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108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-663

======================================================================
 
    VETERANS HEALTH PROGRAMS AND FACILITIES ENHANCEMENT ACT OF 2004

                                _______
                                

 September 8, 2004.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

   Mr. Smith of New Jersey, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 4768]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 4768) to amend title 38, United States Code, to 
authorize the Secretary of Veterans Affairs to enter into 
certain major medical facility leases, to authorize that 
Secretary to transfer real property subject to certain 
limitations, and for other purposes, having considered the 
same, reports favorably thereon with amendments and recommends 
that the bill as amended do pass.

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; REFERENCES TO TITLE 38, UNITED STATES CODE; 
                    TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Veterans Health 
Programs and Facilities Enhancement Act of 2004''.
  (b) References to Title 38, United States Code.--Except as otherwise 
expressly provided, whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of title 38, United States Code.
  (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; references to title 38, United States Code; table 
of contents.

                 TITLE I--MEDICAL FACILITIES MANAGEMENT

Sec. 101. Major medical facility leases.
Sec. 102. Department of Veterans Affairs Capital Asset Fund.
Sec. 103. Annual report to Congress on inventory of Department of 
Veterans Affairs historic properties.
Sec. 104. Authority to use project funds to construct or relocate 
surface parking incidental to a construction or nonrecurring 
maintenance project.
Sec. 105. Inapplicability of limitation on use of advance planning 
funds to authorized major medical facility projects.
Sec. 106. Improvement in enhanced-use lease authorities.
Sec. 107. Extension of authority to provide care under long-term care 
pilot programs.

                        TITLE II--OTHER MATTERS

Sec. 201. Inclusion of all enrolled veterans among persons eligible to 
use canteens operated by Veterans' Canteen Service.
Sec. 202. Enhancement of medical preparedness of Department.

                 TITLE I--MEDICAL FACILITIES MANAGEMENT

SEC. 101. MAJOR MEDICAL FACILITY LEASES.

  (a) Authorized Leases.--The Secretary of Veterans Affairs may enter 
into contracts for major medical facility leases at the following 
locations, in an amount for each facility lease not to exceed the 
amount shown for that location:
          (1) Wilmington, North Carolina, Outpatient Clinic, 
        $1,320,000.
          (2) Greenville, North Carolina, Outpatient Clinic, 
        $1,220,000.
          (3) Norfolk, Virginia, Outpatient Clinic, $1,250,000.
          (4) Summerfield, Florida, Marion County Outpatient Clinic, 
        $1,230,000.
          (5) Knoxville, Tennessee, Outpatient Clinic, $850,000.
          (6) Toledo, Ohio, Outpatient Clinic, $1,200,000.
          (7) Crown Point, Indiana, Outpatient Clinic, $850,000.
          (8) Fort Worth, Texas, Tarrant County Outpatient Clinic, 
        $3,900,000.
          (9) Plano, Texas, Collin County Outpatient Clinic, 
        $3,300,000.
          (10) San Antonio, Texas, Northeast Central Bexar County 
        Outpatient Clinic, $1,400,000.
          (11) Corpus Christi, Texas, Outpatient Clinic, $1,200,000.
          (12) Harlingen, Texas, Outpatient Clinic, $650,000.
          (13) Denver, Colorado, Health Administration Center, 
        $1,950,000.
          (14) Oakland, California, Outpatient Clinic, $1,700,000.
          (15) San Diego, California, North County Outpatient Clinic, 
        $1,300,000.
          (16) San Diego, California, South County, Outpatient Clinic, 
        $1,100,000.
  (b) Authorization of Appropriations.--There is authorized to be 
appropriated to the Secretary of Veterans Affairs for fiscal year 2005 
for the Medical Care account, $24,420,000 for the leases authorized in 
subsection (a).
  (c) Authority for Lease of Certain Lands of University of Colorado.--
Notwithstanding section 8103 of title 38, United States Code, the 
Secretary of Veterans Affairs may enter into a lease for real property 
located at the Fitzsimons Campus of the University of Colorado for a 
period up to 75 years.

SEC. 102. DEPARTMENT OF VETERANS AFFAIRS CAPITAL ASSET FUND.

  (a) Establishment of Fund.--(1) Subchapter I of chapter 81 is amended 
by adding at the end the following new section:

``Sec. 8118. Authority for transfer of real property; Capital Asset 
                    Fund

  ``(a)(1) The Secretary may transfer real property under the 
jurisdiction or control of the Secretary (including structures and 
equipment associated therewith) to another department or agency of the 
United States or to a State (or a political subdivision of a State) or 
to any public or private entity, including an Indian tribe. Such a 
transfer may be made only if the Secretary receives compensation of not 
less than the fair market value of the property, except that no 
compensation is required, or compensation at less than fair market 
value may be accepted, in the case of a transfer to a grant and per 
diem provider (as defined in section 2002 of this title). When a 
transfer is made to a grant and per diem provider for less than fair 
market value, the Secretary shall require in the terms of the 
conveyance that if the property transferred is used for any purpose 
other than a purpose under chapter 20 of this title, all right, title, 
and interest to the property shall revert to the United States.
  ``(2) The Secretary may exercise the authority provided by this 
section notwithstanding sections 521, 522 and 541-545 of title 40. Any 
such transfer shall be in accordance with this section and section 8122 
of this title.
  ``(3) The authority provided by this section may not be used in a 
case to which section 8164 of this title applies.
  ``(4) The Secretary may enter into partnerships or agreements with 
public or private entities dedicated to historic preservation to 
facilitate the transfer, leasing, or adaptive use of structures or 
properties specified in subsection (b)(3)(D).
  ``(5) The authority of the Secretary under paragraph (1) expires on 
the date that is seven years after the date of the enactment of this 
section.
  ``(b)(1) There is established in the Treasury of the United States a 
revolving fund to be known as the Department of Veterans Affairs 
Capital Asset Fund (hereinafter in this section referred to as the 
`Fund'). Amounts in the Fund shall remain available until expended.
  ``(2) Proceeds from the transfer of real property under this section 
shall be deposited into the Fund.
  ``(3) To the extent provided in advance in appropriations Acts, 
amounts in the Fund may be expended for the following purposes:
          ``(A) Costs associated with the transfer of real property 
        under this section, including costs of demolition, 
        environmental remediation, maintenance and repair, improvements 
        to facilitate the transfer, and administrative expenses.
          ``(B) Costs, including costs specified in subparagraph (A), 
        associated with future transfers of property under this 
        section.
          ``(C) Costs associated with enhancing medical care services 
        to veterans by improving, renovating, replacing, updating, and 
        establishing patient care facilities through construction 
        projects to be carried out for an amount less than the amount 
        specified in 8104(a)(3)(A) for a major medical facility 
        project.
          ``(D) Costs, including costs specified in subparagraph (A), 
        associated with the transfer, lease or adaptive use of a 
        structure or other property under the jurisdiction of the 
        Secretary that is listed on the National Register of Historic 
        Places.
  ``(c) The Secretary shall include in the budget justification 
materials submitted to Congress for any fiscal year in support of the 
President's budget for that year for the Department specification of 
the following:
          ``(1) The real property transfers to be undertaken in 
        accordance with this section during that fiscal year.
          ``(2) All transfers completed under this section during the 
        preceding fiscal year and completed and scheduled to be 
        completed during the year during which the budget is submitted.
          ``(3) The deposits into, and expenditures from, the Fund that 
        are incurred or projected for each of the preceding fiscal 
        year, the current fiscal year, and the fiscal year covered by 
        the budget.''.
  (2) The table of sections at the beginning of such chapter is amended 
by inserting after the item relating to section 8117 the following new 
item:

``8118. Authority for transfer of real property; Capital Asset Fund.''.
  (b) Initial Authorization of Appropriations.--There is authorized to 
be appropriated to the Department of Veterans Affairs Capital Asset 
Fund established under section 8118 of title 38, United States Code (as 
added by subsection (a)), the amount of $10,000,000.
  (c) Termination of Nursing Home Revolving Fund.--(1) Section 8116 is 
repealed.
  (2) The table of sections at the beginning of chapter 81 is amended 
by striking the item relating to section 8116.
  (d) Transfer of Unobligated Balances to Capital Asset Fund.--Any 
unobligated balances in the nursing home revolving fund under section 
8116 of title 38, United States Code, as of the date of the enactment 
of this Act shall be deposited in the Department of Veterans Affairs 
Capital Asset Fund established under section 8118 of title 38, United 
States Code (as added by subsection (a)).
  (e) Procedures Applicable to Transfers.--(1) Paragraph (2) of section 
8122(a) is amended to read as follows:
  ``(2) Except as provided in paragraph (3), the Secretary may not 
during any fiscal year transfer to any other department or agency of 
the United States or to any other entity real property that is owned by 
the United States and administered by the Secretary unless the proposed 
transfer is described in the budget submitted to Congress pursuant to 
section 1105 of title 31 for that fiscal year.''.
  (2) Section 8122(d) is amended--
          (A) by inserting ``(1)'' before ``Real property''; and
          (B) by adding at the end the following new paragraph:
  ``(2) The Secretary may transfer real property under this section, or 
under section 8118 of this title if the Secretary --
          ``(A) places a notice in the real estate section of local 
        newspapers and in the Federal Register of the Secretary's 
        intent to transfer that real property (including land, 
        structures, and equipment associated with the property);
          ``(B) holds a public hearing;
          ``(C) provides notice to the Administrator of General 
        Services of the Secretary's intention to transfer that real 
        property and waits for 30 days to elapse after providing that 
        notice; and
          ``(D) after such 30-day period has elapsed, notifies the 
        congressional veterans' affairs committees of the Secretary's 
        intention to dispose of the property and waits for 60 days to 
        elapse from the date of that notice.''.
  (3) Section 8164(a) is amended by inserting ``8118 or'' after 
``rather than under section''.
  (4) Section 8165(a)(2) is amended by striking ``nursing home 
revolving fund'' and inserting ``Capital Asset Fund established under 
section 8118 of this title''.
  (f) Contingent Effectiveness.--The amendments made by this section 
shall take effect at the end of the 30-day period beginning on the date 
on which the Secretary of Veterans Affairs certifies to Congress that 
the Secretary is in compliance with subsection (b) of section 1710B of 
title 38, United States Code. Such certification shall demonstrate a 
plan for, and commitment to, ongoing compliance with the requirements 
of that subsection.
  (g) Continuing Reports.--Following a certification under subsection 
(f), the Secretary shall submit to Congress an update on that 
certification every six months until the certification is included in 
the Department's annual budget submission.

SEC. 103. ANNUAL REPORT TO CONGRESS ON INVENTORY OF DEPARTMENT OF 
                    VETERANS AFFAIRS HISTORIC PROPERTIES.

  (a) In General.--Not later than December 15 of 2005, 2006, and 2007, 
the Secretary of Veterans Affairs shall submit to the Committees on 
Veterans' Affairs of the Senate and House of Representatives a report 
on the historic properties administered or controlled by the Secretary.
  (b) Initial Report.--In the initial report under subsection (a), the 
Secretary shall set forth a complete inventory of the historic 
structures and property under the jurisdiction of the Secretary. The 
report shall include a description and classification of each such 
property based upon historical nature, current physical condition, and 
potential for transfer, leasing, or adaptive use.
  (c) Subsequent Reports.--In reports under subsection (a) after the 
initial report, the Secretary shall provide an update of the status of 
each property identified in the initial report, with the proposed and 
actual disposition of each property. Each such report shall include any 
recommendation of the Secretary for legislation to enhance the 
transfer, leasing or adaptive use of such properties.

SEC. 104. AUTHORITY TO USE PROJECT FUNDS TO CONSTRUCT OR RELOCATE 
                    SURFACE PARKING INCIDENTAL TO A CONSTRUCTION OR 
                    NONRECURRING MAINTENANCE PROJECT.

  Section 8109 is amended by adding at the end the following new 
subsection:
  ``(j) Funds in a construction account or capital account that are 
available for a construction project or a nonrecurring maintenance 
project may be used for the construction or relocation of a surface 
parking lot incidental to that project.''.

SEC. 105. INAPPLICABILITY OF LIMITATION ON USE OF ADVANCE PLANNING 
                    FUNDS TO AUTHORIZED MAJOR MEDICAL FACILITY 
                    PROJECTS.

  Section 8104 is amended by adding at the end the following new 
subsection:
  ``(g) The limitation in subsection (f) does not apply to a project 
for which funds have been authorized by law in accordance with 
subsection (a)(2).''.

SEC. 106. IMPROVEMENT IN ENHANCED-USE LEASE AUTHORITIES.

