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The Power of EUL: Air Force Enhanced Use Lease Program Overview. Mr. Dennis Guadarrama AFRPA/SAU Division Chief 15 February 2011. Overview. Purpose/Future Vision Key Program Progress Approach Client Advocacy Targeted Marketing Action Plan Overview Timeline to Goal - PowerPoint PPT Presentation
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Headquarters U.S. Air ForceFly – Fight – Win
Mr. Dennis GuadarramaAFRPA/SAU Division Chief
15 February 2011
The Power of EUL:Air Force Enhanced Use Lease
Program Overview
Fly – Fight – Win
Overview Purpose/Future Vision Key Program Progress Approach Client Advocacy Targeted Marketing Action Plan Overview Timeline to Goal Key Takeaways: What this Means to You
2
Fly – Fight – Win
The Power of EUL
3
Vision: Use the Power of EUL to deliver $5B in return to the Air Force
Developed a PlanA comprehensive business-focused approach to portfolio development
AF Leadership supportLeadership ‘champions’ support opportunity development and advocate program’s value
Project ExecutionBuilds on current successes by identifying high-value opportunities and diversifying portfolio
Long-term strategyFocused on building partnerships fostering best returns and mutual benefit
Fly – Fight – Win
Approach Identify and Prioritize Opportunities
Identify Hot Markets
Map Hot Markets to
States
Map to Bases and MAJCOMs
Evaluate Client Advocacy
Prioritize Opportunities
Identified hot markets using four criteria:
Renewable portfolio standards
Superior physical resources
Good price of electricity
Job growth
Identified hot market states
Commercial Real Estate still on road to recovery
Primary focus on Renewable Energy
Identified the number of bases by state
Examined supply and demand at each base
Estimated value of potential projects
Prioritized opportunities at each of the bases by revenue
Assessed AF client advocacy across MAJCOMs and bases
Identified existing advocates at bases and MAJCOM
Assessed where current projects could lead to future interest
Coordinate strategies with FOAs and A7Cs
Prioritized opportunities across MAJCOMs and bases
Prioritized list will be used to develop phased approach
Need concurrence on prioritization criteria: market,state-driven, or client
1 2 3 4 5
Opportunity Identification/Valuation Opportunity Prioritization
= Complete = In-Progress 4
Incentives?Resources?
Potential opportunities?
Land available?High revenue
potential?
Existing project champions?
Concurrence on priorities?
Fly – Fight – Win
Client Advocacy Strategy
5
2. Deploy campaign
3. Project marketing
4. Lifecycle PA support
5. Build on success
1. Establish branding,
messaging
Overarching Campaign (Program) Project Specific Advocacy Long-term
Internal: 1̶ Goal: Increase awareness and build advocacy for EUL
1̶ Demonstrate SAF/IE support
1̶ Problem statements: What problem does EUL solve?
1̶ Include Developer engagement
1̶ Partnership w/FOAs
1̶ MAJCOM/ base outreach
1̶ Media engagement
1̶ Events (ADC, REWNA)
1̶ Work closely with external stakeholders
Developer Engagement:
1̶ Industry Forums1̶ Social media/web1̶ Trade media1̶ Direct email
PA collaboration w/ installation, MAJCOM, developer
Media engagement to promote opportunities
Developer Industry Days
Ensure external market understands the project
Hill/Edwards: Regional
or ‘super’ Industry Days to promote full slate of projects
PA guidance developed in collaboration w/ stakeholders
Key messaging
Media opportunities
Celebrate success• Lease signing• Ground
breaking• Economic
Impact• Relationships
Stakeholder testimonials as evidence of EUL success
Marketing team visits to MAJCOMS/ installations
Continued event participation
Education and training
Goal: Introduce EUL to the next generation of real property officers and asset managers
We must communicate the $5B Plan to all stakeholders – Internal and External
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Mount a rigorous business
development effort to ensure deal success
4
Infuse Industry best practices in to
program using Think Tanks and Industry
forums
3
• There has been a lack of proper due diligence
• Need for upfront analysis
• Reduce risk of deal failure
• Early, up-front due diligence efforts applied to MAJCOM studies to identify opportunities
• Developed screening tools to identify/analyze hot markets• Implemented project management principles (performance
metrics, charters, risk management)
• Need to be more in-line with commercial business practices
• Continuous dialogue and trust
• Held highly successful EUL Industry Day in Boston Aug 09
• Hosted three Think Tank sessions focused on portfolio driven analysis of real estate and energy markets
• Collaborated with industry to build the Business Development and solidified the approach for $5B plan
6
Streamline existing process and educate
stakeholders
Build partnership with other FOAs to expand
success
1
2
• Process is too long
• Unclear roles and responsibilities
• Adaptability to project needs is critical
• Demonstrated streamlined process through execution of Edwards AFB EUL
• Held focus groups to define roles and responsibilities; educated over 100 developers and AF personnel over the last 18 months (EUL 101 training, Industry Forum)
