Base closings: panic or potential?

with 132 military facilities on the government's new hit list, states need to seek the best ways to help localities deal with the impact.

The Defense Base Closure and Realignment Commission announced its recommendations for another round of military facility closings and realignments ("downsizing" in military parlance) in July. A total of 132 sites - including all five Air Force maintenance centers and involving 63,000 civilian jobs - were recommended for closure or cuts.

In all, the recommended closing of military installations - large like McClellan Air Force Base in Sacramento and small such as the Naval Reserve Center in Huntsville, Ala. - will affect local economies by eliminating as many as 94,000 civilian jobs. One of the hardest hit could be tiny Guam where 2,665 jobs could be lost and 6,500 more transferred off the island with the closing of three Navy facilities and realignment of two others. California, which lost 26,421 jobs in the last three rounds of closings, could lose nine more major facilities. The loss of McClellan Air Force Base alone, which is on the '95 hit list, would cost 11,000 jobs. Texas stands to lose four bases, the major one being Kelly Air Force Base near San Antonio, where 13,000 jobs would be lost. Oklahoma, Pennsylvania and Georgia could see three bases closed in each state.

It's not the end of the world - but it may seem like it to civic leaders, local businesses and civilian employees. "Shocked" was the word used by city officials in San Antonio when told of the recommendation to close Kelly Air Force Base, followed closely by the word "stunned." And the price of peace looks awfully high when the communities that rely on the military for economic stability are told that their bases are going to be closed.

MILLIONS TO LOCAL ECONOMIES

For most civic leaders, the thought of an impending base closing is met with dismay. Take Colorado Springs, Colo., for instance. Twenty-five members of a Defense Mission Task Force met every month last year - 12 months before any '95 closings were considered - to plot strategies for saving Fort Carson, the largest military base in Colorado, with its 17,600 military and civilian jobs and Pentagon expenditures of $536.3 million last year.

Hit hard in 1994 when Lowry Air Force Base closed and took with it 6,300 jobs, Colorado wants to preserve the military presence that remains in the state. The annual statewide military payroll for active duty and civilian personnel is $2.21 billion. Pentagon contracts add an additional $2.62 billion to Colorado's economy.

This time around, the commission has recommended closure of Fitzsimons Army Medical Center in Denver, a move that will claim nearly 3,000 jobs.

California, just now emerging from the throes of a deep recession, took about 52 percent of the national impact of previous base closings and would be hit with 44 percent in this current round. In past rounds, 41 military facilities were ordered closed. But that's not all - the military is now changing past realignment decisions, closing down more portions of a base or laying off more civilian employees than originally planned.

"It's an invisible thing that people don't really see," says Ben Williams, deputy director of the California Governor's Office of Research and Planning. In one California case, the military is changing its plans, but continuing to say it will be "a base realignment." Williams says, however, the plans are "tantamount to a closure since land will be sold, and we're going to lose 1,200 civilian jobs."

SUCCESSFUL CONVERSION NOT THE NORM

Panic, to some extent, is an understandable response when a community learns a base is on the hit list.

Successful conversion of closed bases is not yet the norm. Past closure rounds ordered 41 military facilities - 22 of them major bases - to shut down in California. Of those, Williams says, seven were officially closed, two were transferred to federal agencies (the historic Presidio was transferred to the National Park Service) and another is scheduled to close in three stages, one of which has been completed.

"Closure is generally a gradual process," he explains. "Actual closure can take up to six years and during that time they are drawing down personnel."

As for converting those bases to areas of active private enterprise - it's going to take time.

"We don't have a lot of successful conversions, yet," Williams says. "I think we will, but it will be over a long period of time."

A FEW SUCCESS STORIES

Successful conversion takes "time, luck and money with the emphasis on the second item [luck]," says Williams, who has been involved in the California effort since 1989.

It also takes hard work, perseverance and creativity by local leaders and a little help from state legislators.

Rumors circulated in early 1990 that England Air Force Base near Alexandria, La., was high on the government hit list. Doomsayers predicted the local economy would be set back 15 years and 6,400 jobs would be lost. But local leaders began preparing for life after closure nearly a year before the Department of Defense (DOD) announced that the base would, in fact, be shut down.

A key component to the plan was a bill approved by the Louisiana Legislature that created and funded an England Economic and Industrial Authority of parish (county) and city representatives. The Air Force, under pressure from Louisiana congressional leaders, agreed to hand over the base to the authority.

By 1992 when the base closed, authority members had managed to entice enough new business and industry into the area that Alexandria housing prices were higher than in 1991, 400 net jobs were created and sales tax revenue increased 10 percent.