  Section 8166(a) is amended by inserting ``land use,'' in the second 
sentence after ``relating to''.

SEC. 107. EXTENSION OF AUTHORITY TO PROVIDE CARE UNDER LONG-TERM CARE 
                    PILOT PROGRAMS.

  Subsection (h) of section 102 of the Veterans Millennium Health Care 
and Benefits Act (38 U.S.C. 1710B note) is amended--
          (1) by inserting ``(1)'' before ``The authority of''; and
          (2) by adding at the end the following new paragraph:
  ``(2) In the case of a veteran who is participating in a pilot 
program under this section as of the end of the three-year period 
applicable to that pilot program under paragraph (1), the Secretary may 
continue to provide to that veteran any of the services that could be 
provided under the pilot program. The authority to provide services to 
any veteran under the preceding sentence applies during the period 
beginning on the date specified in paragraph (1) with respect to that 
pilot program and ending on December 31, 2005.''.

                        TITLE II--OTHER MATTERS

SEC. 201. INCLUSION OF ALL ENROLLED VETERANS AMONG PERSONS ELIGIBLE TO 
                    USE CANTEENS OPERATED BY VETERANS' CANTEEN SERVICE.

  The text of section 7803 is amended to read as follows:
  ``(a) Primary Beneficiaries.--Canteens operated by the Service shall 
be primarily for the use and benefit of--
          ``(1) veterans hospitalized or domiciled at the facilities at 
        which canteen services are provided; and
          ``(2) other veterans who are enrolled under section 1705 of 
        this title.
  ``(b) Other Authorized Users.--Service at such canteens may also be 
furnished to--
          ``(1) personnel of the Department and recognized veterans' 
        organizations who are employed at a facility at which canteen 
        services are provided and to other persons so employed;
          ``(2) the families of persons referred to in paragraph (1) 
        who reside at the facility; and
          ``(3) relatives and other persons while visiting a person 
        specified in this section.''.

SEC. 202. ENHANCEMENT OF MEDICAL PREPAREDNESS OF DEPARTMENT.

  (a) Peer Review Panel.--In order to assist the Secretary of Veterans 
Affairs in selecting facilities of the Department of Veterans Affairs 
to serve as sites for centers under section 7327 of title 38, United 
States Code, as added by subsection (c), the Secretary shall establish 
a peer review panel to assess the scientific and clinical merit of 
proposals that are submitted to the Secretary for the selection of such 
facilities. The panel shall be established not later than 90 days after 
the date of the enactment of this Act and shall include experts in the 
fields of toxicological research, infectious diseases, radiology, 
clinical care of veterans exposed to such hazards, and other persons as 
determined appropriate by the Secretary. Members of the panel shall 
serve as consultants to the Department of Veterans Affairs. Amounts 
available to the Secretary for Medical Care may be used for purposes of 
carrying out this subsection. The panel shall not be subject to the 
Federal Advisory Committee Act (5 U.S.C. App.).
  (b) Proposals.--The Secretary shall solicit proposals for designation 
of facilities as described in subsection (a). The announcement of the 
solicitation of such proposals shall be issued not later than 60 days 
after the date of the enactment of this Act, and the deadline for the 
submission of proposals in response to such solicitation shall be not 
later than 90 days after the date of such announcement. The peer review 
panel established under subsection (a) shall complete its review of the 
proposals and submit its recommendations to the Secretary not later 
than 60 days after the date of the deadline for the submission of 
proposals. The Secretary shall then select the four sites for the 
location of such centers not later than 45 days after the date on which 
the peer review panel submits its recommendations to the Secretary.
  (c) Revised Section.--Subchapter II of chapter 73 is amended by 
adding at the end a new section with--
          (1) a heading as follows:

``Sec. 7327. Medical preparedness centers''; and

          (2) a text consisting of the text of subsections (a) through 
        (h) of section 7325 of title 38, United States Code, and a 
        subsection (i) at the end as follows:
  ``(i) Funding.--(1) There are authorized to be appropriated for the 
centers under this section $10,000,000 for each of fiscal years 2005 
through 2007.
  ``(2) In addition to any amounts appropriated for a fiscal year 
specifically for the activities of the centers pursuant to paragraph 
(1), the Under Secretary for Health shall allocate to the centers from 
other funds appropriated for that fiscal year generally for the 
Department medical care account and the Department medical and 
prosthetics research account such amounts as the Under Secretary 
determines necessary in order to carry out the purposes of this 
section.''.
  (d) Rule of Construction.--No provision of law may be construed to 
supersede or nullify this section, or an amendment made by this 
section, unless it specifically refers to this subsection and 
specifically states that it is enacted to supersede or nullify this 
section or a provision of this section.

  Amend the title so as to read:

      A bill to authorize the Secretary of Veterans Affairs to 
enter into certain major medical facility leases, to authorize 
that Secretary to transfer real property subject to certain 
limitations, otherwise to improve management of medical 
facilities of the Department of Veterans Affairs, and for other 
purposes.

                              Introduction

    On June 24, 2004, the Subcommittee on Health held a hearing 
to consider a draft bill that preceded the introduction of H.R. 
4768, a bill to authorize major medical facility leases for 
fiscal year 2005, to amend the authority of the Secretary of 
Veterans Affairs to enter into enhanced-use real property 
leases, establish a capital asset fund and for other purposes.
    Witnesses who appeared before the Subcommittee included 
Honorable Anthony J. Principi, Secretary of Veterans Affairs, 
accompanied by the following individuals from the Department of 
Veterans Affairs (VA): Honorable Tim S. McClain, General 
Counsel; Honorable William H. Campbell, Assistant Secretary for 
Management; Mrs. Laura Miller, Deputy Under Secretary for 
Health for Operations and Management; and Mr. James M. 
Sullivan, Deputy Director, Office of Asset Enterprise. 
Honorable Everett Alvarez, Jr., the former Chairman of the 
Capital Asset Realignment for Enhanced Services (CARES) 
Commission; Mr. Dennis Brimhall, President and Chief Executive 
Officer of the University of Colorado Hospital and Mr. Lawrence 
A. Biro, Network Director of the Veterans Integrated Services 
Network (VISN) 19, the Rocky Mountain Network; Mr. John L. Nau, 
III, Chairman of the President's Advisory Council on Historic 
Preservation; Mr. Dennis Samic, Treasurer, American Veterans 
Heritage Center, Inc.; Mr. Richard Jones, National Legislative 
Director, AMVETS; Mr. Rick Weidman, Director, Government 
Relations, Vietnam Veterans of America; Ms. Joy J. Ilem, 
Assistant National Legislative Director, Disabled American 
Veterans; Mr. Richard Fuller, National Legislative Director, 
Paralyzed Veterans of America; and Mr. Peter S. Gaytan, 
Principal Deputy Director, The American Legion, also provided 
testimony.
    On July 7, 2004, Honorable Rob Simmons introduced H.R. 
4768, the Veterans Health Programs and Facilities Enhancement 
Act of 2004. The original cosponsors of the bill included 
Honorable Ciro D. Rodriguez, Honorable Christopher H. Smith, 
Honorable Lane Evans, Honorable Cliff Stearns, Honorable Jeff 
Miller, Honorable Bob Beauprez, and Honorable Bob Filner. On 
July 8, 2004, the Subcommittee on Health met and unanimously 
ordered H.R. 4768 reported favorably to the full Committee.
    On July 21, 2004, the full Committee met and ordered H.R. 
4768, as amended, reported favorably to the House by unanimous 
voice vote.

                      Summary of the Reported Bill

    H.R. 4768, as amended, would:

    1.  LAuthorize leases to be paid from the medical care 
account for VA outpatient clinics or other health care 
facilities as follows: Wilmington, North Carolina, in the 
amount of $1,320,000; Greenville, North Carolina, in the amount 
of $1,220,000; Norfolk, Virginia, in the amount of $1,250,000; 
Summerfield, Florida, in the amount of $1,230,000; Knoxville, 
Tennessee, in the amount of $850,000; Toledo, Ohio, in the 
amount of $1,200,000; Crown Point, Indiana, in the amount of 
$850,000; Fort Worth, Texas, in the amount of $3,900,000; 
Plano, Texas, in the amount of $3,300,000; San Antonio, Texas, 
in the amount of $1,400,000; Corpus Christi, Texas, in the 
amount of $1,200,000; Harlingen, Texas, in the amount of 
$650,000; Denver, Colorado, in the amount of $1,950,000; 
Oakland, California, in the amount of $1,700,000; San Diego, 
California (two sites), in the amounts of $1,300,000 and 
$1,100,000, respectively.

    2.  LAuthorize appropriations of $24,420,000 for the leases 
in paragraph 1.

    3.  LAuthorize VA to enter into a long-term lease of up to 
75 years for land to construct a new medical facility on the 
Fitzsimons Campus of the University of Colorado, in Aurora, 
Colorado.

    4.  LProvide the Secretary with additional authority to 
transfer unneeded real property and retain the proceeds from 
the transfer.

    5.  LRequire VA to receive fair market value for any 
transfer of real property, except when transferred to providers 
of homeless veterans' services receiving grants under section 
2011 of title 38, United States Code.

    6.  LEstablish a new ``Capital Asset Fund'' for deposit of 
proceeds from transfers of real property to defray VA's cost of 
such transfers, including demolition, environmental 
remediation, maintenance, repair, historic preservation and 
administrative expenses.

    7.  LRequire the Secretary to include in the Department's 
annual budget submission to Congress information on real 
property transfers, and Capital Asset Fund deposits and 
expenditures.

    8.  LAuthorize an appropriation of $10,000,000 for the 
Capital Asset Fund.

    9.  LTerminate the Nursing Home Revolving Fund and transfer 
unobligated balances to the Capital Asset Fund.

    10. LMake the property transfer authority contingent on the 
Secretary's certification that VA facilities maintain long-term 
care capacity as required by law.

    11. LRequire an inventory and annual reports to Congress on 
the status of and plans for VA historic properties.

    12. LAuthorize the use of project funds to construct or 
relocate surface parking incidental to an authorized major 
medical facility construction project.

    13. LProvide the Secretary flexibility in using funds to 
develop advance planning for major construction projects 
previously authorized by law.

    14. LExempt VA from state and local land use laws under the 
enhanced-use lease authority.

    15. LExtend until December 31, 2005, VA's authority to 
provide care to veterans participating in certain long-term 
care demonstration projects previously authorized in the 
Veterans Millennium Health Care and Benefits Act.

    16. LClarify that veterans enrolled in VA health care are 
eligible to use the Veterans' Canteen Service (VCS).

    17. LReduce the amount authorized to establish four 
National Medical Emergency Preparedness Centers from $20 
million to $10 million per year.

                       Background and Discussion

    Major medical facility leases.--Section 8104(a)(2) of title 
38, United States Code, prohibits VA from obligating or 
expending funds for a lease costing more than $600,000 per year 
unless that lease has been specifically authorized by law. VA's 
fiscal year 2005 budget submission included a request for 
authority to execute six major medical facility leases in the 
following locations: (1) Greenville, North Carolina, Outpatient 
Clinic, $1,220,000; (2) Wilmington, North Carolina, Outpatient 
Clinic, $1,320,000; (3) Oakland, California, Outpatient Clinic, 
$1,700,000; (4) Toledo, Ohio, Outpatient, Clinic, $1,200,000; 
(5) Crown Point, Indiana, Outpatient Clinic, $850,000; and (6) 
Denver, Colorado, Health Administration Center, $1,950,000. 
These leases would replace or expand leases for existing 
facilities in these locations.
    Additionally, VA's Five-Year Capital Plan for 2005-2009, 
submitted to the Committees on Veterans' Affairs in May, 2004, 
included a request for 11 additional major medical facility 
leases at the following locations: (1) Norfolk, Virginia, 
Outpatient Clinic, $1,250,000; (2) Summerfield, Florida, Marion 
County Outpatient, Clinic, $1,230,000; (3) Knoxville, 
Tennessee, Outpatient Clinic, $850,000; (4) Fort Worth, Texas, 
Tarrant County Outpatient Clinic, $3,900,000; (5) Plano, Texas, 
Collin County Outpatient Clinic, $3,300,000; (6) San Antonio, 
Texas, Northeast Central Bexar County Outpatient Clinic, 
$1,400,000; (7) Corpus Christi, Texas, Outpatient Clinic, 
$1,200,000; (8) Harlingen, Texas, Outpatient Clinic, $650,000; 
(9) Waco/Marlin, Texas, Outpatient Clinic, $2,600,000; (10) San 
Diego, California, North County Outpatient Clinic, $1,300,000; 
and (11) San Diego, California, South County, Outpatient 
Clinic, $1,100,000.
    Section 101 of the bill would authorize 16 of the 17 
requested leases and appropriations of $24,420,000 to support 
them. Of the 16 leases, the leases in Norfolk, Virginia; 
Summerfield, Florida; Plano, Texas, and San Antonio, Texas, 
would be for new facilities. The remaining 12 leases are 
replacements or expansions for existing leased facilities. The 
lease requested for Waco/Marlin, Texas, Outpatient Clinic was 
not included in the bill because the Secretary's Decision 
Document on Capital Asset Realignment for Enhanced Services 
(CARES), submitted to the Committees on Veterans Affairs in 
May, 2004, required a study to assess the future of the mission 
of the Waco campus. The study is expected to be completed by 
January 1, 2005. Advancing a major medical facility lease in 
Waco/Marlin, Texas, for fiscal year 2005 before the study 
findings are available would be premature.
    Section 213 of Public Law 108-170, the Veterans Health 
Care, Capital Asset, and Business Improvement Act of 2003, 
authorized the Secretary to carry out advance planning of a 
replacement facility in conjunction with the University of 
Colorado and the Department of Defense (DOD). As planned, VA 
would construct a new medical facility at the University of 
Colorado Fitzsimons campus. The replacement facility would be a 
Federal tower housing the medical services of the Denver 
Veterans Affairs Medical Center and the medical services of 
Buckley Air Force Base. VA's current leasing authority is 
limited to 20 years, an insufficient period of time for VA to 
acquire a land interest for the construction of a new medical 
facility, given the nature of the pending investment. The 
Committee bill would provide VA with new leasing authority to 
enter into a long-term lease of up to 75 years. The new 
authority would ensure the government a long-term interest in 
the land, to warrant the construction of a multi-million dollar 
facility.

