Lease for VA hospital grounds has federal approval

The federal Department of Veterans Affairs and local redevelopment partners have reached an agreement on a long-term lease for the VA campus near 70th and O streets, according to news releases from several Nebraska congressional offices.

The VA lease clears a big hurdle. But smaller hurdles remain, including an amendment to the redevelopment agreement with the city, before construction can begin, said George Achola of America First Real Estate Group. 

"We are probably looking at vertical construction in the fall," said Achola of the 70-unit apartment building, the first private project on the VA campus.

The 57-acre campus could eventually become Victory Park, home to a new VA clinic, private medical office building, rental town homes for veterans and seniors, and a remodeled VA hospital, including offices and apartments, based on the original concept.

“After months of hard work from many stakeholders, we have secured a final agreement to allow the redevelopment of the Lincoln VA to continue,” said Sen. Deb Fischer in a news release Thursday afternoon.

The agreement addresses the location of a new VA clinic and strict energy standards for the project, called Leadership in Energy and Environmental Design silver standards, said Roger Lempke, with Fischer's staff.

Veterans Affairs is looking for a site for a new VA clinic in Lincoln, a separate project from the private redevelopment of the VA campus. That decision will likely not occur until next year. 

The VA campus is one of the potential sites for the new clinic, and the local redevelopment group was seeking a clause in the long-term lease to allow its dissolution if the new clinic was to be built elsewhere.  

The development team had determined that the larger VA campus project is only feasible if the new clinic is built on the VA campus. 

The lease gives the redeveloper flexibility, with the federal decision on a clinic site likely determining "how quickly and if we build out," Achola said. 

The strict energy standards are no longer required, he said. 

Congressmen Jeff Fortenberry and Brad Ashford were also instrumental in working with the VA on the lease, Achola said. 

Fortenberry expressed his satisfaction with the agreement in a news release. "It is an extraordinary example of intergovernmental and public-private cooperation," he said. 

The Seniors Foundation of Lincoln and Lancaster County, a nonprofit group, initiated the plan and will hold the lease. Sampson Construction of Lincoln is building the apartments. 

The Seniors Foundation has been negotiating a long-term lease for the VA campus for five years. 

The redevelopment group has an agreement with the city of Lincoln to use tax-increment financing on the project, including up to $1.4 million on work in the first phase. TIF is generated from property taxes paid over 10 years on the increased vale of the redeveloped site.

The first phase now involves only the apartment building, with other projects, including renovation of the VA hospital, shifted to a second phase, Achola said.   

The group also has an agreement for federal low-income housing tax credits to help build the initial apartment complex.

The developer also received Housing and Urban Development approval for housing vouchers that will be used to subsidize the rent of homeless and near-homeless veterans living there. The apartment building is often referred to as a VASH, or Veterans Affairs Supportive Housing, project.

Fischer thanked VA Secretary Robert McDonald and his staff for working to resolve the issue. 

"After months of hard work from many stakeholders, we have secured a final agreement to allow the redevelopment of the Lincoln VA to continue," she said.

"Delays and outdated requirements threatened this project, even as the final negotiations were underway. Today’s announcement is a victory for Nebraska’s veterans and our community in Lincoln, who have waited patiently for this project to proceed."