, not later than 30 days after the date of such notice, the Secretary shall testify before the committees on the major enhanced-use lease, including with respect to the status of the lease, the cost, and the plans to carry out the activities under the lease. The Secretary may not delegate such testifying below the level of the head of the Office of Asset Enterprise Management of the Department or any successor to such office. (2) The Secretary may not enter into an en- hanced use lease until the end of the 45-day pe- riod beginning on the date of the submission of notice under paragraph (1). (3) Each notice under paragraph (1) shall in- clude the following: (A) An identification of the property in- volved. (B) An explanation of the background of, ra- tionale for, and economic factors in support of, the proposed lease. (C) A summary of the views expressed by in- terested parties at the public hearing con- ducted in connection with the proposed des- ignation, together with a summary of the Sec- retary’s evaluation of those views. (D) A description of the provisions of the proposed lease. (E) A description of how the proposed lease—