    Department of Veterans Affairs Capital Asset Fund.--Section 
102 of the bill would amend chapter 81 of title 38, United 
States Code, to add a new section 8118 to provide the Secretary 
with new authority to transfer by sale, exchange or lease 
unneeded real properties currently in VA's portfolio; would 
establish a new ``Capital Asset Fund'' to finance transfers; 
and would repeal the Nursing Home Revolving Fund in section 
8116 of title 38, United States Code.
    In place of the Nursing Home Revolving Fund, a new fund 
would be established to be known as the Capital Asset Fund. 
This change would acknowledge that VA has not been aggressive 
in making property transfers for the benefit of the Nursing 
Home Revolving Fund. Developing infrastructure to meet 
veterans' needs for long-term care has been a low priority of 
the VA for many years. Residual balances from the Nursing Home 
Revolving Fund would be authorized to be deposited into the 
Fund, and the Fund would be authorized initial appropriations 
of $10,000,000.
    This Capital Asset Fund would be used as well for the 
general purpose of defraying VA's cost of transferring real 
property, including demolition, environmental restoration, 
maintenance and repair, and for historic preservation and 
administrative expenses. The new property transfer authority 
would establish ``fair market value'' as the basis for property 
transfers. The Secretary would be required to include in each 
year's budget submission to Congress a report of both the uses 
of the Capital Asset Fund and descriptive information on each 
completed, pending and planned property disposal.
    To ensure VA would meet its commitment to the long-term 
care needs of veterans, the property transfer authority in this 
bill would be contingent upon the Secretary certifying that VA 
facilities maintain long-term care capacity as required by 
subsection (b) of section 1710B of title 38, United States 
Code. The bill would require the Secretary to submit an update 
on that certification every six months until the certification 
is included in the Department's annual budget submission.

    Annual report to Congress on inventory of Department of 
Veterans Affairs historic properties.--Many of VA's important 
historic buildings are poorly maintained or falling into ruin. 
The Federal Advisory Council on Historic Preservation has 
testified that some of these facilities date from the 19th 
century following the American Civil War, and many more were 
constructed as a part of the Nation's response to caring for 
wounded soldiers and sailors in World Wars I and II. 
Approximately 40 percent of the VA's medical centers are 
identified ``historic districts,'' as defined by the National 
Register of Historic Places, and contain more than 1,900 
historic structures. In addition, a large number of properties 
are individually listed or eligible for listing in the National 
Register, including at least 32 archaeological sites.
    Section 103 of the bill would require VA to establish a 
national inventory of historic VA properties, and would require 
reports to Congress over several years on the status and plans 
associated with any VA property listed on the National Register 
of Historic Places. The Committee concluded that VA should use 
the new Capital Asset Fund to preserve historic VA properties, 
among other purposes.

    Authority to use project funds to construct or relocate 
surface parking incidental to a construction or non-recurring 
maintenance project.--Non-recurring maintenance and 
construction projects at medical facilities frequently involve 
relocating existing facility parking lots to make way for the 
construction projects involved. Current law requires VA to use 
the Parking Revolving Fund authorized in section 8109 of title 
38, United States Code, as the authority and funding source to 
establish all VA health care related parking facilities. 
Surface parking lots are included in the definition of parking 
facilities. This specific-purpose fund is partitioned from any 
non-recurring maintenance or major medical facility 
construction account authorized by Congress for use for the 
projects themselves. The dual funding necessitates a separate 
contracting process and needlessly complicates projects.
    Section 104 of the bill would provide VA authority to use 
funds for the primary construction project for related parking 
lot relocation. This would eliminate the administrative burden 
of separate financial accounting for parking lot projects.

    Inapplicability of limitation on use of advanced planning 
funds to authorized major medical facility projects.--Section 
8104 of title 38, United States Code, prohibits the Secretary 
from obligating advance planning funds for major medical 
facility construction projects in excess of $500,000 until 30 
days after submission of a report to the Committees on 
Veterans' Affairs of the Senate and House of Representatives on 
the proposed obligation. This reporting requirement delays 
design planning for projects that have been expressly approved 
by Congress in prior authorization and appropriations acts. 
Section 105 of the bill would eliminate the burden of reporting 
as it applies to projects that have previously been authorized 
and appropriated by Congress.

    Improvement in enhanced-use lease authorities.--Section 
8166 of title 38, United States Code, provides the Secretary 
permissive authority to disregard State and local laws relating 
to building codes, permits or inspections that would regulate 
or restrict construction, alternation, repair, remodeling or 
improvement of VA property associated with an enhanced-use 
lease under section 8162 of title 38, United States Code. 
Section 106 of the bill would add to existing exemptions from 
State and local laws for enhanced-use leases any land-use laws.

    Extension of authority to provide care under long-term care 
pilot programs.--The Veterans Millennium Health Care and 
Benefits Act established an innovative three-year pilot program 
in long-term care. To respond to this requirement, VA 
established a three-site program along the lines of the 
Medicare ``Program of All-Inclusive Care for the Elderly,'' 
known as the ``PACE'' program. The Act was intended to test the 
feasibility, acceptability, outcomes and costs of care using 
different models of care management and delivery. The three 
program sites are Dayton, Ohio; Denver, Colorado; and Columbia, 
South Carolina. The authority for the pilot program expires 
December 31, 2004. VA has requested authority to extend for one 
year the duration of this authority to allow VA to continue to 
deliver the care participating veterans are receiving in these 
locations. Section 107 of the bill would extend VA's authority 
to provide care to veterans in these pilot programs until 
December 31, 2005. This would allow for an orderly transition 
of health care services for those veterans participating in the 
PACE program at the termination of the current authority.

    Inclusion of all enrolled veterans among persons eligible 
to use canteens operated by Veterans' Canteen Service.--The 
Veterans' Canteen Service is authorized in chapter 78, of title 
38, United States Code, to provide essential commercial 
products and services to veterans hospitalized and domiciled in 
VA hospitals and homes. Over the past ten years, VA's health 
care system has shifted significantly from institutional and 
inpatient services to outpatient primary care. Simultaneously, 
States have taken on a significantly larger role in caring for 
veterans in need of long-term, institutional care. Thus, the 
formal mission statement of the Canteen Service, to provide 
services to veterans ``hospitalized or domiciled,'' has become 
increasingly inconsistent with VA's larger health care mission. 
Section 201 of the bill would state that the Veterans' Canteen 
Service mission is to serve veterans enrolled in the VA health 
care system.

    Enhancement of medical preparedness of Department.--The 
Department of Veterans Affairs Emergency Preparedness Act of 
2002 requires the Secretary to establish four Medical Emergency 
Preparedness Research Centers. These centers have not been 
established. Section 202 of the bill would restate the intent 
of Congress that a series of specific actions be taken by the 
Secretary to establish the centers by dates certain, in 
accordance with the original intent of Congress.

                      Section-By-Section Analysis

    Section 1 of the bill would name the Act the ``Veterans 
Health Programs and Facilities Enhancement Act of 2004.''

    Section 101(a) of the bill would authorize the Secretary of 
Veterans Affairs to enter into 16 specified major medical 
facility leases that are required to be authorized by law 
because the cost of the lease exceeds $600,000 per year.

    Section 101(b) of the bill would authorize $24,420,000 to 
be appropriated in fiscal year 2005 to VA for the leases 
authorized in subsection (a).

    Section 101(c) of the bill would authorize the Secretary to 
enter into a lease for real property located at the University 
of Colorado, Fitzsimons Campus, for a period up to 75 years.

    Section 102(a) of the bill would amend subchapter I of 
chapter 81 of title 38, United States Code, to add a new 
section 8118 to provide for the transfer of real property under 
the jurisdiction or control of the Secretary, and for 
establishment of a Capital Asset Fund.

    New section 8118(a)(1-5) would authorize the Secretary to 
transfer VA real property, including land, structures and 
equipment associated with the property by sale or exchange to 
another Federal agency, a state or a political subdivision of a 
State, or any public or private entity; require VA to receive 
fair market value for any transfer of real property, except 
when transferred to providers of homeless veterans' services 
receiving grants under section 2011 of title 38, United States 
Code; and provide for expiration of the authority seven years 
after the date of enactment of this new section.

    New section 8118(b)(1-3) would establish in the Treasury a 
fund known as the Capital Asset Fund and authorize VA to 
deposit proceeds from the transfer of VA real property into the 
Fund; authorize VA to expend Fund deposits for costs associated 
with the transfer of real property, including demolition, 
environmental remediation, maintenance, repair, historic 
preservation, related administrative expenses; authorize VA to 
expend Fund deposits for future transfers; authorize VA to 
expend Fund deposits to enhance medical care services by 
improving, renovating, replacing, updating, and establishing 
patient care facilities.

    New section 8118(c) would require the Secretary to include 
in the annual VA budget reports submitted to Congress the 
transfers to be undertaken during that fiscal year, completed 
during the preceding fiscal year, and planned or scheduled to 
be completed during that fiscal year; and deposits into and 
expenditures from the Fund incurred or projected for the 
preceding fiscal year, current fiscal year, and fiscal year 
covered by the proposed budget.

    Section 102(b) would authorize an initial appropriation for 
the Capital Asset Fund established under new section 8118 in 
the amount of $10,000,000.

    Section 102(c) would repeal section 8116 of title 38, 
United States Code, the Nursing Home Revolving Fund.

    Section 102(d) would authorize the transfer of unobligated 
balances from the repealed Nursing Home Revolving Fund into the 
Capital Asset Fund established under new section 8118.

    Section 102(e) would amend paragraph 2 of section 8122(a) 
of title 38, United States Code, to establish procedures 
applicable to transfers of VA properties including: 
notification in the budget submitted to Congress pursuant to 
section 1105 of title 31, United States Code; placing a notice 
of intent to transfer in applicable local newspapers and the 
Federal Register; holding public hearings; notification to the 
Administrator of General Services and waiting 30 days after 
each such notice; and notifying the Committees on Veterans' 
Affairs of the House and Senate of intention to dispose of 
properties and waiting 60 days from the date of each such 
notice.

    Section 102(f) would make the property transfer authority 
established by new section 8118 contingent on the Secretary's 
certification to Congress that VA is in compliance with the 
long-term care capacity requirements of subsection (b) of 
section 1710B of title 38, United States Code.

    Section 102(g) would require the Secretary to submit an 
update to Congress on the certification established in section 
102(f) every six months until the certification is included in 
VA's annual budget submission.

    Section 103(a) of the bill would require VA to submit a 
report to the Committees on Veterans' Affairs of the Senate and 
House of Representatives by December 15 for fiscal year 2005 
and two subsequent years on the status of and plans for VA 
historic properties.

    Section 103(b) would require the Secretary to include in 
the initial report set forth in subsection (a) a description, 
classification, current physical condition and potential for 
transfer, leasing or adaptive use of each historic property.

