## Lessons Learned: The Grand Junction Office Site Transfer to Private Ownership

**Authors: Donna Bergman-Tabbert and Tracy B. Plessinger**

**U.S. Department of Energy Grand Junction Office (USA)**

**ABSTRACT**

The U.S. Department of Energy Grand Junction Office (DOE−GJO) in Grand
Junction, Colorado, has played an integral role within the DOE complex
for many years. GJO has a reputation for outstanding quality in the
performance of complex environmental restoration projects, utilizing
state-of-the-art technology. Many of the GJO missions have been
completed in recent years. In 1998, DOE Headquarters directed GJO to
reduce its mortgage costs by transferring ownership of the site and to
lease space at a reasonable rate for its ongoing work.\
A local community group and GJO have entered into a sales contract;
signing of the Quitclaim Deed is planned for February 16, 2001.

Site transfer tasks were organized as a project with a critical-path
schedule to track activities\
and a *Site Transition Decision Plan* was prepared that included a
decision process flow chart, key tasks, and responsibilities.
Specifically, GJO identified the end state with affected parties early
on, successfully dealt with site contamination issues, and negotiated a
lease-back arrangement, resulting in an estimated savings of more than
60 percent of facility maintenance costs annually. Lessons learned
regarding these transition activities could be beneficial to many other
sites.

**INTRODUCTION**

The U.S. Department of Energy Grand Junction Office (DOE--GJO) was
originally established in the 1940s, as part of the Manhattan Project to
procure uranium for top-secret weapons projects. Over time, the GJO site
housed two pilot uranium-ore milling plants, conducted the National
Uranium Resource Evaluation program, and then became a leading DOE
office involved in restoration of properties contaminated with uranium
mill tailings. Many of the GJO larger missions were completed in the
1990s, resulting in several long-term projects and fewer staff members
and the need to occupy less space. Long-term missions for GJO include
the Long-Term Surveillance and Maintenance Program, Uranium Mill
Tailings Remedial Action (UMTRA) Ground Water Project, and the newly
assigned Moab Millsite Restoration Project.

More than 30 buildings, primarily office, warehouse, shop, and
laboratory space, occupy the\
54-acre GJO site (see Figure 1). In 1998 as part of DOE's ongoing
mortgage-reduction effort, DOE decided that the GJO site should be
transferred to non-DOE ownership and that space needed for GJO
continuing missions should be leased instead. It was agreed in 1999 that
the\
GJO site would be transferred to the local community for economic
development purposes to compensate the community for the economic loss
from downsizing at the site during recent years. A nonprofit
corporation, the Riverview Technology Corporation (RTC), was formed
representing the City of Grand Junction, Colorado, and Mesa County to
acquire the DOE property and save jobs by being a less expensive
landlord than DOE. Negotiations for the

transfer began in fall 1999, and the site is on track to be transferred
by February 16, 2001.

![](media/image1.jpeg){width="3.089583333333333in"
height="3.7993055555555557in"}

The Offer to Purchase contract was signed on December 4, 2000. The
acreage to be transferred to the local community is approximately 46
acres; 8 acres of the site will be transferred to the U.S. Army Reserve
in fiscal year 2001.

**MAJOR ACTIVITIES AND LESSONS LEARNED**

Serious efforts by both parties to achieve site transfer have been
ongoing since the formation of the RTC. DOE designed a "Bridge to the
Future" critical-path schedule to track site transition activities.
Activities in the schedule include

-   Preparation of a *Site Transition Decision Plan.*

-   Review for Atomic Energy Act Section 161(g) applicability.

-   Determination and DOE review of the fair market value of the GJO
    site.

-   Performance of a cost comparison (lease versus own) of office space.

-   Review of National Historic Preservation Act (NHPA) applicability.

-   Submittal of a Request for Deferred Remediation to the State of
    Colorado.

-   Preparation of National Environmental Policy Act (NEPA)
    documentation.

-   Conduct of formal negotiations.

-   Finalization of real estate transfer documents.

The list of activities grew with the accumulation of knowledge and
consisted of more than\
262 general tasks. The schedule provided a framework for tying together
critical activities\
and integrated thoughts with actions to provide a communication vehicle
for team input\
and concerns.

# ***Site Transition Decision Plan* and Determination of Legal Authority**

The 20-page Decision Plan presented a decision process flow chart that
identified key tasks, decision points, and responsibilities for actions
leading toward or away from the site being transferred to the local
community. The Decision Plan was used to obtain agreement with numerous
DOE entities that a systematic, logical approach should be used to
determine who should own the site.

