The new Veterans Affairs secretary wants to break a logjam in Congress that has stalled 24 health care projects, including a proposed center in South Hampton Roads.
David Shulkin, whom the Senate unanimously confirmed this week, said the Department of Veterans Affairs is making changes that could allow the projects to proceed.
The 24 projects are spread across 15 states. Most are health care centers or outpatient clinics, but the list also includes proposals for research space and a mental health clinic.
The projects have bipartisan support. A recent letter to congressional leaders urging passage came at the behest of Sen. Mark Warner, a Virginia Democrat, and Sen. Susan Collins, a Republican from Maine. It had signatures from senators on both sides of the aisle.
In South Hampton Roads, the VA wants a 155,000-square-foot outpatient center that would offer primary and specialty care, day surgery, an eye clinic, a pharmacy and radiology services.
A location has not been specified, but a center that size in South Hampton Roads would relieve pressure on the Hampton VA Medical Center, which faces a rising patient workload.
The delay in Congress stems from a 2013 ruling from the Congressional Budget Office, which rates projects based on budget impact.
The VA considers these projects as long-term leases. A third party secures private financing, the center is built, then the VA makes annual lease payments that are sufficient to repay the debt. In Hampton's case, the lease would be for 20 years.
But the CBO says Congress shouldn't treat these as conventional leases. It should set aside the entire cost of the project up front: construction costs and 20 years worth of payments. That represents the true cost of taxpayers' investment.
The senators say that's not necessary. To get the projects up and running, lawmakers only need to budget money for construction and the first year's lease payments. They'll pay the 19 other annual payments in succeeding budgets.
The difference is substantial. It would cost taxpayers about $18 million to build the center and pay the first year of rent — $12.8 million in one-time costs and $5.2 million in rent. It would cost nearly $117 million to pay for everything upfront, as CBO recommends.
During his confirmation hearing, Shulkin responded in writing to a question about the leases from Sen. Thom Tillis, R-N.C., whose state also is home to many veterans.
"If confirmed," Shulkin replied, "I will work diligently with the Congressional Budget Office and Congress to come to a resolution in order to move the 24 pending leases forward."
Shulkin said the VA is changing its approach to these projects.
"Specifically, I will work with CBO to highlight the key changes VA is currently implementing to standardize our leasing process and requirement ...," he said. "It is paramount that we all work together to find a solution."
Warner noted Shulkin's support of the 24 projects in a news release.
CBO changed course on this issue in 2012. After receiving new information, it decided that the projects aren't leases in the manner of, say, someone renting an apartment.
Rather, "VA's build-to-lease contracts are similar to obtaining a mortgage to buy a house," it said in 2013, when officials testified before Congress.
If Congress did not set aside the upfront investment, it would be "at odds with established principles of federal budgeting, which require agencies to record the costs of government investments when they are made," CBO said.
Lessig can be reached by phone at 757-247-7821.