    Section 103(c) would require the Secretary to include in 
subsequent reports set forth in subsection (a) an update of the 
status of each property identified in the initial report and 
recommendations for legislation to enhance transfer, leasing or 
adaptive use of such properties.

    Section 104 of the bill would amend section 8109 of title 
38, United States Code, to add a new subsection (j) to 
authorize the use of available project funds to construct or 
relocate surface parking, when incidental to an authorized non-
recurring maintenance or major medical facility construction 
project.

    Section 105 of the bill would amend section 8104 of title 
38, United States Code, to add a new subsection (g) to 
eliminate the existing limitation that requires VA to submit a 
report to Congress and wait 30 days before obligating advanced 
planning funds over $500,000 for the design or development of a 
major medical facility construction project previously 
authorized by law.

    Section 106 of the bill would amend section 8166(a) of 
title 38, United States Code, to include ``land-use'' in the 
existing list of permissive exemptions from state and local 
laws for enhanced-use leases.

    Section 107 of the bill would amend subsection (h) of 
section 102 of the Veterans Millennium Health Care and Benefits 
Act to extend VA's authority to provide services under the 
long-term care pilot programs authorized by that Act until 
December 31, 2005.

    Section 201 of the bill would amend section 7803 of title 
38, United States Code, to expand the definition of persons 
eligible to use the Veterans' Canteen Service to include all 
individuals enrolled in VA health care under section 1705 of 
title 38, United States Code, or employed at VA facilities, as 
well as families and relatives of veteran patients.

    Section 202(a) of the bill would require the Secretary to 
establish a peer review panel not later than 90 days after the 
date of enactment of this Act to assist VA in selecting 
facilities to serve as sites for centers authorized under 
section 7327 (formerly section 7325).

    Section 202(b) of the bill would: require the Secretary to 
solicit proposals for centers authorized in new section 7327 
not later than 60 days after enactment of this Act; set a 
deadline for proposal submissions not later than 90 days after 
the solicitation is announced; require the peer review panel 
established under subsection (a) to submit recommendations to 
the Secretary not later than 60 days after the proposal 
deadline; and require the Secretary to select four sites for 
the location of such centers not later than 45 days after the 
date on which the peer review panel recommendations are 
submitted.

    Section 202(c) of the bill would amend subchapter II of 
chapter 73 of title 38, United States Code, to add a new 
section 7327, Medical preparedness centers.

    New Section 7327(a-h) would recodify the text of 
subsections (a-h) of section 7325 of title 38, United States 
Code.

    New Section 7327(i)(1) and (2) would authorize $10,000,000 
to be appropriated in fiscal year 2005 and each subsequent year 
through 2007 for the centers authorized in new section 7327; 
and require the Under Secretary for Health to allocate from 
other appropriated funds for a fiscal year such sums as 
necessary to carry out the purposes of new section 7327.

    Section 202(d) of the bill would provide a rule of 
construction with respect to subsequent laws which purport to 
amend any of the provisions contained in this section of the 
bill.

                    Performance Goals and Objectives

    Department of Veterans Affairs' performance goals and 
objectives are established in annual performance plans and are 
subject to the Committee's regular oversight and evaluation by 
the U.S. Government Accountability Office. VA also publishes a 
performance and accountability report for each fiscal year.

              Statement of the Views of the Administration

 Statement of The Honorable Anthony J. Principi, Secretary of Veterans 
   Affairs, Before The Subcommittee on Health, Committee on Veterans 
                 Affairs, U.S. House of Representatives

                             June 24, 2004

    H.R. 4768

    Mr. Chairman and Members of the Subcommittee:

    Thank you for providing the Department of Veterans Affairs (VA) 
this opportunity to discuss my recent decisions surrounding the Capital 
Asset Realignment for Enhanced Services (CARES) and the draft of a 
proposed bill to be entitled, ``The Department of Veterans Affairs Real 
Property and Facilities Improvement Act of 2004.'' The bill contains 
several provisions that would significantly enhance VA's ability to 
manage and expand its capital resources while promoting efficiencies, 
and cost savings. Most importantly, the bill would facilitate the 
implementation of CARES. I request an opportunity to more closely 
review the specific provisions of the bill and supply the results of 
our review for the record. [Subsequently, the Department provided no 
additional views on the bill.]
    As you know, last month I announced my decision on the future of 
VHA's capital infrastructure and publicly released my CARES Decision 
Document, copies of which have been provided to the Committee. It is 
not my intention today to discuss the details of the entire decision 
document. Instead, I will focus my discussion on the following issues 
of particular interest to the Committee:

    1.  The CARES Implementation Board;
    2.  Community Based Outpatient Clinics;
    3.  Mental Health Strategic Plan;
    4.  Long-term Care Strategic Plan;
    5.  Veterans Rural Access Hospital;
    6.  Special Disability Program for Spinal Cord Injury and 
Disorders;
    7.  Capital Initiatives for the Veterans Health Administration; and
    8.  VA/DoD Sharing Opportunities

Before I address those topics, however, I would like to provide a brief 
background on CARES.

    Background

    CARES is a data-driven planning process designed to project future 
demand for health care services, compare projected demand against 
current supply, and identify the capital requirements and asset 
realignments VA needs to meet future demand for services, improve 
access to and quality of services, and improve the cost effectiveness 
of VA's health-care system. The CARES process is a comprehensive, 
system-wide approach to projecting into the future the appropriate 
function, size and location of VA facilities. CARES was initiated to 
provide a plan for management of VA's capital infrastructure into the 
future that can be improved over time. For that reason, the tools and a 
process used to develop CARES will be integrated into annual capital 
and strategic planning cycles, ensuring continued and systematic 
planning for the capital resources VA needs to provide quality health 
care to veterans.
    On February 12 of this year, the CARES Commission presented its 
final report to me. Following an intensive review of this report, I 
issued my ``CARES Decision'' on May 7, 2004. In that decision, I 
formally accepted the CARES Commission's recommendations using the 
flexibility the Commission provided to minimize the effect of any 
campus or service realignment on continuity of care to veterans 
currently receiving services. My Decision and the CARES Commission 
Report form the blueprint that will effectively guide the Department as 
it moves forward to enhance and improve health-care delivery to 
veterans by modernizing and more effectively managing its capital 
infrastructure.

    CARES Implementation Board

    To oversee the many and varied actions needed to carry out my CARES 
Decision, I established the CARES Implementation Board, which I will 
personally chair. The Board will provide Departmental oversight of 
CARES implementation and advise me on CARES-related decisions. The 
Board is an intra-Departmental, senior-level group and will ensure that 
implementation actions are consistent with my CARES Decision, meet the 
Decision's aggressive timeframes, and honor the personal and public 
commitments made during the CARES process.
    The Board will actively participate in developing the methodologies 
and structure of CARES reviews and studies as called for in my 
Decision. All CARES decisions will be presented to the Board for my 
approval, unless approved by me for delegation. Recently the Board held 
its first meeting and reviewed options regarding the composition and 
membership of committees, task forces and other groups that will be 
established to conduct the various studies outlined in my CARES 
Decision. I expect that guidance will be finalized for my approval in 
the near future so that these groups may begin their studies and 
reviews.

    Community-Based Outpatient Clinics (CBOCs)

    VA is committed to continuing its efforts to meet national 
standards for access to care for our Nation's veterans by establishing 
new sites of care through CBOCs. VA will also continue to explore 
opportunities to improve management of existing CBOCs through more 
effective staffing, expanding hours of operation, and examining 
opportunities to augment services where appropriate.
    To ensure that VA fulfills its commitment, I established priority 
criteria for the development of new CBOCs through the CARES process. 
The priority criteria include the development of CBOCs that:

    1.  are in markets with large numbers of enrollees, are outside of 
access guidelines, and are below VA national standards for primary care 
access;
    2.  are in markets that are classified as rural or highly rural and 
are below VA national standards for primary care access;
    3.  take advantage of VA/DoD sharing opportunities;
    4.  are associated with the realignment of a major facility; and
    5.  are required to address the workload in existing overcrowded 
facilities.

    These criteria reflect my determination to produce more equitable 
access to VA services across the country, particularly in rural and 
highly rural areas where there are often limited health care options. 
They also reflect VA's ongoing commitment to strengthening sharing 
opportunities with the Department of Defense.

    My Decision identifies 156 priority CBOCs. These priority CBOCs are 
targeted for implementation by 2012 pending availability of resources, 
validation with the most current data available, and approval through 
the National CBOC Approval Process and the CARES Implementation Board. 
As VA proceeds in implementing CARES and engages in future planning, 
the locations of these CBOCs may change, but the priorities will remain 
constant.
    Planning the implementation of new CBOCs has begun. On May 13, 
2004, a revised VA Handbook on Planning and Activation of CBOCs was 
issued to all VISNs. At the same time, VISNs were provided guidance on 
submission of new CBOC business plans. VISNs are now in the process of 
preparing business plans for priority CBOCs identified in my Decision 
that are planned for activation in FY 2004. Additionally, VISNs are 
preparing business plans for priority CBOCs planned for FY 2005 that 
require immediate review in order to proceed with VA/DoD agreements and 
leasing or contracting obligations. These business plans are to be 
completed and submitted to the Acting Under Secretary for Health by the 
end of this month. A review panel will evaluate the business plans, 
score the applications and develop a recommendation that the Acting 
Under Secretary for Health will submit to me for approval.
    VISNs also received guidance regarding establishing outreach 
clinics to an existing primary care site, changing the location of an 
existing CBOC, leasing additional space for an existing CBOC, expanding 
services at an existing CBOC and changing management models at CBOCs, 
such as VA-staffed or contract. To obtain approval for any of these 
changes to CBOCs, the VISNs must submit a justification for the change 
and a summary of stakeholder comments. In the case of establishing an 
outreach clinic subordinate to an existing primary care site, approval 
will be granted only for areas that meet the distance criteria for 
highly rural areas specified in the national planning criteria.
    I should point out that although I established priority criteria 
and identified 156 priority CBOCs that meet these criteria, these 
priorities do not prohibit the VISNs from pursuing other CBOC 
opportunities. VISNs may submit business plans for establishing CBOCs 
earlier than originally indicated in my Decision or for establishing 
CBOCs not referenced in my Decision. In either scenario, however, the 
VISN must demonstrate that it will, at the same time, be able to open 
any priority CBOC on schedule.
    Mr. Chairman, I recognize that resources are not available to open 
all of the priority clinics immediately. I will work closely with 
Congress for approval of appropriations to enhance access to VA health 
care services as well as expand the types of services offered in 
outpatient sites, particularly specialty care such as mental health 
services. Moreover, VA will manage implementation of CBOCs by applying 
the revised CBOC criteria within the existing National CBOC Approval 
Process and through the authority of the CARES Implementation Board. 
This will ensure a careful and considered implementation that mandates 
VISNs develop sound business plans and ensures that national criteria 
are met and that resources are available to provide the high quality of 
care veterans expect from VA.

    Mental Health Strategic Plan

    VA is committed to meeting the mental health needs of our Nation's 
veterans, and it is critical that VA's health care system consistently 
provides comprehensive mental health care services at a high level of 
quality across the country. Effective mental health treatment requires 
that veterans have appropriate access to a full continuum of mental 
health care services.
    In my Decision I called for a comprehensive VA Mental Health 
Strategic Plan. This strategic plan, which is nearing completion, 
incorporates the recommendations of the report of the President's New 
Freedom Commission on Transforming Mental Health Care in America 
through VA's Action Agenda for Transforming Mental Health Care in VA. 
The recommendations resulting from the VA Mental Health Strategic Plan 
will require every VISN to develop mental health market plans that 
incorporate revised projections, which must include projected demand 
for outpatient mental health services and acute psychiatric inpatient 
care. Additionally, policies developed in the Mental Health Strategic 
Plan, such as special emphasis on integrating strategies to meet the 
future geropsych needs of the enrolled veteran population and 
incorporating the findings VHA's Work Group reviewing the President's 
New Freedom Commission on Mental Health Report, will be incorporated in 
the VISN's plans to ensure that comprehensive mental health services 
are included in CBOCs; that veterans have access to a full continuum of 
mental health care services, which are consistent across all VISNs; and 
ensure acute inpatient mental health services are collated with other 
inpatient services. I expect to receive the Mental Health Strategic 
Plan later this summer.

