public health purposes, including research. The computation of these public benefit allowances shall be in accordance with Exhibits A and B attached hereto and made a part hereof.

(b) Transfer of surplus real property for educational or public health purposes is subject to the disapproval of the Administrator within 30 days after notice is given to him of a proposed transfer.

(c) Transfer shall be on the following terms and conditions:

(1) The transferee shall be obligated to utilize the property continuously in accordance with an approved plan of operation.

(2) The transferee shall not be permitted to sell, lease, rent, mortgage, encumber, or otherwise dispose of the property, or any part thereof, without prior written authorization of the Department or its designee.

(3) The transferee shall file with the Department such reports covering the utilization of the property as may be required.

(4) In the event the property is sold, leased, encumbered, disposed of, or is used for purposes other than those set forth in the approved plan without the consent of the Department, all revenues or the reasonable value, as determined by the Department, of benefits to the transferee deriving directly or indirectly from such use shall be considered to have been received and held in trust by the transferee for the United States and shall be subject to direction and control of the Department. The provisions of this paragraph shall not impair or affect the rights reserved to the United States in subparagraph (6) of this paragraph.

(5) It is not the Department's policy to require transferees to carry insurance as a condition of transfer. However, where a transferee carries insurance against damages to or loss of on-site property due to fire or other hazards, and where loss of or damage to transferred Federal surplus real property occurs, said insurance and all moneys payable to the transferee, its successors or assigns, thereunder shall be held in trust by the transferee, its successors or assigns. All such moneys shall be promptly used by the transferee for the purpose of repairing and restoring the property for its former use, or replacing it with equivalent or more suitable facilities. If not so used, there shall be paid to the Treasurer of the United States an amount not exceeding the unamortized

public benefit allowance of the buildings, structures or improvements lost, damaged, or destroyed.

(6) With respect to on-site property, in the event of noncompliance with any of the conditions of the transfer, title to the property transferred, and right to immediate possession shall, at the option of the Department, revert to the Government. In the event title is reverted to the United States for noncompliance or voluntarily reconveyed in lieu of reverter, the transferee, at the option of the Department, shall be responsible and be required to reimburse the Government for the decreased value of the property not due to reasonable wear and tear, acts of God, and alterations and conversions made by the transferee to adapt the property to the educational or health use for which the property was acquired. The Government shall, in addition thereto, be reimbursed for such damages including such costs as may be incurred in recovering title to or possession of the property as it may sustain as the result of the noncompliance.

(7) With respect to off-site property, in the event of noncompliance with any of the terms and conditions of the transfer, the unearned public benefit allowance shall, at the option of the Department, become immediately due and payable or, if the property or any portion thereof is sold, leased, or otherwise disposed of without authorization from the Department or its designee, such sale, lease, or other disposal shall be for the benefit and account of the United States and the United States shall be entitled to the proceeds of any such disposal. In the event the transferee fails to remove the property or any portion thereof within the time specified, then, in addition to the rights reserved above, at the option of the Department, all right, title, and interest in and to such unremoved property shall be retransferred to other ellgible applicants or shall be forfeited to the United States.

(8) With respect to on-site property, the Government, at its option, shall have the right during any period of emergency declared by the President of the United States or by the Congress of the United States to the full unrestricted use of the surplus real property, or of any portion thereof, disposed of in accordance with the provisions of this part. Such use may be either exclusive or nonexclusive. Prior to the expiration or termination of the period of restricted use by the transferee,

the Government shall not be obligated to pay rent or any other fees or charges during the period of emergency, except that the Government shall (i) bear the entire cost of maintenance of such portion of the property used by it exclusively or over which it may have exclusive possession or control, (ii) pay the fair share, commensurate with the use, of the cost of maintenance of such surplus real property as it may use nonexclusively or over which it may have nonexclusive possession or control, (iii) pay a fair rental for the use of improvements or additions to the surplus real property made by the purchaser or lessee without Government aid, and (iv) be responsible for any damage to the surplus real property caused by its use, reasonable wear and tear, the common enemy and acts of God excepted. Subsequent to the expiration or termination of the period of restricted use, the obligations of the Government shall be as set forth in the preceding sentence and in addition, the Government shall be obligated to pay a fair rental for all or any portion of the conveyed premises which it uses.

NOTE: The final sentence above serves to clarify by publication a long-standing interpretation of the obligations of the Government not explicitly provided for prior to publication of that sentence and does not represent any alteration of policy or interpretation. It is, therefore, explanatory of the Government's obligations under conveyances executed prior to the date of its publication as well as under conveyances executed subsequent thereto.

