Guiding Principles on Disposition of VA Capital Assets

NCHV observes that decision-making regarding the disposition of VA capital assets has not always been guided by an assessment of what is truly in the best interest of veterans, but rather by the VA's desire to generate maximum cost savings or revenues. (These interests should be one and the same, but somehow are not universally so.) We are aware of circumstances where organizations seeking to acquire VA capital assets for housing and services projects of utmost criticality for homeless veterans and other needy populations have lost to developers proposing commercial, profit-making ventures. While disposition of capital assets to these entities is undoubtedly more lucrative for the federal government, the result does not produce direct benefits to veterans most in need or ensure that our nation's public assets are redeployed for the greatest social good.

The Department of Veterans Affairs lacks a true "veteran interest" focus in the overall approach that guides its reduction of vacant space. This is evident in Chapter 12 of the DNCP (Reducing Vacant Space), which describes the vacant space component of VA's capital asset strategy as "designed to reduce excess space and conserve resources by lowering maintenance and operational costs of infrastructure not needed by VHA to meet its various missions." (Chapter 12, p. 1) Nowhere in that statement, or elsewhere in Chapter 12, does the VA identify any other desired outcomes from asset disposition other than cost savings. Certainly the "veteran interest" is better served when purposes beyond fund generation are also taken into account.

We urge the CARES Commission to request the Secretary of Veterans Affairs to issue a Department-wide directive, either within the final national CARES plan or independently, affirming that it is the public policy of the Department of Veterans Affairs that disposition of capital assets shall be made with the foremost purpose of expanding direct services to veterans. Also, the directive should clarify that asset disposition shall not be used as a means for the VA to supplant services it currently provides. Further, the directive should articulate that surplus, excess, unutilized or underutilized VA properties shall first be made available on a no-cost or lowest-cost basis to nonprofit or public organizations responding to the human needs of veterans (and low-income persons in general secondarily), with a primary preference for organizations experienced in serving homeless veterans.

Homeless Veteran Services

The VA estimates that more than 299,000 veterans are homeless on any given night; more than 500,000 experience homelessness over the course of a year. Conservatively then, one out of every four homeless adult males who is sleeping in a doorway, alley, or box in our urban and rural communities has put on a uniform and served our country. The VA also reports that its homeless treatment and community-based assistance network serves more than 100,000 veterans annually. With an estimated 500,000 veterans homeless at some time during a year and the VA reaching only 20 percent of those in need, 400,000 veterans remain without services from the department responsible for supporting them. In the meantime, numerous VA properties sit vacant or underutilized.

NCHV had hoped that the CARES process would have been the moment when homeless veteran needs could be finally aligned with VA property availability, thus making a major stride toward ending homelessness for our nation's veterans. Sadly, the DNCP fails to articulate a coherent national plan to deploy its capital assets to maximize housing and supportive services opportunities for homeless veterans. We note that the Secretary's Advisory Committee on Homeless Veterans shares this concern. In its first annual report to the Secretary, the Committee, in commenting on CARES, stated that "there has been little information shown that indicates that the potential realignment of assets will enhance services for homeless veterans." (p. 24)

The DNCP recognizes that homelessness is a special disability program with congressionally-mandated capacity requirements (Chapter 7, Enhancing Access to Special Disability Programs). VA did instruct the VISNs to assess the impact of their planning initiatives on mandated funding levels for homelessness programs, as well as other special disability programs. Regrettably, the Department did not go further and challenge itself to use the CARES process as the opportunity to provide an aggressive response to homelessness among veterans. Nor did it articulate standard criteria for the VISNs to use in assessing the suitability of properties for homeless uses. The end result of this absence of both vigor and direction is a set of VISN market plans that merely dabbles with a shelter or supportive housing proposal here and there, and completely silent on homelessness altogether in the draft national plan.

We urge the CARES Commission to recommend that the Secretary of Veterans Affairs establish as a Departmental goal to establish at least 50,000 additional supportive housing units for homeless veterans on VA property and to instruct VISNs to develop concrete action plans for reaching this goal. If time does not permit completion of such action plans prior to publication of the final national CARES plan, then such actions must take place within the first round of strategic planning subsequent to issuance of the final plan.

Recuperative, Rehabilitative and Extended Care Services

The VA has proceeded with its capital asset realignment process at a brisk pace, despite the lack of agreed-upon methods of projecting future needs in key areas such as mental health, addiction treatment, psychosocial rehabilitation, supportive housing, and extended care. A complete and accurate assessment of the future needs of and plan for VA capital assets cannot be concluded without including these major service areas. Yet the VA fully intends to march onward with CARES implementation as it stands and address these "other" service areas in subsequent strategic planning.

Likewise we were alarmed to see that VISN market plans propose closure, consolidation or relocation of several domiciliary or psychiatric facilities, despite the absence of market data to support such decisions and without regard to Congressional mandates that the VA maintain or expand capacity in these and other specialized service areas.