A major decision was the determination by the DOE legal staff regarding
the applicability of Atomic Energy Act (42 *United States Code* 2011
*et* *seq*.) Section 161(g) to transfer of the GJO site. This legal
authority, one of several the Department has for transferring property,
gives DOE the option to not use the standard Government Services
Administration (GSA) federal property transfer rules. A determination
that this law is appropriate for transferring the GJO site to a private
entity would open the door for DOE and the community to formalize their
plans. The attorneys felt the act was the appropriate legal authority to
use in transferring the site.

As a best management practice, DOE screened the property as surplus to
determine interest by other federal agencies following guidance in the
Federal Property Management Regulations (Title 41 *Code of Federal
Regulations* Part 101). No other federal agency expressed interest in
the site. The Decision Plan identified numerous other tasks whose
outcomes could influence the community's willingness to take the site.
DOE had worked with the community ad hoc group long enough to know that
the community wanted the site essentially for free, wanted no
contamination remaining on the site (with the exception of surface water
and ground water), and wanted a guaranteed long-term tenant, the local
DOE office and its contractors.

The intent of the Decision Plan was to ensure that the decisions being
made were in the government's best interest, but it also clearly
identified which decisions were critical with regard to perceived
community acceptance. For example, if the decision on preservation of
historic site structures did not allow modifications to or destruction
of buildings, or if the remaining contamination on site necessitated
extremely strict controls on new construction or existing building
modifications, the potential buyer might not be interested. Likewise, if
DOE internally determined that it must be paid fair market value for the
site, the local DOE office need not enter into negotiations with the
community.

While making these decisions, the local community was kept informed of
DOE's positions. Formal negotiations did not begin until many of the key
internal DOE decisions had been made. Once the go/no go decision was
made regarding the community, the overall critical path schedule became
more focused, and numerous tasks related solely to transfer to the
private entity were incorporated into the schedule and planning effort.

# **Determination of Fair Market Value**

DOE−GJO procured the services of a local certified appraiser to perform
a market appraisal of the site. Once the appraisal was completed, DOE
management questioned if only one appraisal was adequate and discussed
obtaining a second opinion, as had been done by real estate staff
members at other DOE sites. Because GJO had not allowed time for another
appraisal, a compromise was reached within DOE to have a federal
appraiser (a consultant to the Western Area Power Administration) review
the appraisal. If the federal appraiser detected flaws, another
appraisal would then be considered. No flaws were identified, and the
commercial appraisal\
was accepted. GJO went a step further and also had GSA review the
appraisal as a planning\
step in case DOE chose to have GSA conduct a public auction of the site.
Again, the appraisal was accepted. DOE also kept GSA on board as an
advisor during the site transfer process.\
If negotiations with the RTC faltered, GSA was ready to auction the site
to the highest\
private bidder.

# **Cost Analysis: Lease Versus Own**

The local DOE office considered leasing office space in the community so
that assigned\
missions could be accomplished more efficiently. GJO conducted a cost
analysis to compare\
the estimated cost of owning and operating the site with the cost of
renting various properties in the community. The GJO site appraisal used
comparable commercial properties in the local area as part of the market
value determination. DOE concluded several factors from these data: (1)
no space was available in the community of comparable size, (2) office
rental space was limited and usually with low square footage, (3) the
number of offices that would be needed were scattered among buildings
throughout the city, and (4) satisfactory office space was commanding a
fairly high price. An option that DOE dismissed was procuring or
constructing a new office building for GJO use.

Numerous factors contributed to why the existing site location made
sense as space to lease back by DOE. Federal staff and contractor staff
are co-located in several buildings. DOE has a state-of-the-art
communication system for the buildings that includes telephone switching
gear and a computer networking system. DOE was interested in a lease for
a 6-year term. Estimated DOE costs for site ownership totaled \$28.36
per square foot per year. Ownership included placing all buildings
except the three needed for ongoing missions in "safe shutdown" status.
Comparable rental rates in the city ranged from \$5.50 to \$20.00 per
square foot, with most office space renting for more than \$12.00 per
square foot. A single structure with the 50,000 square feet needed by
GJO personnel was not available. DOE successfully negotiated with the
RTC for\
an average of \$8.00 per square foot per year for the space it needed at
the GJO site. In DOE's opinion, this rate was at the lower end of the
rate for available space elsewhere in the\
community and was significantly lower than predicted operating costs for
the site under continued DOE ownership.