    Long-term Care Strategic Plan

    Mr. Chairman, many stakeholders have expressed concerns about how 
VA intends to address the provision of long-term care within the 
context of CARES. In order to respond to these concerns, I directed in 
my Decision that VHA develop a Long-term Care Strategic Plan addressing
      consistent access for nursing home care;
      geropsych needs;
      domiciliary care;
      long-term psychiatric care for the seriously mentally 
ill;
      expanding care coordination in the home;
      residential care, assisted living facilities; and
      other less restrictive care settings.

    I am currently considering various policy options that have been 
designed to adhere to certain core principles, which include a policy 
that is clinically sound, is fair for veterans, can be modeled for VISN 
planning, and is acceptable to Congress. Some of the key elements that 
I will strongly consider are the extent to which the Long-term Care 
Strategic Plan:

      focuses on veterans who need care for a short duration, 
for services to restore function following a period of hospitalization, 
for example, patients who have had a heart attack, stroke or hip 
replacement; veterans in need of respite care, and geriatric evaluation 
and management to stabilize medically complex patients; or end-of-life, 
hospice and palliative care for those who are terminally ill; and
      focuses on veterans who can no longer be maintained 
safely in home and community-based settings such as elderly patients 
needing help with activities of daily living, or who require long-term 
maintenance care and specialized services not generally available in 
the community, such as chronically mentally ill patients, spinal cord 
injury or traumatic brain injury patients, and ventilator dependent 
patients.

    The Long-term Care Strategic Plan will be designed to improve the 
veteran's quality of life by seeking to preserve personal dignity, 
enhance emotional well being, and provide care in the least restrictive 
setting possible.
    In addition to long-term nursing home care, VA is reviewing its 
long term-care policy in other key program areas, such as domiciliary 
and residential rehabilitation programs. VA's long-term care policies 
relating to these programs will assure that programs in domiciliary 
structures are focused on residential rehabilitation and that each 
patient has a clinical treatment plan. As each program (e.g., mental 
health, substance abuse, and long-term care) defines its discrete 
capacity for residential rehabilitation, VA will have a more complete 
picture of the total capacity requirement for domiciliaries.
    I will, of course, keep Congress informed of the Long-term Care 
Strategic Plan once adopted. Once again, in all cases, the Long-term 
Care Strategic Plan will be designed to improve the veteran's quality 
of life by seeking to preserve personal dignity, enhance emotional well 
being, and provide care in the least restrictive setting possible.

    Veterans Rural Access Hospital

    VA is also reviewing the ``critical access hospital'' concept that 
was initially introduced to help ensure the quality of the care that 
veterans receive at VA's small facilities. Recognizing that some small 
and rural facilities will be unable to maintain the workload necessary 
to perform certain surgical procedures or manage some complex illnesses 
effectively, VA will establish parameters to ensure high quality 
patient care. A new policy, Veterans Rural Access Hospital (VRAH), is 
under development and will specifically define the clinical and 
operational characteristics of small and rural facilities within VA. I 
have directed that the VRAH policy be completed later this month. In 
the interim, the missions of small facilities recommended for change 
will not be altered. Once the new VRAH policy is approved, however, VA 
will study the scope of services performed at VA's small and rural 
facilities using the policy's criteria and the guidance that will be 
provided. I anticipate the outcome of this study will be clarification 
of the type and complexity of surgical procedures that can be safely 
accomplished in small and rural facilities.

    Special Disability Program for Spinal Cord Injury and Disorders 
(SCI&D;)

    I recommitted VA to excellence in care for veterans with SCI&D; by 
approving new SCI&D; Centers in Syracuse, Denver, Minneapolis, and VISN 
16, and a certified SCI&D; outpatient clinic in Philadelphia. I also 
approved expansion of existing SCI&D; Centers in Memphis, Cleveland, 
Augusta, and Long Beach. As part of the implementation process for the 
new centers and the expansion of existing centers, I requested that VHA 
validate the number of SCI&D; beds to ensure the appropriate need for 
and distribution between acute and long-term SCI&D; beds. I also 
requested that VHA validate the expansion of the existing SCI&D; Center 
or development of a new SCI&D; Center in South Florida.
    In preparation for implementation of the new and expanded SCI&D; 
Centers, members of VHA's SCI&D; Strategic Health Care Group have 
reviewed and validated SCI&D; beds. A balance has been achieved between 
acute and long-term care planning based on dual, actuarial, demand-
forecasting models that have been peer-reviewed, scrutinized, and 
vetted. The ``CARES Major Construction Projects FY 2004-2010'' 
appropriately includes plans for expansion of the existing SCI&D; Center 
in Tampa. The new VISN 16 SCI&D; Center needs inclusion in the ``CARES 
Major Construction Projects FY 2004-2010''. Ongoing planning for long-
term care outside the SCI&D; Centers will be refined after publication 
of VA's Long-Term Care Strategic Plan.

    Capital Initiatives

    I am pleased to announce that VA has developed a long-term Capital 
Plan, which will be delivered to members of Congress shortly. With more 
than 5,500 buildings and approximately 32,000 acres of land nation-
wide, it is critical that VA have a systematic and comprehensive 
framework for managing its portfolio of capital assets. This plan 
provides that framework and is a sound blueprint for effective 
management of the Department's capital investments that will lead to 
improved resource use and more effective health care and benefits 
delivery for our Nation's veterans.
    As we strive to meet the many challenges that lie ahead, this plan 
will act as our guide. I recently announced my decisions on the Capital 
Asset Realignment for Enhanced Services (CARES) process. CARES is the 
most comprehensive analysis of VA's health-care infrastructure that has 
ever been conducted and my decision provides a 20-year blueprint for 
the critical modernization and realignment of VA's health care system. 
Consistent with my decision, the capital plan outlines CARES 
implementation and identifies priority projects that will improve both 
the environment of care at, and expand access to, VA medical facilities 
and ensure more effective operations by redirecting resources from 
maintenance of vacant and underused buildings and reinvesting them in 
veterans' health care. Implementation of CARES will require substantial 
investment. While I will assess what amounts should be funded in future 
budgets, this plan reflects a need for additional investments of 
approximately $1 billion per year for the next 5 years to modernize 
VA's medical infrastructure and enhance veterans' access to care.
    The capital plan also identifies our highest priority needs for new 
construction and expansion of cemeteries in areas where burial sites 
will soon be depleted, new benefits administration office facilities, 
and information technology projects designed to improve customer 
service and enhance delivery of VA benefits.
    Additionally, this plan describes how VA will enhance collaborative 
efforts with the Department of Defense and increase the use of public 
and private ventures through VA's enhanced-use lease authority. By 
improving the way that we manage the enhanced-use lease process and 
engaging in productive public and private partnerships, VA can enhance 
benefits and services to our Nation's veterans and more effectively 
fulfill our mission.
    As we move forward, VA will continue to improve stewardship of the 
funds entrusted to us by more effectively managing our capital assets 
and planning to meet the future needs of America's veterans and their 
families. By employing best business practices and maximizing the 
functional and financial value of our capital assets through well 
thought-out acquisitions, allocations, operations, and dispositions, VA 
will continue to ensure that all capital investments are based on sound 
business principles and--most importantly--meet our veterans' health 
care, benefits, and burial needs. I am confident that effective 
implementation of this plan will help us to achieve these important 
results.
    VA's capital investment planning process and methodology ensure a 
Department-wide approach for the use of capital funds and ensure all 
major investments are based upon sound economic principles and are 
fully linked to strategic planning, budget, and performance measures 
and targets. On May 20, 2004, I transmitted an interim report to VA's 
5-Year Capital Plan entitled ``CARES Major Construction Projects Fiscal 
Year (FY) 2004--2010'' to Congress. This interim report includes VA's 
highest priority major medical facility construction requirements over 
the next five years. VA's comprehensive 5-year capital plan will 
include other specific capital requirements such as leasing, minor 
construction, and community based outpatient clinics.
    The projects listed in the interim report were identified through 
the CARES planning process as well as the VA's capital investment 
process, and support decisions identified in my CARES Decision. The 
CARES process focused on capital requirements at a macro-level by using 
projections of beds and inpatient and outpatient services. Once 
performance gaps were identified in the market plans, business case 
applications were developed for specific major construction projects in 
order to fill these gaps. Business case applications were scored and 
prioritized based on how well they addressed each of the criteria in 
the capital decision model. Over 100 CARES concept papers and business 
case applications were submitted and reviewed through VA's capital 
investment process utilizing criteria I approved in May 2004.
    Once Congress approves the FY 2005 appropriations, VA will have 
more than $1 billion available to begin renovating and modernizing VA's 
health care system. In the next six months, VA intends to make 28 
design awards, one land purchase, and a construction award for a bed 
tower at the West Side VA Medical Center in Chicago, Illinois. VA will 
use available funds from FY 2004 and prior year appropriations and 
funds appropriated for FY 2005 to carry out these awards. VA will 
proceed with planning and construction once the requirements of section 
221 of Public Law 108-170 are fulfilled, which allows me to carry out 
major construction projections specified in the final CARES report 45 
days after my submission of the interim report that was delivered to 
Congress on May 20th of this year.

    VA/DoD Sharing Opportunities

    Sharing between the Department of Veterans Affairs and the 
Department of Defense is a priority of the President and for both 
Departments. As my CARES decisions are implemented, we will continue to 
take all necessary steps to identify and act on available sharing 
opportunities.
    My CARES decision identified 35 promising sharing opportunities. 
Working through the VA/DoD Joint Executive Council (JEC), co-chaired by 
VA's Deputy Secretary and DoD's Under Secretary for Personnel and 
Readiness, VA and DoD have already begun to work more closely toward 
making a reality of many of these opportunities.
    For example, my CARES Decision, as well as VA's 5-Year Capital 
Plan, includes a number of significant ventures for VA--DoD 
collaboration including two new federal medical facilities in Denver, 
Colorado and Las Vegas, Nevada, a joint outpatient clinic in Pensacola, 
Florida, an outpatient clinic and regional office in Anchorage, Alaska, 
and an outpatient clinic in Columbus, Ohio.
    In addition, the JEC recently established a Capital Asset Planning 
and Coordination Steering Committee, which will be responsible for 
identifying and overseeing opportunities that maximize capital asset 
resource utilization for both Departments. This body will oversee 
implementation of the VA/DoD recommendations that require capital 
planning and will seek to maximize productive collaboration between 
Departments in developing capital asset management sharing 
opportunities in the future. Both Departments recognize the importance 
of capital coordination efforts at the local level and the Capital 
Asset Planning and Coordination Steering Committee is working to 
improve the stability of VA/DoD partnerships through transition of 
management at local facilities.
    With my discussion of the Department's capital initiatives and VA/
DOD Sharing Opportunities as a backdrop, I will now turn to Section 2 
of the proposed bill.

    Section 2. Capital Leases

    Section 2 would authorize me to enter into contracts for leases for 
the following seventeen facilities:

           (1) Wilmington, North Carolina, Outpatient Clinic, 
        $1,320,000;
           (2) Greenville, North Carolina, Outpatient Clinic, 
        $1,220,000;
           (3) Norfolk, Virginia, Outpatient Clinic, $1,250,000;
           (4) Summerfield, Florida Marion County, Outpatient, Clinic, 
        $1,230,000;
           (5) Knoxville, Tennessee, Outpatient Clinic, $850,000;
           (6) Toledo, Ohio, Outpatient, Clinic, $1,200,000;
           (7) Crown Point, Indiana, Outpatient Clinic, $850,000;
           (8) Fort Worth, Texas, Tarrant County Outpatient Clinic, 
        $3,900,000;
           (9) Plano, Texas, Collin County Outpatient Clinic, 
        $3,300,000;
           (10) Saint Antonio, Texas, Northeast Central Bexar County 
        Outpatient Clinic, $1,400,000;
           (11) Corpus Christi, Texas, Outpatient Clinic, $1,200,000;
           (12) Harlingen, Texas, Outpatient Clinic, $650,000;
           (13) Waco/Marlin, Texas, Outpatient Clinic, $2,600,000;
           (14) Denver, Colorado, Health Administration Center, 
        $1,950,000;
           (15) Oakland, California, Outpatient Clinic, $1,700,000;
           (16) San Diego, California, North County Outpatient Clinic, 
        $1,300,000; and
           (17) San Diego, California, South County, Outpatient Clinic, 
        $1,100,000.

    Of these 17 leases, the leases in Norfolk, Virginia; Summerfield, 
Florida; Plano, Texas and San Antonio, Texas are new. The remaining 13 
leases are replacement or expansions for existing leases. Please note 
that the leases in Section 2 should be identified as operating leases 
because they do not meet the required characteristics of a ``capital 
lease''. Capital leases are subject to specific requirements such as 
being scored under the OMB scorekeeping rules and the requirement that 
the entire cost of the lease be expended during the first year of the 
lease.