As the VA continues to develop market projections and planning initiatives in these specialized service areas, it should be especially attentive to the directions that Congress has provided regarding maintenance and expansion of capacity, including P.L. 104-262 regarding mental health and other special disability programs and P.L. 107-95 regarding domiciliary services.

We urge the Commission to remind the Secretary of Veterans Affairs that as the VA continues its asset planning through the VA's overall strategic planning process and incorporates the projected needs for specialized care services into such plans, it must adhere to Congressional directives regarding maintenance or expansion of capacity in specialized service areas.

McKinney-Vento Title V Program

About the McKinney-Vento Title V Program

Title V of the McKinney-Vento Homeless Assistance Act makes vacant federal properties available at no cost to nonprofit organizations, including state and local government agencies, for use as facilities to assist people experiencing homelessness. Eligible uses include emergency shelter, child care, job training, transitional housing, food and clothing distribution, mental health services, and addiction treatment. Properties may be made available by lease or deed.

Under Title V, The U.S. Department of Housing and Urban Development (HUD) is charged with screening available underutilized, unutilized, excess, and surplus real properties and making a determination as to whether the properties are suitable for homeless uses. HUD accomplishes such screening via canvas of each federal department or agency holding land, including the Department of Veterans Affairs. A list of properties for which HUD has made such a determination is published each Friday in the Federal Register.

Properties are considered to be unsuitable if they meet one or more of the following criteria: within 2000 feet of flammable or explosive material, not accessible by road, within an airport runway clear zone, in a floodway, or in a secured area or cannot be accessed without crossing through a secure area. Determinations of unsuitability may be challenged within 20 days of publication in the Federal Register.

Once a property is listed as suitable and available, it is "frozen" for 60 days and the federal government may not dispose of it for any purpose other than homeless uses. During that sixty-day period, organizations interested in applying for property submit a notice of interest to the U.S. Department of Health and Human Services (HHS) [which has statutory authority to arrange "public health benefit transfers."] HHS then sends inquirers an application. The organization has 90 days to complete the application.

HHS must approve or deny a completed application within 25 days after receiving it. If HHS approves an application, the organization must then negotiate the lease or deed with the land-holding agency.

Advantages of Title V Program for Homeless Service Providers

Homeless veteran service providers and other organizations supporting people experiencing homelessness clearly benefit from the acquisition of federal capital assets through the Title V program as compared to other property disposition methods, such as the VA's Enhanced Use Lease (EU) authority. The principal advantage is that under Title V, the properties are made available to the nonprofit organization at no cost. Under EU, on the other hand, the receiving organization must negotiate and make lease payments. Thus EU imposes a serious financial burden on organizations whose budgets are already strained, with every available dollar needed to pay for care and support for people with severe needs.

Also advantageous to organizations acquiring properties through Title V is that leased properties are exempt from local zoning ordinances, thus eliminating the threat of community groups unilaterally blocking the siting of homeless facilities based on stereotypes and prejudices about people in extreme poverty (i.e., NIMBYism). In addition, property transfers made through Title V are not subject to Congressional notification.

VA Implementation of Title V

Initially, federal agencies failed to implement the Title V program. While compliance has significantly improved over the years (in large part due to a law suit filed against the VA and other federal agencies by the National Law Center on Homelessness and Poverty), incidents of non-compliance still occur on occasion. The VA is not without stain in this regard.

For example, we are aware of a VA property in California that qualified as suitable under Title V, but was never identified by the VA as available and was instead disposed of through Enhanced Use Lease. In Florida, the VA reported to HUD that a vacant property in question was unsuitable under the Title V program (and thus the facility was not listed as available), but then approached the nonprofit organization who had sought to acquire the property under Title V and offered it to them through EU. How would a property determined to be unsuitable for homeless uses under Title V be any more suitable for homeless people under EU when a property's suitability is independent of its manner of disposition?

Title V and the DNCP

NCHV is distressed that both the CARES process and the subsequent DNCP have completely ignored the Department's obligations under Title V of the McKinney-Vento Homeless Assistance Act, especially given the Department's professed commitment to homeless veterans. We are struck by the near-complete absence of discussion about Title V both in the instructions VA provided to VISNs for preparing their market plans and in the DNCP itself. For example, in the Handbook for Market Plan Development, prepared as a supplement to Chapter 5 of the CARES Guidebook-Phase II, VISNs are presented alternatives for permanently reducing vacant space, including divestment. The description of this alternative includes just the briefest of hints that there is even a Title V program to take into consideration. Chapter 12 (Vacant Space Planning) of the DNCP fails to mention the Title V program altogether among disposition alternatives.

On the other hand, EU is discussed time and time again, an indicator of VA's clear preference to lease properties for remuneration rather than to lease or deed them to homeless organizations for no-cost. The DNCP even includes in Appendix J a summary list of EU opportunities identified in the VISN market plans. No such list is provided for properties that could be qualified for suitability and availability under Title V. The VA did not instruct VISNs to inventory Title V opportunities.