As a reality check, GSA was contacted regarding lease rates in the
community for Federal Government office space. The lease rate for office
space ranged from \$13.48 to \$16.71 per square foot. In this instance,
adequate space for 23 DOE staff members could be located,\
but the cost was still too high. DOE's final analysis included the
"loss" of revenue from not receiving the \$1.135M market value for the
site but still predicted savings of more than\
60 percent annually when compared with predicted ownership costs, or an
average of roughly\
\$1M per year.

**National Historic Preservation Act Review**

During site transition, the GJO site was designated as a historic
district under the National Historic Preservation Act. Because the site
was to be transferred and the potential buyer did not want to be
restricted by what it could or could not do with structures on the site,
DOE proposed to the Colorado State Historic Preservation Officer (SHPO)
that the site history be recorded in a document, buildings be captured
in photographs, and a summary of the site's history would exist as an
interpretive sign located at the site, as well as in booklets available
in local libraries. The SHPO agreed to the recordation and historic
documentation by signing a Memorandum of Agreement with the local DOE
office. Future owners of the site may do whatever they please with the
site structures.

Native American tribes in the region known to have inhabited the Grand
Junction area in the past were notified of the pending site transfer.
Photographs and maps were provided to tribal environmental contacts to
assist them in determining the existence of any historic, sacred, or
religiously significant areas associated with the site. The tribes
identified no such areas.

# **Request for Deferred Remediation and State of Colorado Approval**

The lengthiest critical task was obtaining buy-in from the State of
Colorado to transfer the site\
to private ownership under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) Section 120(h) requirements
before all remediation was completed. CERCLA regulations require that
the State of Colorado approve a Request for Deferred Remediation to
allow contaminated material to remain on the site. Negotiations with the
State of Colorado regarding the Request for Deferred Remediation
involved technical analysis and commitment from DOE that the public
would be protected from contaminated surface water and ground water on
the site. This process required DOE to enter into an enforceable
agreement with the State of Colorado to ensure DOE's commitment to
provide institutional controls, monitoring, and remediation of the
site's contamination according to a remediation plan. The Request for
Deferred Remediation and related documents were also subject to a 30-day
public comment period. GJO's use of its Long-Term Surveillance and
Maintenance Program in overseeing future activities greatly facilitated
the review by the State of Colorado.

Specific areas of contamination remaining at the GJO site include
several surface water expressions, the alluvial ground water system, and
two small areas of subsurface soil contamination. All contamination is
from uranium mill tailings contamination associated\
with previous site activities. The ground water underlying the entire
site and associated surface water expressions (two ponds and a perennial
wetlands area) are being remediated through natural attenuation and are
expected to meet regulatory thresholds within 50 to 70 years.
Contaminants currently exceeding regulatory limits include uranium,
radium, arsenic, molybdenum, selenium, nitrate, sulfate, chloride, and
total dissolved solids. In addition, two pockets of soil contamination
remain under two buildings to be leased back by DOE for its use. The
soil contamination has elevated concentrations of radium and uranium.
Once the buildings are not needed for DOE purposes, the buildings will
be demolished, contaminated soils will be removed, and the soils will be
disposed of at an existing uranium mill tailings disposal site.

At the GJO site, DOE placed deed restrictions on use of surface water
and ground water and disturbance of soils in contaminated areas and
required that the new owner notify DOE if the site were sold. Final
review by the State of Colorado is nearly complete, the public comment
period is scheduled, and State of Colorado approval is expected by
February 15, 2001.

Another related issue was the existence of elevated levels of
radioactive material in the site's analytical chemistry laboratory
building. Because DOE has an ongoing need for the laboratory and initial
investigations showed low levels of radioactive material in the
structure, GJO proposed use of a regulatory-approved risk-based approach
to determine if the materials posed a health risk. A team of community,
State of Colorado, DOE, and U.S. Environmental Protection Agency
representatives was created to collaborate on the risk-based approach.
This group eventually achieved consensus that the radioactive materials
were within acceptable health-based limits when a risk-based approach
was applied rather than a regulatory standard. This approval allowed
continued use of the building and saved money for the Federal Government
by deferring building decontamination or demolition until some time in
the future if or when laboratory services are no longer needed.

