NFDA MEMBER ALERT:   VA PACT Act Implications for Leased Real Estate

On August 9, President Biden signed into law the “Honoring Our PACT Act of 2022” (Public Law 117-168), a significant piece of legislation expanding medical coverage for veterans. The “PACT” letters stand for “Promise to Address Comprehensive Toxics”.  In essence, this law expands benefits accorded veterans exposed to burn pits and other toxic substances. But the law does a number of other important things affecting real estate leased by the Department of Veterans Affairs, in section 703 of the Act.

First, it fully authorizes 31 major lease projects requested by the VA that, in some cases, have been pending for four years.  

Secondly, it revamps the way the VA’s “major leases” are authorized.  Heretofore, the VA needed to enact a public law (typically the VA’s annual authorization and appropriation act) to secure authorization for these leases. Now, courtesy of the PACT Act, the authorization process for major leases will parallel the committee approval process that GSA undertakes for its prospectus-level projects meaning the VA must submit their lease projects for authorization by the Senate and House Committees on Veterans’ Affairs. 

Third, what constitutes a VA “major lease” has been redefined. Formerly, it was any lease with an annual net rent of $1 million or greater. Henceforth, it is the same as the GSA prospectus threshold (currently $3.375 million in net rent) and it is directly linked with GSA’s enabling legislation such that, if the GSA prospectus threshold is increased, so too will the VA’s major lease threshold. These changes, in aggregate, represent a major advance in the workability and efficiency of the VA leasing program. 

Since the VA uses, under a delegation of authority, GSA’s leasehold acquisition authority, VA major leases will need to be authorized by both of GSA’s oversight committees (Senate Environment and Public Works and House Transportation and Infrastructure) as well as the Committees on Veterans’ Affairs of both houses.  

Without a doubt, PACT Act implementation, as it affects real property leasing, will be discussed with the VA leadership at the upcoming NFDA Conference in October.