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Personal Property Disposition - Community Reuse Organizations (CROs)


FROM: Michael Owen (signed)
Director, Office of Worker and Community Transition

Department of Energy Washington, DC 20505

January 22, 2003

Disposition of Excess Personal Property


CROs have been operating asset conversion and personal property transfer programs since shortly after the passage of section 3154 (Hall Amendment) of the National Defense Authorization Act of 1994 by Congress. Excess personal property disposition by DOE sites results in significant cost savings to DOE by reducing the costs associated with long-term storage and maintenance, and providing security for those assets. These programs benefit CRO's and their communities by stimulating job creation and, in some cases, by providing much needed revenue to support critical economic development programs.

Personal property programs have taken a number of different forms, although most involve the transfer of excess personal property to CRO's at no or nominal cost after a determination has been made by local DOE property managers that it is excess. CRO's then make these assets available to commercial enterprises, often at below-market value, for use in their business operations to enhance their ability to create private-sector jobs in the region. If the nature, condition, or value of assets is such that use for job creation is precluded, CRO's may sell assets at auction or by other means with proceeds to be allocated in support of ongoing economic development activities.

The purpose of this memorandum is to provide additional guidance to CRO's and DOE Field Offices regarding the disposition of excess personal property. This additional guidance is designed to facilitate use of minimum acceptable, yet more uniform, business practices in this regard as well as assure appropriate accountability for program operation.


National Defense Authorization Act of 1993: Sections 3161 and 3163

National Defense Authorization Act of 1994: Section 3154 (Hall Amendment)

Draft Policy and Planning Guidance for Community Transition Activities

DOE Acquisition Letter 95-06, Personal Property Guidance

Personal Property Letter 970-1 (not available)

Memorandum from Charles Przybylek, Chief Counsel, Albuquerque to Eileen Beaulieu, Community Transition Program Manager, Albuquerque  (June 19, 2001)  (not available)

Memorandum from Eric Fygi, Acting General Counsel to Jennifer Fowler, Chief Counsel Oak Ridge Operations Office (March 27, 1998)

Memorandum from Richard H. Hopf, Office of management and Administration to Robert Baney, Office of Worker and Community Transition (March 2, 2001)


Consistent with the Office of Worker and Community Transition's (Office) commitment to exercising maximum flexibility in its administration and oversight of community transition programs and to afford communities the opportunity to develop programs responsive to local needs, there has been minimum effort to impose guidelines for property disposition programs. The Office has focused on assuring that programs operate well within the intent and rule of governing legislation through frequent monitoring of programs and consultation with program operators and interested parties across the Department.

Uses of excess personal property: For purposes of operating excess personal property disposition programs, authorized uses of excess personal property by CRO's, in priority order, are:

  1. The transfer to a private, commercial enterprise for use in its business operations in such a way that such use results in the creation of new employment opportunities for displaced contractor workers and/or area residents.
  2. The offer of a transfer to a private, commercial enterprise for use in its business operations as an inducement to establish productive capacity in a CRO's geographical service area that will result in the creation of new employment opportunities for displaced contractor workers and area residents.
  3. After determination that such property has no or limited value for uses described above, CRO's may offer subject property for sale at auction or by other means that assures reasonable access to the general public and provides for most favorable terms of sale. Proceeds from sales must be used to support community economic development activity determined to be appropriate in consultation between CRO's and the local DOE community transition field contact. Activities in this regard must be sufficiently documented to allow CROs or DOE to adequately respond to information requests from the general public or responsible government officials.

Sale of excess personal property/Use of proceeds:   There has been considerable concern expressed by a number of authorities regarding the use of the proceeds from personal property sales to support economic development activities undertaken by a local CRO. This concern has focused on the treatment of excess DOE personal property as readily converted to cash to support CRO operations, particularly the payment of staff salaries and funding of unrelated CRO operations. This Office is sensitive to these concerns as a practical matter, as well as a matter of public perception.

The Office also realizes that local community transition programs and organizations are often small with indistinct lines between various staff responsibilities and program initiatives. For example, an individual staff member may constitute an entire "program," e.g., business retention and expansion and in some cases, may also having significant administrative responsibilities. The Office, in cooperation with local DOE community transition contacts and CRO officials, shall closely monitor the use of proceeds from excess personal property disposition programs to assure that they are used in support of clearly-defined community economic development purposes, in the context of local operational and economic realities. The Office shall be the final authority in this regard in the event any disputes arise.

CRO personal property disposition program managers must conclusively meet two tests prior to the sale of assets for cash for program support, and that the uses for such support are limited as described below.

  • After personal property conveyance by DOE, but prior to making such personal property available for sale to the general public, the CRO must reach a deliberate conclusion that the assets in question have no value as inducement or have no direct job creation/retention value to targeted existing area enterprises. Such a determination shall be documented in writing and provided to the local DOE community transition official as well as kept in program files.
  • Prior to the sale of any personal property, the CRO must have a specific plan for use of any sale proceeds in its overall economic development program and provide written documentation of that plan in its asset conversion program description. Each of these plans must be submitted to the Office, through the local DOE community transition official, for review and approval prior to program operation. Note that CRO community transition and personal property disposition plans submitted to and on file with the Office prior to the effective date of this memorandum shall be in compliance with this provision unless a CRO is otherwise notified. Activities of a clearly administrative nature or that do not constitute or contribute to a clear community economic development purpose may not be supported by proceeds from excess asset sales.

Value thresholds/Documentation: Obviously, not all personal property determined to be excess has the same monetary value. Notwithstanding the requirement that all excess personal property must be screened pursuant to established DOE procedures prior to conveyance to CRO's, certain assets should undergo varying degrees of scrutiny and evaluation beyond standard screening practices to determine the full range of market utilization alternatives. This needs to be done to ascertain true value prior to making them available for sale to the general public.

For example, personal property that may have been state-of-the art when originally acquired may be virtually without functional value at the time of sale. Such information may be of significant value to CRO's as they develop disposition strategies.

CRO's are encouraged to work with local DOE property managers to develop any appropriate screening procedures over and above those required by existing DOE and federal regulations to meet local personal property disposition program objectives. Excess personal property that is conveyed to a CRO must be accompanied by documentation that such property has received the appropriate level of screening as determined by DOE, together with any commentary regarding price, utilization or other matters of interest to CRO's.

Revenue sharing: DOE may, at its sole discretion, negotiate a share of proceeds of any personal property sold to the general public through the CRO excess personal property disposition process. Such revenues may be collected as consideration for the cost of transfer of the asset to the CRO, or as a negotiated percentage of proceeds from actual sale of assets, or both. Revenue-sharing arrangements are to be negotiated on a site-by-site basis. All sales proceeds retained by DOE shall be returned to the U.S. Treasury.


CROs are encouraged to work closely with local DOE community transition officials and property managers to execute this guidance.