# **National Environmental Policy Act Documentation**

An Environmental Assessment (EA) was prepared according to NEPA
guidelines, but an innovative approach was used. Because DOE had no real
control over future land use, it was impractical to select a specific
future-use scenario and evaluate potential impacts with such a
hypothetical situation. Rather, the "transfer from DOE ownership"
alternative was evaluated in\
a more general and qualitative manner. A possible use of the site that
could have numerous adverse environmental impacts was development of a
gravel quarry. This worst-case use was compared with historic federal
uses of the site. No detailed data were developed for the future uses,
but the alternative was evaluated qualitatively for environmental
impact. The NEPA process provided a means to consider the
***potential*** consequences of the proposed action, in\
this case, a real property transfer. The NEPA process included a 30-day
public comment period; no comments were received. Other governmental
entities were given the opportunity to offer input on the consequences
of the proposed actions as a result of the NEPA process. No input was
received.

**Negotiations**

The RTC named a three-person negotiation team from its 12-member
volunteer board. DOE also named a three-person negotiation team and
selected several advisors, including DOE real estate personnel and the
GJO Deputy Manager. A recommendation was made to the local DOE office
that the negotiation team report to the GJO Manager, who would make
decisions for the team. The local DOE office chose instead to have the
GJO Manager actually be the lead negotiator. GJO's supervising office,
the DOE Albuquerque Operations Office, had been delegated authority by
DOE Headquarters to transfer the site and formally passed the authority
on to the local office. The GJO Manager was given the authority to
negotiate all aspects of the transfer and consulted regularly with the
DOE Albuquerque Operations Office and DOE Headquarters. The GJO staff
attorney was a member of the GJO negotiation team and consulted with
other DOE Albuquerque Operations Office attorneys. The other member of
the DOE negotiation team was a member of the GJO technical staff.

Before the start of formal negotiations, both negotiation teams agreed
to an activity that was rather unprecedented. DOE offered to bring in a
consultant to provide negotiation training for ***both*** sides. The
training was held for 2 days and consisted of defining each party's
goals, objectives, and negotiation strategies. While the technical and
legal aspects of negotiation were learned, the greatest benefit was to
have both negotiation parties in a room together, often role-playing,
and getting to know the human sides of one another.

**The Real Estate Transaction**

The actual real estate transfer was obviously of paramount concern to
both parties; early and consistent significant legal involvement was a
necessity. Easements and rights-of-way had to be identified and
reviewed, and mineral rights had to be considered. The RTC had virtually
no funding with which to perform the tremendous task of receiving the
GJO site. For legal support, the RTC negotiation team relied upon City
of Grand Junction and Mesa County attorneys. This arrangement could have
proven cumbersome, but the bylaws of the RTC clearly stated that the
City and County must approve all decisions made by the RTC related to
the transfer. Therefore, this arrangement was more efficient than having
a private attorney work the issues and then still needing local
government legal review. The city and county attorneys were quite
involved in reviewing the Offer to Purchase, Quitclaim Deed, and lease
(from the RTC to DOE for office space). This effort required a
significant amount of time by these two individuals, particularly
because their regular jobs are not typically accomplished within a
40-hour workweek. DOE had not adequately estimated the time it would
take for DOE attorneys and City and County attorneys to argue details of
contract language, but the time consumed was understandable.

# **Personal Property**

Personal property disposal at the GJO site was also an issue. Because
DOE needed only three buildings to continue its missions, site transfer
was an appropriate time to reduce the personal property inventory to
what was needed solely for the missions. The local DOE office had
conducted public auctions of excess personal property as needed during
the past several years. These auctions typically cost the local office
administratively as much as the Federal Government profited from them.
GJO had legal authority to transfer excess personal property to the
local community with the site and decided to do so. DOE and contractor
staff first identified all property (e.g., office, laboratory, and field
equipment) necessary to conduct ongoing missions. All other property was
then screened using DOE's standard excess property process. Other DOE or
federal sites did not want most of the property, and remaining equipment
was transferred to the RTC for no consideration. The transferred
personal property totaled about \$250,000 in depreciated value.

**OTHER LESSONS LEARNED**

The process of transferring a federal site to the private sector is
complex and can be fraught with pitfalls. The GJO site is on track for a
successful transfer, but there were moments when the outcome was less
sure. GJO has identified some additional lessons learned as food for
thought in future real property transfers by federal agencies.