In New Hampshire, the legislature established a $50 million capital improvements bond for the Pease (Air Force Base) Development Authority that helped develop an airline maintenance facility and a technology park with an emphasis on biotechnology.

Rhode Island is another example of what a state can do to counter military downsizing. Legislation was passed in 1974 in response to the Quonset Point Naval Air Station closing. The law established the Rhode Island Port Authority and gave it, among other powers, the right of eminent domain and bonding authority.

"You have to be very patient," explains Marcel Valois, the authority's executive director. "It sometimes takes years to turn a [military] facility to productive [civilian] use. It's been 20 years and we are just now starting a major push to develop the port to take advantage of the military piers and an airport."

The tangible results of 20 years of hard work are a park for small industries as well as luring to the former base a branch of General Dynamics that makes submarine components and a Japanese firm that makes film.

And Arizona's Legislature passed a Defense Restructuring Act in 1992 that gives significant state income tax and property tax credits for reuse of military bases as well as credits for defense companies that hire new workers or transfer them from military to commercial work. Hughes Missile Systems Co., which produces the Tomahawk Cruise missiles among other things, moved 2,000 jobs to Tucson from Southern California where company executives decried the regulatory and tax environment. Arizona's lower cost of living was another lure for the company.

NOTHING NEW

Base closings are nothing new. After World War II, the defense economy declined from 40 percent of gross national product to 6 percent within two years. Transition planning, however, began in 1942 and accelerated in 1944. Public policies were established that, along with pent-up demand, helped transform the wartime economy with few negative effects.

Similar downsizing followed the Korean and Vietnam wars with waves of closings during the '60s and '70s.

Although legislatures can help in a variety of ways, successful conversions begin at the local level, as the citizens of Roswell, N.M., can attest.

More than 20 years ago, Roswell showed the nation that a town's life did not begin and end with a military presence.

In 1967, DOD announced it would close Walker Air Force Base. The town of 45,000 lost nearly a third of its population, an on-base work force of 6,000 and a $1-million-per-month payroll. The unemployment rate hit 20 percent.

But Roswell saved itself. The town began attracting industries by offering cheap leases, low-interest capital investment loans and generous tax incentives.

Twenty-eight years later, four base run ways are being used by airline companies for pilot training. The base hospital is now a regional medical rehabilitation center, and Eastern New Mexico University runs a branch campus in what once were headquarters buildings, barracks and other military structures.

Springing from the ashes of Walker Air Force Base, the Roswell Industrial Air Center houses a federal Jobs Corp training center, several aircraft retrofitting companies, an oil rig training school, a National Guard armory, a commercial airport, the state highway department headquarters and more than 20 small factories.

But closed bases don't come with any guarantees, either. Illinois Representative Bill Black was the primary sponsor of legislation in 1995 that gave municipalities the power to create tax incentives for redevelopment of closed bases.

The closing of Chanute Air Force Base in 1992 spurred the legislation. "It was a major, major blow," says Black. "But, rather than cry in their beer, the village of Rantoul put together a very successful redevelopment effort.

"If their luck holds and their hard work continues, I give them a year and they will be a model for the nation of successful conversion," he adds.

Black's legislation allows the village to float bonds to improve base infrastructure - roads, streets, water systems - that are 60 years old.

"The systems were not up to EPA [Environmental Protection Agency] specifications. The feds can get waivers for that; the village of Rantoul couldn't," Black explains.

GOOD NEWS, BAD NEWS

Base closings and military conversions are the epitome of good news/bad news stories.

"You can get lucky and happen to find a major reuse to make up for lost jobs," Williams says. Business can be lured to a site abandoned by the military. But there is no guarantee that laid-off workers will be rehired nor will wages remain the same. The Sacramento Army Depot conversion is a good example. Packard Bell came in after the Army left and replaced all the lost jobs, but the company hired new people, not the ones laid off by the closure, at lower wages.

More typical of conversion, Williams says, is that employers and new jobs are "picked up - a few here, a few there - if community leaders really get out and hustle."

When Norton Air Force Base closed in 1988, 4,500 jobs were lost. So far, Williams says, 1,100 jobs have been created by businesses lured to the former California base.

"They believe in 10 years they will have up to 10,000 jobs, and I think they may make it," he says.

RELATED ARTICLE: Peace Is Marvelous, But It Costs Jobs

The end of the Cold War has wrought many changes, and base closings are only part of the story. Military contractors also have seen orders decline - which, in turn, has resulted in laid-off employees as well as decreases in tax revenues collected by the states from military-dependent businesses.

The Washington State Community Diversification Program, created by the Legislature in 1990, is a national model for dealing with defense cuts in a state that has been one of the highest per capita recipients of defense money in the nation. With eight major military bases and a $5 billion defense industry, Washington in 1993 had 5.7 percent of its work force (137,000 people) in jobs directly linked to the Department of Defense.