We urge the CARES Commission to recommend that the Secretary of Veterans Affairs instruct VISNs to identify properties currently or potentially suitable and available for disposition under the McKinney-Vento Title V program and list them in the final national CARES plan. If time does not permit identification of such properties prior to publication of the final national CARES plan, then such identification must take place in the first round of strategic planning subsequent to issuance of the final plan. Further, the Commission should request the Secretary of Veterans Affairs to instruct VISNs to use the Title V criteria for determining suitability for homeless uses when conducting these property assessments.

In addition, we urge the CARES Commission to recommend that the Secretary of Veterans Affairs take action to ensure the Department's full compliance with the McKinney-Vento Title V Program. The Secretary should be urged to:

We are aware that the Department views the disposal of real property to be a significant challenge. The Handbook states that "unless disposal of real property is specifically legislated by Congress, VA's disposal authority is very limited. Consequently, for the vast majority of disposals, VA must determine that the property is excess to VA's needs and inform the GSA of its desire to dispose of it. The Secretary must approve the disposal and Congress must be notified…" (p. 21).

This narrative on divestment alternative suggests that there may be conflicts between the statutes governing the disposal of VA properties and the Title V statute that would preclude the VA from full compliance with Title V. Accordingly, we urge the Commission to recommend that the Secretary of Veterans Affairs prepare an analysis of VA property acquisition and disposition statutes, regulations, and policy guidance and their intersection with the Title V program, and to recommend or adopt any changes needed in order for the VA to fully participate in the Title V program.

Enhanced Use Lease Authority

Enhanced Use Lease (EU) authority allows the VA to enter into agreements with non-government entities for the use of VA space or land for private development, resulting in some benefit back to the VA and to veterans.

EU authority is one of several appropriate mechanisms for disposing of VA property. A few homeless veteran service provider organizations have succeeded in navigating the complex EU process and successfully developed supportive housing programs for homeless veterans. These positive outcomes have occurred due largely to the sheer determination of individual medical center directors and community leaders to work collaboratively. These successes suggest promise for other homeless veteran service providers pursuing EU opportunities.

These successes are tempered by the number of homeless veteran service providers who have confronted fiscal and procedural obstacles which have thwarted the execution of EU agreements.

The greatest impediment to homeless service providers' ability to take advantage of VA's EU authority is the very fact that the provider is charged for the use of the leased space. Sometimes these charges are as high as the fair market value of the space, which is quite expensive and far beyond the abilities of nonprofit service provider organizations, as well as their extremely-low income clients. Faced with the prospect of paying fair market value for use of the VA property, the provider is likely better served by acquiring space in the commercial market. Both parties lose out in this situation. The provider is left trying to obtain expensive space in the private market and the VA loses a potential tenant.

We urge the Commission to recommend that the Secretary of Veteran Affairs issue a Department-wide directive instructing central office and VISN capital asset and enterprise managers, medical center directors, and VISN directors to ensure that space agreements with homeless service providers are negotiated without charge or at the lowest charge possible, and certainly at a rate not to exceed 30 percent of their tenants' aggregate monthly incomes.

Additionally, the EU process is a complex real estate transaction in which many small nonprofit organizations find it difficult to participate. In some cases, the providers simply lack the expertise and experience to negotiate the transaction. In other circumstances, the EU process is time consuming and contentious, a combination of NIMBY issues percolating at the public hearing stage, delays resulting from multiple Congressional notification periods, and general inertia on the part of VA asset and enterprise management staff. In some cases, promising deals have collapsed-after the homeless veteran service provider spent countless hours assembling a pool of project partners-because the VA did not do its part swiftly enough. These procedural barriers must be addressed if more small nonprofit organizations are to take advantage of EU authority.

We urge the Commission to recommend that the Secretary of Veteran Affairs initiate procedural reforms to strengthen the EU process, including provision of technical assistance directly or via contract to small nonprofit organizations seeking to acquire property through EU arrangements and setting and adhering to firm deadlines for finalizing agreements.

We reiterate our assertion that McKinney-Vento Title V is the better property disposition route for homeless service providers, and thus should be the VA's preferred route as well. While the EU statute does not require the VA to explore all disposition alternatives prior to initiating an EU arrangement, there is nothing in the legislative record that suggests VA must use EU authority above all other disposition methods or that Congress intended for EU authority to supplant the Department's responsibilities under Title V. Certainly, Congress did not intend for nonprofit organizations seeking to serve homeless people to be CHARGED for access to vacant VA properties via acquisition through EU when access to those very same properties could just as readily have been transferred by lease or deed without charge via the Title V mechanism.

Conclusion

The National Coalition for Homeless Veterans is eager to work with the CARES Commission and the Department of Veterans Affairs in perfecting and implementing the CARES plan. We look forward to the possibility that CARES will open new avenues for the national network of homeless service providers to secure facilities necessary for conducting their important work, and the promise that many more of our nation's homeless veterans will be able to end their homeless condition as a result of additional VA-community partnerships.