# **End State Buy-In**

Management at all levels must agree up front as to the end state of the
facility. Although this seems easy enough, the end state, if stated too
simply, will result in different interpretations by DOE decision-makers
and can lead to chaos. A prerequisite to reaching a common understanding
is, of course, identifying the management individuals in the DOE system
who are part of the decision-making process and will involve themselves
or their departments in your process.\
Each manager must buy into the agreement on the end state definition,
once the definition is understood. GJO's end state was essentially to
transfer a small portion of the site to the\
U.S. Army Reserve and the balance of the site to a local community
entity representing the\
city and county. The location of leased space for continued DOE missions
would be based on economic analysis.

# **Make the Site Transition Process a Project**

Any site transfer will likely include many tasks that fall within the
broad categories of real property and personal property disposition;
waste management and environmental compliance (e.g., National
Environmental Policy Act, National Historic Preservation Act, and
permits);\
site remediation requirements; and both federal and contractor personnel
planning. The GJO\
site transfer, unlike DOE sites that are closing, did not have many
activities tied to personnel planning, contract closeout, and staff
reductions. However, the GJO site transfer process did include a
critical path schedule consisting of more 262 tasks. Depending on the
complexities of each individual site transfer, the number of tasks could
increase significantly compared with the number of GJO site transfer
tasks. Guidelines for site transition should include

-   Follow good project management practices.

-   Identify scope, baseline schedule, and baseline budgets.

-   Identify resources to manage and perform each task.

-   Establish and understand logic ties among tasks; this activity can
    be a monumental\
    effort but it will result in a clearer understanding of project
    details.

A project manager should be appointed with the authority to maintain
schedule and budget commitments. The project manager should have an
exceptional working relationship with the lead negotiator, if the site
transfer relies on a sales negotiation. The local DOE office should
obtain delegation of the sale negotiation to the local office level.

A site transfer project that is well structured and formalized by scope,
schedule, and budget still requires maintaining as much flexibility as
possible. As the site transfer project progresses and matures,
conditions, goals, and objectives will change. Changes are inevitable if
negotiation is the vehicle for transfer of a site to a local community
entity and are even more probable if there is ongoing environmental
restoration. An established project baseline will be invaluable in
managing change.

GJO established a dual path to accomplish transfer of the site by the
DOE Headquarters-controlled milestone date, even if negotiations with
the community faltered. GSA was fully on board and had completed
preliminary planning to sell the site at a public auction if
negotiations failed. DOE and GSA had conducted a screening, via several
large regional newspapers and GSA's Internet website, to establish if
there was potential interest from the private sector in acquiring the
site. GSA received roughly a dozen expressions of interest,
predominantly from developers. DOE was able to use the option to sell
the site at public auction as a negotiation tool with the RTC. Although
all involved entities preferred that the community group acquire the
site, DOE had a valid second option with a GSA auction. This option was
helpful during times when the community alleged that the site had little
worth because of functional obsolescence and touted that no one else
would ever consider taking over such a property.

# **Understand Internal Requirements**

DOE has the ability to be creative and to achieve mortgage reduction
while working in the best interest of the government. However, many
internal requirements intended to ensure accountability could actually
hinder the site transfer process if the requirements are not fully
understood. Site management must have access to subject matter experts
in many fields to accomplish a timely transfer. The site transfer team
must meet frequently, and each member must provide a status report on
assigned tasks. Peer pressure to make timely progress on interrelated
tasks is a useful tool.

**CONCLUSIONS**

On December 4, 2000, the Secretary of Energy celebrated with the local
community and GJO at a ceremony involving the signing of the Offer to
Purchase contract (see Figure 2). The State of Colorado is on schedule
to approve the Request for Deferred Remediation by February 15, 2001,
and the Quitclaim Deed is ready for signing the next day.

What made the entire site transfer effort a success? Communications
regarding remedial action considerations and real property details were
crucial. Flexibility during negotiations and the ability to modify plans
to accommodate changes when new information or changing priorities
dictated, were of utmost importance. "Consistently" and "frequently"
were the keys to effective communication in a changing environment.
Communication of remediation standards, cleanup protocols, and site
infrastructure details that were obvious to the federal agency were
often more difficult to articulate to other interested groups. An
approach of teamwork and flexibility in considering alternative
strategies for accomplishing the site transfer adopted by GJO, the
public, local and state governments, and internal entities resulted in
success.

![](media/image2.jpeg){width="4.1097222222222225in"
height="2.765972222222222in"}

The transfer of the GJO site achieved cost savings of more than 60
percent annually when compared with the costs associated with
maintaining the facility. If similar results can be achieved across the
board, DOE can certainly consider the closing of some sites and transfer
from DOE ownership a successful venture.