    Section 2 of the bill authorizes for appropriation the sum of 
$27,020,000 for fiscal year 2005 for the Medical Care account for the 
leases listed in this section. My comment on the total amount of the 
authorization is consistent with my previous comments regarding the 
authorization of the seventeen leases identified in this section.
    Section 2 further authorizes me to enter into a lease for real 
property located at the Fitzsimons campus of the University of Colorado 
for a period of up to 75 years. We have been involved in evaluating and 
planning for a facility for the Fitzsimons site and there is a 
potential for a joint venture with DOD to provide health care to both 
veterans and DOD beneficiaries. Of the many issues remaining, the 
availability of land is a critical one.
    The bill provides the Department a new leasing authority. The bill 
permits the VA to enter into a long-term lease of up to 75 years at the 
University of Colorado Hospital at the Fitzsimons Campus of the 
University of Colorado. This authority is necessary for the VA to 
acquire a sufficient land interest for the construction of a new 
medical facility on the Fitzsimons Campus. We support this proposal. 
The VA will enter into a sharing agreement with the University of 
Colorado Hospital, which will produce economies of scale of benefit to 
both parties. It is anticipated that this facility will be a joint 
operation of the Department of Veterans Affairs and the Department of 
the Air Force.

    Section 3. Department of Veterans Affairs Capital Asset Fund

    Section 3 of the bill would authorize VA to dispose of its excess 
real property by transfer to a Federal agency, a state or political 
subdivision of a state or to any public or private entity and to retain 
the proceeds generated by the disposals. We support this provision 
except for the language that limits the authority to the transfer of 
real property. To prevent any misinterpretation, we recommend that the 
words ``sale, exchange, and'' be inserted before the word transfer. 
This language will allow us to implement the nationwide recommendations 
of the recent CARES decision in a timely and efficient manner. Further, 
the section provides that VA receive compensation of not less than the 
fair market value of the property except in the case of a transfer to a 
grant and per diem provider (as defined in section 2002 of title 38). 
Further, the property would revert to the United States if the property 
transferred to a grant or per diem provider is used for other purposes. 
This latter provision could have government-wide implications, so until 
a thorough vetting of this provision is completed, we are not prepared 
to opine on it at this time.
    The authority may be exercised notwithstanding 40 U.S.C. Sec. 521, 
522 and 541-545 and the McKinney-Vento Homeless Assistance Act (which 
provides that unused or underutilized Federal real property may be used 
to assist the homeless). We support this provision only because VA's 
homeless assistance programs now constitute the largest integrated 
network of services in the U.S.. In 2005 VA will spend $1.5 billion on 
medical services for the homeless and another $188 million on programs 
to return homeless veterans to stable living. These programs include 
outreach, case management, transitional residential care, 
rehabilitation care, income support assistance, permanent housing 
assistance, and follow-up care. We continually ensure that our property 
policies address the needs of the homeless. Section 3 of the proposed 
bill further provides that any such transfer shall be in accordance 
with this section and section 8122 of title 38. Section 8122 of title 
38, requires that VA report the proposed transfer in its annual budget 
document before transferring real property valued in excess of $50,000 
to another Federal agency or to a state or a political subdivision of a 
state for fair market value. As most parcels of real property exceed 
the $50,000 threshold, this would require VA to submit disposal 
information each time it sought to transfer real property to another 
Federal agency or to a state or a political subdivision. Therefore, we 
object to this provision. We suggest the proposal be amended to require 
the submission of a report along with the budget request for property 
valued equal to or more than the Major Medical Facility Project 
threshold identified in subsection 8104(a)(3)(A) of title 38.
    The bill further provides that the authority provided by this 
section may not be used in a case in which section 8164 of title 38 
(enhanced use) applies. We support this provision. The exercise of this 
authority expires seven years after the date of the enactment of this 
section. We strongly object to this provision. Should a 7-year 
limitation be established, we recommend that the Secretary transfer to 
any account or accounts any unobligated and undistributed dollars 
remaining in the Fund upon expiration of the authority. The proceeds 
from the transfer of real property under this section would be 
deposited in a Capital Asset Fund (the ``Fund''), as provided for by 
this legislation. The bill would also terminate the Nursing Home 
Revolving Fund and deposit funds therein into the Fund. Further, the 
bill would authorize to be appropriated to the Fund $10,000,000.
    Amounts in the Fund would have to be used for the costs of actual 
or planned disposals of real estate, including demolition, 
environmental cleanup, improvements to facilitate the transfers and 
administrative expenses. If amounts remain after those expenditures, 
like expenditures may be made for future transfers. Any remaining 
amounts are to be used for historic preservation as set forth in 
legislation. We appreciate the provisions that establish use of the 
Fund. However, we object to the limitation on the use of the proceeds 
to historic preservation after expenses. We would strongly support use 
of the Fund for non-recurring VA Capital projects as well as historic 
preservation.
    Property may only be transferred under this section, or under 
sections 8117 or 8164 of title 38, after: (a) placing notice of my 
intent to do so in the local newspapers and in the Federal Register; 
(b) holding a public hearing; providing notice to the Administrator of 
General Services; (c) waiting 30 days to determine if another Federal 
agency has an interest in acquiring the property at fair market value; 
and (d) thereafter, providing a 60-day notice period for the 
congressional veterans' affairs committees to review the intended 
property disposal. We support the report and wait requirement of this 
section as it relates to 8117, but object to its application to 8164. 
The basis for the objection is that section 8164 already has specific 
notification requirements.
    Section 3, additionally, would make two conforming amendments to 
VA's enhanced-use lease statute. First, it would amend section 8164(a) 
to provide that, before disposing of an enhanced-use leased property 
pursuant to section 8164, I must determine that a disposal under that 
section, rather than under the proposed new section 8117 (or under 
section 8122), would be in the best interests of the Department. Next, 
it would amend section 8165 (a)(2) to provide that proceeds from a 
disposal of enhanced-use leased property would be deposited in the 
proposed new Capital Asset Fund, vice the Nursing Home Revolving Fund.
    Further, Section 3 states that the amendments made therein shall 
take effect at the end of the 30-day period beginning on the date that 
I certify to Congress that I am in compliance with subsection (b) of 
section 1710B of title 38. Also, following this certification, I am 
required to submit an update to Congress on that certification every 
six months until the certification is included in the Department's 
annual budget submission. The ability to better manage our capital 
assets through this section's real property disposal authority and 
compliance with 1710B(b) of title 38 are not appropriately joined. 
Conditions that may influence the Department's ability to meet its 
capacity requirements may not always be within our control. Therefore, 
VA objects to this provision.

    Section 4. Authority to use Project Funds to Construct or Relocate 
Surface Parking Incidental to a Construction or Non-Recurring 
Maintenance Project

    Section 4 of the bill would add language to Section 8109 that would 
allow funds in a construction account or capital account that are 
available for a construction project or nonrecurring maintenance 
project to also be used for constructing or relocating a surface 
parking lot incidental to that project. VA supports this provision of 
the bill.

    Section 5. Advance Planning Funding for Major Medical Facilities

    This bill would also exempt projects that have already been 
authorized by law from current statutory notice and wait requirements 
that apply to certain major medical facility projects. VA supports this 
provision of the bill.

    Section 6. Improvement in Enhanced-Use Lease Authorities

    This section would amend section 8166(a) to clarify that, in 
addition to the bar against subjecting any construction, alteration, 
repair, remodeling, or improvement of enhanced-use leased property to 
any State or local law relating to building codes, permits or 
inspections, such activities are to be exempt from any State or local 
law relating to land use, unless I provide otherwise. We support this 
provision.

    Section 7. Extension of Authority to Provide Care Under Long-Term 
Care Pilot Programs

    Section 7 of the draft bill would authorize VA to continue 
furnishing certain long-term care services to a very limited group of 
veterans still participating in a long-term care pilot program, the 
authority for which will be expiring soon. VA supports section 7 of the 
bill.
    The Veterans Millennium Health Care and Benefits Act, enacted in 
1999, directed that VA carry out a relatively small three-year pilot 
program to furnish veterans with all-inclusive long-term care services 
using three different models of care delivery. The effort was intended 
to test the feasibility, acceptability, outcomes and costs of care 
using each model. VA patterned the pilot on the Medicare Program of 
All-Inclusive Care for the Elderly, commonly referred to as the PACE 
Program. VA conducted the pilot program in three separate locations. In 
Dayton, Ohio, VA directly furnished pilot participants with all of the 
services typically included in the PACE Program. In Denver, VA 
furnished some of the services directly, but paid a capitated amount to 
a private Colorado PACE provider to furnish the remainder of the 
services. Finally, in Columbia, South Carolina, VA served as the care 
manager, but a private PACE provider furnished all care, receiving a 
capitated amount from VA. The authority for the pilot program will be 
expiring later this year, and VA will be reporting to Congress 
regarding the program in March of 2005, as required by law.
    At this point in time, the pilot program is winding down. VA has 
not been enrolling any new veterans in the pilot for some time. 
However, a few veterans will still be receiving care under the program 
when it ends. To ensure continuity of care and avoid disruption in the 
life of these elderly and frail patients, section 7 would authorize VA 
to continue to furnish these few veterans with the same services they 
have been receiving, in the same settings, until December 31, 2005. 
That time period would allow Congress time to review the post-pilot 
report, including VA's recommendations, and decide how to proceed. VA 
also anticipates that by that time, most participants will have moved 
to a different care setting.

    Conclusion

    Mr. Chairman, my CARES Decision and accompanying 5-year Capital 
Plan represent a blueprint for VA's future. Sophisticated forecasting 
models provide new and more complete information about the demand for 
VA health care. A comprehensive assessment of VA's facilities has 
greatly improved our understanding about the condition of VA's 
facilities. These factors, combined with the experience of conducting 
the CARES process, leave the Department well positioned to continue to 
expand the accuracy and scope of its planning efforts. Throughout the 
CARES implementation process we will keep you and other members of 
Congress informed and involved and, just as important, we will keep our 
patients and their families informed and involved.
    This concludes my statement. I will now be happy to answer any 
questions that you or other members of the Subcommittee might have.

               Congressional Budget Office Cost Estimate

    The following letter was received from the Congressional 
Budget Office concerning the cost of the reported bill:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 26, 2004
Hon. Christopher H. Smith
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4768, the Veterans 
Health Programs and Facilities Enhancement Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sam 
Papenfuss, who can be reached at 226-2840.

            Sincerely,
                                       Douglas Holtz-Eakin,
                                                           Director
    Enclosure.
                                ------                                


               Congressional Budget Office Cost Estimate

 H.R. 4768, Veterans Health Programs and Facilities Enhancement Act of 
                                  2004

As ordered reported by the House Committee on Veterans' Affairs 
on July 21, 2004

Summary

    H.R. 4768 would authorize the Department of Veterans 
Affairs (VA) to lease 16 facilities, most of which would be for 
outpatient clinics. It also would create a new fund, the 
Department of Veterans Affairs Capital Asset Fund, that VA 
could use to pay for certain construction projects, subject to 
appropriation of the necessary amounts. The bill also would 
extend, through the end of calendar year 2005, the authority 
for VA to provide long-term care for veterans already enrolled 
in certain pilot programs. Finally, the bill would require VA 
to establish four medical preparedness centers and would 
authorize the appropriation of funds for those centers.
    CBO estimates that implementing H.R. 4768 would cost $25 
million in 2005 and $168 million over the 2005-2009 period, 
assuming appropriation of the necessary amounts. Enacting the 
bill would not affect direct spending or receipts.
    H.R. 4768 contains an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act (UMRA), but CBO estimates 
the cost, if any, for state and local governments to comply 
with that mandate would be well below the threshold established 
by UMRA ($60 million in 2004, adjusted annually for inflation). 
H.R. 4768 would not impose any private-sector mandates as 
defined in UMRA.

Estimated Cost to the Federal Government

    The estimated budgetary impact of H.R. 4768 is shown in the 
following table. The costs of this legislation fall within 
budget function 700 (veterans benefits and services).