Only one base there has closed - Sandpoint Naval Station in Seattle. Jobs have been lost, however, through military contract cutbacks ($4 billion to $5 billion flows into state businesses annually from procurement contracts). Unemployment associated with cutbacks in the Puget Sound area has been "dramatic," according to the state Department of Community, Trade and Economic Development. The department reported that thousands of jobs in industries such as aerospace and shipbuilding have been lost.

To help offset some of these losses, Washington program staff and private partners used $290,000 in state funds in 1993 to leverage more than $2 million in federal, private and local investment for seven diversification and conversion projects that helped move local economies away from sole dependence on the military.

The Community Diversification Program is run by an advisory committee representing state and local governments, military-dependent firms, labor and other interests.

RELATED ARTICLE: 'Fast Track' Cleanup Speeds Redevelopment

One way to soften the local social and economic hardships of Department of Defense (DOD) base closures is by encouraging private redevelopment of the properties.

Unfortunately, redevelopment has been hampered by hazardous waste contamination of many sites and the associated barriers to sale and productive reuse. In 1995, DOD's conservative cost estimate for closing 123 facilities was $4 billion.

The Clinton administration announced a five-part plan in 1993 to accelerate the cleanup process. One of the major components is "Fast Track Cleanup" - DOD's effort to cooperate with state and federal regulators in overcoming delays and redeveloping federally owned sites.

Fast Track cleanup identifies sites safe enough to transfer to the private sector for economic development. It requires that the property be evaluated according to previous use and what environmental degradation, if any, has occurred. Public notice and approval from state environmental officials are required throughout the cleanup process; parties interested in leasing DOD property are notified of any previous contamination on a site.

In addition, Congress passed the Community Environmental Response Facilitation Act (CERFA) in 1992. The law requires DOD to identify all uncontaminated property and make it available for redevelopment as soon as possible. After the 1988 and 1991 round of base closures, DOD identified "clean parcels" - uncontaminated property ready for immediate reuse - within 18 months. The department finished its clean property determinations for the 1993 closing decisions this April. DOD has attempted to coordinate its cleanup and redevelopment efforts with EPA and state regulators to ensure that sites designated as hazardous waste or "Superfund" properties meet state and federal requirements. So far, EPA has accepted 65 percent of DOD's cleanup recommendations, agreeing to cleanup plans at approximately 36,000 of 55,000 acres of DOD's federally listed hazardous waste property.

DOD hopes that it has found a common-sense approach to cleanup. With its Fast Track program, uncontaminated property is identified and made available for immediate reuse. Where cleanup is needed, remedies are chosen quickly and implemented with state and federal cooperation and public approval. In this newly cooperative and efficient atmosphere, base closure does not have to equal economic loss.

Sean Cavanagh, NCSL 

RELATED ARTICLE: Overview of Military Base Conversion

The U.S. military operates more than 1,500 installations, including 400 major bases, within the United States and abroad. With the end of the Cold War, Congress created in 1988 a bipartisan Defense Base Closure and Realignment Commission to recommend to the president which bases should be closed. Once a list of proposed closings is presented, the president can return the recommendations to the commission or take them to Congress for approval on an all-or-nothing basis.

Under this system, Congress approved closure in 1989 of 86 bases and realignment of 59 others. (Realignment involves transfer of some military units, expanding personnel at some bases and reducing them at others.) An additional 36 bases were closed and 43 realigned in 1991. Congress approved closure of 130 more bases and realignment of 45 in 1993.

Bases and other military installations have been closed throughout U.S. history - starting with unneeded Revolutionary War forts. During the 1960s and '70s, more than 100 bases were closed, and, over time, most were converted to civilian use. Of 97 bases closed during those years, about 1.9 jobs were created on the converted bases for each civilian Department of Defense job lost. In many cases, however, a decade or more ensued between closure and full reuse, according to California's Center for Economic Conversion.

And no one is certain if the economic activity that a base, its military personnel and their dependents generate through local purchases is equalled at the converted facility.

A few lessons learned over the past rounds of closings include:

* Base conversion can be a long and painful process complicated by political disputes, procedures for military property disposal and toxic waste cleanup.

* Several bases have been rapidly closed; others have had major reductions in the number of civilian workers.

* Bases in rural areas are often difficult to convert. Those in more populated areas may have a number of redevelopment options.

* Communities with bases that employ a large number of workers such as shipyards and aviation repair depots often have difficulty replacing those jobs with civilian ones at comparable skill and pay levels.

Dianna Gordon is an assistant editor of State Legislatures.