(9) The restrictions set forth in subparagraphs (1) through (6) of this paragraph shall extend for the following periods:

(i) Thirty (30) years for land with or without improvements being acquired for use in place;

(ii) A minimum of five (5) years for facilities being acquired separately from land whether they are for use on-site or off-site. However, where the estimated economic life of the structures for the use for which they are requested is greater than 5 years, the period of limitations on the use of the structures shall be equal to their estimated economic life.

(d) Transferees by obtaining the consent of the Department may obtain abrogation of the restrictions set forth in the transfer terms, for all or any portion of the property, upon payment to the Department in accordance with the following:

(1) If the abrogation is requested by the institution for the purpose of serving the needs or purposes of a third party, payment shall be based upon the current fair market value of the conveyed property, as of the date of the request for abrogation, less amortized credit based on the original sale price of the property.

(2) If the abrogation is requested by the institution for the purpose of using the property as security for new construction, for acquiring substitute or better facilities, or for relocating elsewhere, all for the purpose of further advancing or promoting the program for which the property was originally conveyed, payment shall be based upon the original sale price as of the date of the deed, less amortization credit. Such abrogation shall be conditioned upon the requirement that all proceeds of sale obtained by the transferee in disposing of the property in excess of the amount paid the Department to obtain abrogation will be devoted to such program use. To assure this, appropriate agreements, supported by Surety Bond, or other security that may be deemed by the Department to be necessary or advisable, will be obtained from the grantee.

(3) The Government's right of recapture for use during a period of emergency will not be released unless there are exceptional circumstances.

(e) Related personal property shall be transferred as a part of the realty and in accordance with real property procedures and forms. It will be subject to the same public benefit allowance granted for the real property. Where related personal property is involved in an on-site transaction, the related personal property may be transferred by a bill of sale imposing restrictions for a period not to exceed 5 years from the date of transfer, other terms and conditions to be the same as, and made a part of the real property transaction.

§ 12.10 Deferred use, disposal terms and conditions.

(a) Surplus real property disposals under this section shall be limited to transfers of land to States and their political subdivisions and instrumentalities and tax-supported educational or public health institutions for use as sites for school or public health facilities to be constructed thereon within a maximum period of 8 years from date of transfer.

(b) Transfers under this section shall be subject to all of the general terms and

conditions set forth in § 12.9 (b) and (c) (1), (2), (3), (4), (5), (6), and (8) and, in addition, the following special terms and conditions shall apply:

(1) Transferee shall be obligated to use the property continuously, including the proposed facilities constructed thereon, in conformance with its approved plan, for a period of thirty (30) years from the date of transfer.

(2) The transferee shall be obligated to construct the proposed facilities and commence utilization of the conveyed property for educational or public health purposes in conformance with the approved plan no later than eight (8) years from the date of transfer. The Department may, in its discretion, effect transfer upon the requirement that construction be completed and utilization be commenced within a period of time less than eight (8) years from the date of transfer.

(3) The transfer shall be made in consideration of payments and public benefits inuring to the United States equal to the sale price of the property as follows: Until such time as the facilities contemplated in the transferee's approved plan have been constructed and placed in use in conformance therewith, the transferee shall pay to the United States within 1 year from the date of transfer and annually thereafter on the anniversary date thereof an amount equal to three and one-third (3) percent of the fair value of the property, together with interest at the prevailing rate as determined by the Department for the disposals of government real property upon the upaid balance of the sale price of the property. At such time as the facilities last mentioned shall have been constructed and placed in use, which may be prior to but not later than the maximum time fixed by the Department and specified in the instrument of transfer, the transferee shall be entitled to a public benefit allowance, to be applied against the unpaid balance of the sale price computed upon the basis of the benefit which has accrued or may accrue to the United States from the use of such property for educational or health purposes. In the case of a transfer of less than 100 percent public benefit allowance, the public benefit allowance shall be computed on and applied against the balance of the sale price remaining unpaid at the time of commencement of utilization in accordance with this section. The transferee shall,

at such time, make full payment in cash of any balance of the sale price remaining after application of such public benefit allowance.

(c) Prior to the transfer of any land under this section, the transferee shall submit to the Department, together with its application, an opinion of the highest legal officer of the State as to the authority of the transferee to enter into the proposed transaction, accept the property subject to the foregoing terms and conditions and undertake the obligations provided for thereunder.

(d) After the facilities have been constructed and the property has been placed into required use in conformance with the approved plan, a transferee, by obtaining the consent of the Department, may secure abrogation of the restrictions set forth in the transfer terms, consistent with the requirements of § 12.9 (d).

(e) Any installments, interest, or other payments against the sale price of property transferred under this section shall, upon a forfeiture of title to the property for breach of condition, be forfeited.

(f) If at any time it is determined that the transferee is unable to construct the facilities contemplated in the approved plan because of circumstances beyond its control, the Department may permit the transferee to obtain abrogation of all restrictions set forth in the transfer terms upon payment to the Department of (1) the current fair market value of the property, or (2) the sale price as of the date of the deed, whichever is greater, less all payments of principal made during the term of deferred use. Payments of interest and any reimbursement for administrative costs shall be forfeited.

