Developers leasing Army Corps land for free

Ronald W. Howell is like any other developer who is trying to find a way to cut costs. On his latest project, a $10 million marina, golf and cabin complex, his company, StateSource L.L.C., found a loophole that will save the company millions. Howell is the recipient of a 50-year, rent-free lease on 280 acres of property owned by the Army Corps of Engineers on Skiatook Lake in Oklahoma.

Under federal rules, private developers must pay market value in order to lease land from the corps, which owns 456 lakes in 43 states. Technically, though, Howell was able to lease the land for free because his lease was a sublease between StateSource and the Skitook Economic Development Authority. Under an exemption that allows governmental agencies to lease land for free from the corps, SEDA received a lease and then subleased the land to Howell in an attempt to develop the area for recreation. Howell, in return, will make a profit off the free land.

The process is not without skepticism. More than 1,300 rent-free leases to states, localities and other public agencies have been handed out by the corps, which keeps no records of subleases. According to The Washington Post, officials don’t think Howell’s deal was unusual. Officials at the corps defend Howell’s arrangement as congruent with the corps’ goals in promoting recreational development on public lakes.

“We’re not in the business of telling the states how to operate,” head of the corps’ natural resources division told the Washington Post. “If they decide that they want to put this in the hands of a private developer at no cost, to stimulate the economy, then that’s not our business.”