                                                                   By Fiscal Year, in Millions of Dollars
                                                           -----------------------------------------------------
                                                              2004     2005     2006     2007     2008     2009
----------------------------------------------------------------------------------------------------------------

                                   SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law for Veterans' Medical Care
  Estimated Authorization Level a.........................   27,957   28,888   29,706   30,608   31,117   32,104
  Estimated Outlays.......................................   27,141   28,334   29,293   30,210   30,846   31,756
Proposed Changes:
  Authorization of Leases.................................
    Estimated Authorization Level.........................        0       24       24       24       24       24
    Estimated Outlays.....................................        0       12       24       24       24       24
Medical Preparedness Centers
    Estimated Authorization Level.........................        0       10       10       10       10       10
    Estimated Outlays.....................................        0        6        8       10       10       10
Capital Asset Fund
    Estimated Authorization Level.........................        0       10        0        0        0        0
    Estimated Outlays.....................................        0        2        4        3        1        0
Pilot Program Extension
    Estimated Authorization Level.........................        0        5        1        0        0        0
    Estimated Outlays.....................................        0        5        1        0        0        0

  Total Changes
      Estimated Authorization Level.......................        0       49       35       34       34       34
      Estimated Outlays...................................        0       25       37       37       35       34

Spending for Veterans' Medical Care Under H.R. 4768
    Estimated Authorization Level.........................   27,957   28,937   29,741   30,642   31,151   32,138
    Estimated Outlays.....................................   27,141   28,359   29,330   30,247   31,881   31,790
----------------------------------------------------------------------------------------------------------------

a The 2004 level is the amount appropriated for that year. No full-year appropriation has yet been provided for
  fiscal year 2005. The current-law amounts for the 2005-2009 period assume appropriations remain at the 2004
  level with adjustments for anticipated inflation.





Basis of Estimate

    For this estimate, CBO assumes that the bill will be 
enacted before the end of calendar year 2004 and that the 
authorized and necessary amounts for implementing the bill will 
be appropriated for each year.

                        AUTHORIZATION OF LEASES

    Section 101 would authorize VA to enter into leases at 16 
different sites, most of which would be for outpatient clinics, 
and specifies the maximum lease payment for each site. In 
total, section 101 would authorize a little more than $24 
million for these lease payments in 2005. Based on information 
from VA on previous leases and lease proposals, we expect these 
leases would be for a term of more than 10 years. For the 
purposes of this estimate, we assume that all of these leases 
would meet the criteria for an operating lease. (Those criteria 
are detailed in the Office of Management and Budget Circular A-
11.) Because CBO has not seen any contracts that VA might use 
to enter into these leases, we cannot definitively say that 
these leases would meet the criteria for an operating lease.
    Assuming it would take about six months to sign the lease 
agreements, CBO estimates that implementing this provision 
would cost $12 million in 2005 and $108 million over the 2005-
2009 period, assuming appropriation of the authorized and 
estimated amounts.

                      MEDICAL PREPAREDNESS CENTERS

    Under current law, VA is authorized to establish four 
medical emergency preparedness centers which have 
responsibilities to assist with chemical, biological, or 
radiological threats. In addition, the Congress has authorized 
the appropriation of $20 million a year through 2007 for these 
centers. As of the date of this estimate, VA has not 
established any centers and no appropriations have been made 
for that purpose.
    Section 202 of H.R. 4768 would require VA to create four 
medical preparedness centers that would have the same 
responsibilities as the four medical emergency preparedness 
centers already authorized under current law. Section 202 would 
specifically authorize the appropriation of $10 million a year 
through 2007 and would require VA to provide additional funds 
if necessary. Based on information from VA, CBO believes $10 
million a year would be sufficient to operate these four 
centers. Assuming normal start-up time for implementing new 
programs and the appropriation of the authorized and estimated 
amounts, CBO estimates that implementing this section would 
cost $6 million in 2005 and $44 million over the 2005-2009 
period.

                           CAPITAL ASSET FUND

    Section 102 would make it easier for VA to dispose of real 
property to both public and private entities and would 
establish a new fund in the Treasury to be known as the 
Department of Veterans Affairs Capital Asset Fund. Under the 
bill, VA would be able to dispose of real property without the 
requirement to use the General Services Administration (GSA), 
though VA would still have to notify GSA of its intent to 
dispose of real property. (The authority to dispose of property 
under this section would expire seven years after enactment of 
the bill.) The proceeds from property disposal would be 
deposited into the Capital Asset Fund and could be used to pay 
for costs associated with the transfer of property as well as 
construction projects with a cost less than $4 million. 
However, under section 102, expenditures from the fund would be 
subject to appropriation action. Thus, CBO does not expect that 
VA would significantly increase its sales or other dispositions 
of real property.
    Section 102 also would authorize the appropriation of $10 
million to the Capital Asset Fund where it could be used for 
the purposes stated above. Under the bill, section 102 would 
not take effect until the Secretary of VA certified that the 
department was in compliance with current law regarding the 
provision of extended care or long-term care to veterans. 
Assuming that the Secretary makes this certification by the end 
of the calendar year, CBO estimates that implementing this 
provision would cost $2 million in 2005 and $10 million over 
the 2005-2009 period, assuming appropriation of the authorized 
amount.

                        PILOT PROGRAM EXTENSION

    Section 107 would allow VA to extend three pilot programs 
for long-term care through the end of calendar year 2005. 
According to VA, it spent about $5 million in 2003 on these 
pilot programs. Thus, CBO estimates that implementing section 
107 would cost about $5 million in 2005 and $6 million over the 
2005-2006 period, assuming the appropriation of the necessary 
amounts.

Intergovernmental and private-sector impact

    H.R. 4768 contains an intergovernmental mandate as defined 
in UMRA because it would preempt state and local authority to 
regulate land use of property leased by VA. Under current law, 
that land is exempt from some state and local laws regulating 
building codes, permits, and inspections. This bill would 
expand those exemptions to include laws regulating land use. 
CBO estimates that the costs, is any, for state, local, and 
tribal governments to comply with that mandate would be well 
below the threshold established by UMRA ($60 million in 2004, 
adjusted annually for inflation). H.R. 4768 would not impose 
any private-sector mandates as defined in UMRA.

Estimate prepared by:
    Federal Costs: Sam Papenfuss (226-2840)
     Impact on State, Local, and Tribal Governments: Melissa 
Merrell (225-3220)
    Impact on the Private Sector: Carla Murray (226-2900)

Estimate approved by:
    Peter H. Fontaine,
    Deputy Assistant Director for Budget Analysis

                     Statement of Federal Mandates

    The preceding Congressional Budget Office cost estimate 
concludes that the bill would not exceed the intergovernmental 
mandate threshold and would not impose private sector mandates 
as defined in the Unfunded Mandates Reform Act.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, the reported bill is authorized by Congress' 
power to ``provide for the common Defense and general Welfare 
of the United States.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *


PART V--BOARDS, ADMINISTRATIONS, AND SERVICES

           *       *       *       *       *       *       *


CHAPTER 73--VETERANS HEALTH ADMINISTRATION--ORGANIZATION AND FUNCTIONS

           *       *       *       *       *       *       *


SUBCHAPTER II--GENERAL AUTHORITY AND ADMINISTRATION

           *       *       *       *       *       *       *


Sec. 7327. Medical preparedness centers

  (a) Establishment of Centers.--(1) The Secretary shall 
establish four medical emergency preparedness centers in 
accordance with this section. Each such center shall be 
established at a Department medical center and shall be staffed 
by Department employees.
  (2) The Under Secretary for Health shall be responsible for 
supervising the operation of the centers established under this 
section. The Under Secretary shall provide for ongoing 
evaluation of the centers and their compliance with the 
requirements of this section.
  (3) The Under Secretary shall carry out the Under Secretary's 
functions under paragraph (2) in consultation with the 
Assistant Secretary of Veterans Affairs with responsibility for 
operations, preparedness, security, and law enforcement 
functions.
  (b) Mission.--The mission of the centers shall be as follows:
          (1) To carry out research on, and to develop methods 
        of detection, diagnosis, prevention, and treatment of 
        injuries, diseases, and illnesses arising from the use 
        of chemical, biological, radiological, incendiary or 
        other explosive weapons or devices posing threats to 
        the public health and safety.
          (2) To provide education, training, and advice to 
        health care professionals, including health care 
        professionals outside the Veterans Health 
        Administration, through the National Disaster Medical 
        System established pursuant to section 2811(b) of the 
        Public Health Service Act (42 U.S.C. 300hh-11(b)) or 
        through interagency agreements entered into by the 
        Secretary for that purpose.
          (3) In the event of a disaster or emergency referred 
        to in section 1785(b) of this title, to provide such 
        laboratory, epidemiological, medical, or other 
        assistance as the Secretary considers appropriate to 
        Federal, State, and local health care agencies and 
        personnel involved in or responding to the disaster or 
        emergency.
  (c) Selection of Centers.--(1) The Secretary shall select the 
sites for the centers on the basis of a competitive selection 
process. The Secretary may not designate a site as a location 
for a center under this section unless the Secretary makes a 
finding under paragraph (2) with respect to the proposal for 
the designation of such site. To the maximum extent 
practicable, the Secretary shall ensure the geographic 
dispersal of the sites throughout the United States. Any such 
center may be a consortium of efforts of more than one medical 
center.
  (2) A finding by the Secretary referred to in paragraph (1) 
with respect to a proposal for designation of a site as a 
location of a center under this section is a finding by the 
Secretary, upon the recommendations of the Under Secretary for 
Health and the Assistant Secretary with responsibility for 
operations, preparedness, security, and law enforcement 
functions, that the facility or facilities submitting the 
proposal have developed (or may reasonably be anticipated to 
develop) each of the following:
          (A) An arrangement with a qualifying medical school 
        and a qualifying school of public health (or a 
        consortium of such schools) under which physicians and 
        other persons in the health field receive education and 
        training through the participating Department medical 
        facilities so as to provide those persons with training 
        in the detection, diagnosis, prevention, and treatment 
        of injuries, diseases, and illnesses induced by 
        exposures to chemical and biological substances, 
        radiation, and incendiary or other explosive weapons or 
        devices.
          (B) An arrangement with a graduate school 
        specializing in epidemiology under which students 
        receive education and training in epidemiology through 
        the participating Department facilities so as to 
        provide such students with training in the epidemiology 
        of contagious and infectious diseases and chemical and 
        radiation poisoning in an exposed population.
          (C) An arrangement under which nursing, social work, 
        counseling, or allied health personnel and students 
        receive training and education in recognizing and 
        caring for conditions associated with exposures to 
        toxins through the participating Department facilities.
          (D) The ability to attract scientists who have made 
        significant contributions to the development of 
        innovative approaches to the detection, diagnosis, 
        prevention, or treatment of injuries, diseases, and 
        illnesses arising from the use of chemical, biological, 
        radiological, incendiary or other explosive weapons or 
        devices posing threats to the public health and safety.
  (3) For purposes of paragraph (2)(A)--
          (A) a qualifying medical school is an accredited 
        medical school that provides education and training in 
        toxicology and environmental health hazards and with 
        which one or more of the participating Department 
        medical centers is affiliated; and
          (B) a qualifying school of public health is an 
        accredited school of public health that provides 
        education and training in toxicology and environmental 
        health hazards and with which one or more of the 
        participating Department medical centers is affiliated.
  (d) Research Activities.--Each center shall conduct research 
on improved medical preparedness to protect the Nation from 
threats in the area of that center's expertise. Each center may 
seek research funds from public and private sources for such 
purpose.
  (e) Dissemination of Research Products.--(1) The Under 
Secretary for Health and the Assistant Secretary with 
responsibility for operations, preparedness, security, and law 
enforcement functions shall ensure that information produced by 
the research, education and training, and clinical activities 
of centers established under this section is made available, as 
appropriate, to health-care providers in the United States. 
Dissemination of such information shall be made through 
publications, through programs of continuing medical and 
related education provided through regional medical education 
centers under subchapter VI of chapter 74 of this title, and 
through other means. Such programs of continuing medical 
education shall receive priority in the award of funding.
  (2) The Secretary shall ensure that the work of the centers 
is conducted in close coordination with other Federal 
departments and agencies and that research products or other 
information of the centers shall be coordinated and shared with 
other Federal departments and agencies.
  (f) Coordination of Activities.--The Secretary shall take 
appropriate actions to ensure that the work of each center is 
carried out--
          (1) in close coordination with the Department of 
        Defense, the Department of Health and Human Services, 
        and other departments, agencies, and elements of the 
        Government charged with coordination of plans for 
        United States homeland security; and
          (2) after taking into consideration applicable 
        recommendations of the working group on the prevention, 
        preparedness, and response to bioterrorism and other 
        public health emergencies established under section 
        319F(a) of the Public Health Service Act (42 U.S.C. 
        247d-6(a)) or any other joint interagency advisory 
        group or committee designated by the President or the 
        President's designee to coordinate Federal research on 
        weapons of mass destruction.
  (g) Assistance to Other Agencies.--The Secretary may provide 
assistance requested by appropriate Federal, State, and local 
civil and criminal authorities in investigations, inquiries, 
and data analyses as necessary to protect the public safety and 
prevent or obviate biological, chemical, or radiological 
threats.
  (h) Detail of Employees From Other Agencies.--Upon approval 
by the Secretary, the Director of a center may request the 
temporary assignment or detail to the center, on a 
nonreimbursable basis, of employees from other departments and 
agencies of the United States who have expertise that would 
further the mission of the center. Any such employee may be so 
assigned or detailed on a nonreimbursable basis pursuant to 
such a request.
  (i) Funding.--(1) There are authorized to be appropriated for 
the centers under this section $10,000,000 for each of fiscal 
years 2005 through 2007.
  (2) In addition to any amounts appropriated for a fiscal year 
specifically for the activities of the centers pursuant to 
paragraph (1), the Under Secretary for Health shall allocate to 
the centers from other funds appropriated for that fiscal year 
generally for the Department medical care account and the 
Department medical and prosthetics research account such 
amounts as the Under Secretary determines necessary in order to 
carry out the purposes of this section.