• EUL/PPA governance is needed
• Partnering with FOAs is critical for success
• Established Renewable Energy Project Development Subpanel • Charter with AFCESA and AFCEE, developed process to
evaluate renewable energy projects for execution• Working with AFCEE to leverage Natural Infrastructure
Key Program InitiativesProgram Initiative Industry Feedback Action Taken
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Action PlanPortfolio Evolution
7
Current Project Pipeline Values
Category Project Type Value
Energy
Solar $ 242.0M
Coal $ 118.0MWaste-to-Energy $ 82.0M
Cogeneration $ 40.0M
Real Estate
Mixed Use $ 166.1M
Industrial $ 48.1M
R&D $ 64.0M
Hospitality $ 22.0M
Medical $ 1.5M
Real Estate$301.3M
38%Energy$482.0M
62%
A:Current Pipeline ~$.78B
Targeted Project Strategy Values
Target Approach Example
Focused on hot market, high revenue, and vastly available land bases with high EUL success to date to generate surge of revenue
AFMC: Edwards, Hill (Solar, Geothermal)
Energy $3.6B100%
B:Mid-term~$3.6B
Portfolio Expansion Strategy Values
Innovation Strategies Description
Focused ExecutionDiversity portfolio with right mix of projects
Reinvestment and Cost Avoidance Dividends
Re-invest EUL proceeds into installation requirements generating cost avoidance and cost savings measures
New AssetsNatural Infrastructure and resources, equipment with excess capacity, available real property
New Execution ModelsMAJCOM IDIQs, PPA/EUL, Fence to Fence EUL, Performance-driven support (RESS)
New Technologies Nuclear, cogeneration, algae
Energy30%
Traditional Real Estate
10%
Innovation60%
C: Long-term~$3.7B
Fly – Fight – Win
ApproachTarget Strike Zones (Hot Market States)
8
Hot Energy Market Characteristics: Superior physical resources, renewable portfolio
standards, and good electricity prices, jobs, and rates.
Hot marketsOther opportunity locations
88% of the AF EUL program future energy deals are located in Hot Market States
States Opportunities
# of Projects
California 19
Utah 11
Nevada 6
Arizona 4
Florida 4
Colorado 3
New Mexico 2
New Jersey 2
Texas 2
Idaho 2
Alabama 1
Virginia 1
Delaware 1
Georgia 1
Ohio 1
Illinois 1
Mississippi 1
Tennessee 1
Alaska 1
Cumulative Total 64
Markets aligned to States w/ AF Installations
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Glide Path to $5B
9
Comments• A: Current program at projected
NPV of $783M
• B: Estimated $3.6B focused on target strike zones (Hill & Edwards AFB)
• C: Estimated $3.7B attainable from diversifying the portfolio (cost avoidance, reinvestment, fence to fence analysis)
Targeting the $5B goal by focusing on 3 primary areas:A: Current Pipeline B: Mid-term C: Long-term
Program Glide Path NPV Potential
Current Pipeline(Executed & In Pipeline)
Grand Total
Targeted Project Strategy
Portfolio Expansion Strategy
$5B Goal Line
Stretch Goal
$8.08B$3.7B
$0.82
A
B
C
$0.78B
$5.0B$3.6B
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
NPV
($ in
Bill
ions
)
$8.0
Fly – Fight – Win
Targeted Marketing Developed Marketing and Communications Team focused on:
Building sustainable partnerships with developers and financiers Continue conveying a predictable, understandable, process for
transactions Partnering with state and local community stakeholders to:
Identify synergies with potential EUL projects and stakeholder expectations
Consistently communicate with Economic Development Offices, Local Universities, and City Council meetings
Educate and inform regulatory agencies on EUL benefits and processes
Sharing initial due diligence with development community Ensure synergies and identify potential local investors and/or grant
funding for specific initiatives Exploring new approaches to industry days
Regional, AF-wide Renewable Energy Forums
10
Fly – Fight – Win
Takeaways
11
AFRPA is focused on reaching $5B Goal
Developed a plan1
Communications & Marketing
5
• Developed three focus areas• Resources/Manpower through AFRPA, MAJCOM, and installations play critical role
in execution of the plan
• Targeted stakeholder engagement and marketing to build synergies• Sharing of due diligence to maximize probability of deal success
Long-Term Strategy4
• Ensuring projects remain financeable through a flexible, streamlined process• Strategizing on how best to spread the wealth across the Air Force• Focusing on investment strategies that will help the Air Force support the $5B goal
Project Execution3 • Initiated long-term strategy planning with Hill and Edwards AFBs
• Identified next wave of opportunities (Hill, Edwards, AMC)• Developed timeline to reach $5B• Set the stage for solicitations and HRO selections over the next 3 years
Leadership Support2
• Establish firm support and direction from HQ Air Force through MAJCOMs to bases that EUL projects are a top priority
• SAF/IE endorsement will increase advocacy and momentum of the program
Fly – Fight – Win 12
Contact
Delivering Value to the Warfighter, our People, and our Communities
Visit us at www.airforceeul.com (external)
www.afrpa.hq.af.mil (internal)1-866-725-7617
Follow the Air Force Real Property Agency
on Facebook
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Questions?
13
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