§ 12.11 Special terms and conditions.

(a) In the case of on-site disposals, applicants shall be required to pay all external administrative costs which shall include, but not be limited to, taxes, surveys, appraisals, inventorying costs, legal fees, title search, certificate or abstract expenses, decontamination costs, government moving costs, closing fees in connection with the transaction and service charges, if any, made by State Agencies for Surplus Property under the terms of a cooperative agreement with the Department.

(b) In the case of off-site property, applicants will be required to post performance bonds, make performance guarantee deposits, or give such other

assurances as may be required by the Department or the holding agency to insure adequate site clearance and pay service charges, if any, made by State Agencies for Surplus Property under the terms of a cooperative agreement with the Department.

(c) Whenever negotiations are undertaken for disposal to nonprofit public health or educational organizations which are not instrumentalities of State or local governments of any surplus real property which cost the Government $1 million or more, the Department shall give notice to the Attorney General of the United States of the proposed disposal and the probable terms and conditions thereof. The applicant shall furnish to the Department such information and documents as the Attorney General may determine to be appropriate or necessary to enable him to give the advice as provided for by section 207 of the Act or to determine whether any other disposition or proposed disposition of the surplus real property violates the antitrust laws of the United States.

(d) Where an applicant proposes to acquire and use in place improvements located on land which the Government does not own, he shall be required, before disposal shall be consummated, to obtain a right to use the land commensurate with the duration of the restrictions applicable to the improvements. The applicant shall be required to assume, or obtain release of, the Government's obligations respecting the land including but not limited to such obligations as restoration, waste, and rent. At the option of the Department, the applicant may be permitted to post a bond to indemnify the Government against such obligations.

(e) The Department may require the inclusion on the transfer document of any other provision deemed desirable or necessary.

(f) Where an eligible applicant for an on-site transfer proposes to construct new, or rehabilitate old facilities, the financing of which must be accomplished through issuance of revenue bonds having terms inconsistent with the terms and conditions or transfer prescribed in § 12.9 (c), (d), and (e), the Department may, in its discretion, impose such alternate terms and conditions of transfer in lieu thereof as may be appropriate and effective to assure utilization of the

property for educational or public health purposes: Provided, however, That the right to repossess in the event of national emergency, as set forth in § 12.9 (c) (7) shall be reserved in every transfer.

§ 12.12 Utilization.

(a) Where property or any portion thereof is not being utilized for the purposes for which transferred, the transferee shall be required at the direction of the Department:

(1) To retransfer such property to other health or educational user as the Department may direct;

(2) To sell such property for the benefit and account of the United States; (3) To return title to such property to the United States; or

(4) To abrogate the conditions and restrictions of the transfer, as set forth in § 12.9(d), except that where property has never been placed in use for the purposes for which transferred, abrogation will not be permitted except under extenuating circumstances.

(5) When the transferee is unable to construct the proposed facilities on land conveyed under the deferred use plan, it may purchase the land as set for in § 12.10 (f).

(b) Where the transferee desires to place the property in temporary use for a purpose other than that for which the property was transferred, approval of the Department must be obtained, and will be conditioned upon such terms as the Department may impose, including but not limited to the requirement that net revenues therefrom will be payable to the Department.

§ 12.13 Form of conveyance.

(a) Transfers of surplus real property shall be on forms approved by the General Counsel of the Department and shall include the disposal terms and conditions set forth in this part and such other terms and conditions as the General Counsel may deem appropriate or necessary.

(b) Transfers of on-site property normally shall be by quitclaim deed without warranty of title.

§ 12.14 Compliance inspections and reports.

The Department, or its designee, shall make such compliance inspections as are necessary and shall require of the transferee such compliance reports and actions as are deemed necessary.

EXHIBIT A.-DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, OFFICE OF SURPLUS PROPERTY UTILIZATION PUBLIC BENEFIT ALLOWANCE FOR TRANSFER OF REAL PROPERTY FOR EDUCATIONAL PURPOSES

10

20

20

10

10

10

20

10

10

10

20

30

10

10

1 This public benefit allowance applies only to surplus real property being sold for onsite use. When surplus real property is to be moved from the site, a basic public benefit allowance of 100 percent will be granted.

2 Applicable when this is the primary use to be made of the property. The public benefit allowance for the overall program is applicable when such facilities are conveyed as a minor component of other facilities.

3 This 10 percent may include recognition of an approvable recreation program operated in such a way as to be accessible to the public yet entirely compatible with, but subordinate to, the educational program.

The maximum allowance available to eligible private, nonprofit institutions. Tax-supported institutions receive 100 percent allowance.