           *       *       *       *       *       *       *


CHAPTER 78--VETERANS' CANTEEN SERVICE

           *       *       *       *       *       *       *


Sec. 7803. Operation of Service

  [The canteens at hospitals and homes of the Department shall 
be primarily for the use and benefit of veterans hospitalized 
or domiciled at such hospitals and homes. Service at such 
canteens may also be furnished to personnel of the Department 
and recognized veterans' organizations employed at such 
hospitals and homes and to other persons so employed, to the 
families of all the foregoing persons who reside at the 
hospital or home concerned, and to relatives and other persons 
while visiting any of the persons named in this section.]
  (a) Primary Beneficiaries.--Canteens operated by the Service 
shall be primarily for the use and benefit of--
          (1) veterans hospitalized or domiciled at the 
        facilities at which canteen services are provided; and
          (2) other veterans who are enrolled under section 
        1705 of this title.
  (b) Other Authorized Users.--Service at such canteens may 
also be furnished to--
          (1) personnel of the Department and recognized 
        veterans' organizations who are employed at a facility 
        at which canteen services are provided and to other 
        persons so employed;
          (2) the families of persons referred to in paragraph 
        (1) who reside at the facility; and
          (3) relatives and other persons while visiting a 
        person specified in this section.

           *       *       *       *       *       *       *


PART VI--ACQUISITION AND DISPOSITION OF PROPERTY

           *       *       *       *       *       *       *


   CHAPTER 81--ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY 
    FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL 
                                PROPERTY

      subchapter i--acquisition and operation of medical facilities

Sec.
8101.    Definitions.
     * * * * * * *
[8116.    Nursing home revolving fund.]
     * * * * * * *
8118.    Authority for transfer of real property; Capital Asset Fund.

           *       *       *       *       *       *       *


SUBCHAPTER I--ACQUISITION AND OPERATION OF MEDICAL FACILITIES

           *       *       *       *       *       *       *


Sec. 8104. Congressional approval of certain medical facility 
                    acquisitions

  (a) * * *

           *       *       *       *       *       *       *

  (g) The limitation in subsection (f) does not apply to a 
project for which funds have been authorized by law in 
accordance with subsection (a)(2).

           *       *       *       *       *       *       *


Sec. 8109. Parking facilities

  (a) * * *

           *       *       *       *       *       *       *

  (j) Funds in a construction account or capital account that 
are available for a construction project or a nonrecurring 
maintenance project may be used for the construction or 
relocation of a surface parking lot incidental to that project.

           *       *       *       *       *       *       *


[Sec. 8116. Nursing home revolving fund

  [(a)(1) Amounts realized from a transfer pursuant to section 
8122(a)(2)(C) of this title shall be administered as a 
revolving fund and shall be available without fiscal year 
limitation.
  [(2) The revolving fund shall be deposited in a checking 
account with the Treasurer of the United States.
  [(b)(1) The expenditure of funds from the revolving fund may 
be made only for the construction, alteration, and acquisition 
(including site acquisition) of nursing home facilities and may 
be made only as provided for in appropriation Acts.
  [(2) For the purpose of section 8104(a)(2) of this title, a 
bill, resolution, or amendment which provides that funds in the 
revolving fund may be expended for a project involving a total 
expenditure of more than $2,000,000 for the construction, 
alteration, or acquisition (including site acquisition) of a 
nursing home facility shall be considered to be a bill, 
resolution, or amendment making an appropriation which may be 
expended for a major medical facility project.]

           *       *       *       *       *       *       *


Sec. 8118. Authority for transfer of real property; Capital Asset Fund

  (a)(1) The Secretary may transfer real property under the 
jurisdiction or control of the Secretary (including structures 
and equipment associated therewith) to another department or 
agency of the United States or to a State (or a political 
subdivision of a State) or to any public or private entity, 
including an Indian tribe. Such a transfer may be made only if 
the Secretary receives compensation of not less than the fair 
market value of the property, except that no compensation is 
required, or compensation at less than fair market value may be 
accepted, in the case of a transfer to a grant and per diem 
provider (as defined in section 2002 of this title). When a 
transfer is made to a grant and per diem provider for less than 
fair market value, the Secretary shall require in the terms of 
the conveyance that if the property transferred is used for any 
purpose other than a purpose under chapter 20 of this title, 
all right, title, and interest to the property shall revert to 
the United States.
  (2) The Secretary may exercise the authority provided by this 
section notwithstanding sections 521, 522 and 541-545 of title 
40. Any such transfer shall be in accordance with this section 
and section 8122 of this title.
  (3) The authority provided by this section may not be used in 
a case to which section 8164 of this title applies.
  (4) The Secretary may enter into partnerships or agreements 
with public or private entities dedicated to historic 
preservation to facilitate the transfer, leasing, or adaptive 
use of structures or properties specified in subsection 
(b)(3)(D).
  (5) The authority of the Secretary under paragraph (1) 
expires on the date that is seven years after the date of the 
enactment of this section.
  (b)(1) There is established in the Treasury of the United 
States a revolving fund to be known as the Department of 
Veterans Affairs Capital Asset Fund (hereinafter in this 
section referred to as the ``Fund''). Amounts in the Fund shall 
remain available until expended.
  (2) Proceeds from the transfer of real property under this 
section shall be deposited into the Fund.
  (3) To the extent provided in advance in appropriations Acts, 
amounts in the Fund may be expended for the following purposes:
          (A) Costs associated with the transfer of real 
        property under this section, including costs of 
        demolition, environmental remediation, maintenance and 
        repair, improvements to facilitate the transfer, and 
        administrative expenses.
          (B) Costs, including costs specified in subparagraph 
        (A), associated with future transfers of property under 
        this section.
          (C) Costs associated with enhancing medical care 
        services to veterans by improving, renovating, 
        replacing, updating, and establishing patient care 
        facilities through construction projects to be carried 
        out for an amount less than the amount specified in 
        8104(a)(3)(A) for a major medical facility project.
          (D) Costs, including costs specified in subparagraph 
        (A), associated with the transfer, lease or adaptive 
        use of a structure or other property under the 
        jurisdiction of the Secretary that is listed on the 
        National Register of Historic Places.
  (c) The Secretary shall include in the budget justification 
materials submitted to Congress for any fiscal year in support 
of the President's budget for that year for the Department 
specification of the following:
          (1) The real property transfers to be undertaken in 
        accordance with this section during that fiscal year.
          (2) All transfers completed under this section during 
        the preceding fiscal year and completed and scheduled 
        to be completed during the year during which the budget 
        is submitted.
          (3) The deposits into, and expenditures from, the 
        Fund that are incurred or projected for each of the 
        preceding fiscal year, the current fiscal year, and the 
        fiscal year covered by the budget.

           *       *       *       *       *       *       *


SUBCHAPTER II--PROCUREMENT AND SUPPLY

           *       *       *       *       *       *       *


Sec. 8122. Authority to procure and dispose of property and to 
                    negotiate for common services

  (a)(1) * * *
  [(2)(A) Except as provided in paragraph (3) of this 
subsection, the Secretary may not during any fiscal year 
transfer to another Federal agency or to a State (or any 
political subdivision of a State) any interest in real property 
described in subparagraph (B) of this paragraph unless (i) the 
transfer (as proposed) was described in the budget for that 
fiscal year submitted to Congress pursuant to section 1105 of 
title 31, and (ii) the Department receives compensation equal 
to the fair market value of the property.
  [(B) An interest in real property described in this 
subparagraph is an interest in real property that is owned by 
the United States and administered by the Secretary and that 
has an estimated value in excess of $50,000.
  [(C) Amounts realized from the transfer of any interest in 
real property described in subparagraph (B) of this paragraph 
shall be deposited in the nursing home revolving fund 
established under section 8116 of this title.]
  (2) Except as provided in paragraph (3), the Secretary may 
not during any fiscal year transfer to any other department or 
agency of the United States or to any other entity real 
property that is owned by the United States and administered by 
the Secretary unless the proposed transfer is described in the 
budget submitted to Congress pursuant to section 1105 of title 
31 for that fiscal year.

           *       *       *       *       *       *       *

  (d)(1) Real property under the jurisdiction of the Secretary 
may not be declared excess by the Secretary and disposed of by 
the General Services Administration or any other entity of the 
Federal Government unless the Secretary determines that the 
property is no longer needed by the Department in carrying out 
its functions and is not suitable for use for the provision of 
services to homeless veterans by the Department or by another 
entity under an enhanced-use lease of such property under 
section 8162 of this title.
  (2) The Secretary may transfer real property under this 
section, or under section 8118 of this title if the Secretary 
--
          (A) places a notice in the real estate section of 
        local newspapers and in the Federal Register of the 
        Secretary's intent to transfer that real property 
        (including land, structures, and equipment associated 
        with the property);
          (B) holds a public hearing;
          (C) provides notice to the Administrator of General 
        Services of the Secretary's intention to transfer that 
        real property and waits for 30 days to elapse after 
        providing that notice; and
          (D) after such 30-day period has elapsed, notifies 
        the congressional veterans' affairs committees of the 
        Secretary's intention to dispose of the property and 
        waits for 60 days to elapse from the date of that 
        notice.

           *       *       *       *       *       *       *


SUBCHAPTER V--ENHANCED-USE LEASES OF REAL PROPERTY

           *       *       *       *       *       *       *


Sec. 8164. Authority for disposition of leased property

  (a) If, during the term of an enhanced-use lease or within 30 
days after the end of the term of the lease, the Secretary 
determines that the leased property is no longer needed by the 
Department, the Secretary may initiate action for the transfer 
to the lessee of all right, title, and interest of the United 
States in the property. A disposition of property may not be 
made under this section unless the Secretary determines that 
the disposition under this section rather than under section 
8118 or 8122 of this title is in the best interests of the 
Department.

           *       *       *       *       *       *       *


Sec. 8165. Use of proceeds

  (a)(1) * * *
  (2) Funds received by the Department from a disposal of 
leased property under section 8164 of this title shall be 
deposited in the [nursing home revolving fund] Capital Asset 
Fund established under section 8118 of this title.

           *       *       *       *       *       *       *


Sec. 8166. Construction standards

  (a) Unless the Secretary provides otherwise, the 
construction, alteration, repair, remodeling, or improvement of 
the property that is the subject of the lease shall be carried 
out so as to comply with all standards applicable to 
construction of Federal buildings. Any such construction, 
alteration, repair, remodeling, or improvement shall not be 
subject to any State or local law relating to land use, 
building codes, permits, or inspections unless the Secretary 
provides otherwise.

           *       *       *       *       *       *       *

                              ----------                              


  SECTION 102 OF THE VETERANS MILLENNIUM HEALTH CARE AND BENEFITS ACT

SEC. 102. PILOT PROGRAMS RELATING TO LONG-TERM CARE.

  (a) * * *

           *       *       *       *       *       *       *

  (h) Duration of Programs.--(1) The authority of the Secretary 
to provide services under a pilot program under this section 
shall cease on the date that is three years after the date of 
the commencement of that pilot program.
  (2) In the case of a veteran who is participating in a pilot 
program under this section as of the end of the three-year 
period applicable to that pilot program under paragraph (1), 
the Secretary may continue to provide to that veteran any of 
the services that could be provided under the pilot program. 
The authority to provide services to any veteran under the 
preceding sentence applies during the period beginning on the 
date specified in paragraph (1) with respect to that pilot 
program and ending on December 31, 2005.

           *       *       *       *       *       *       *