State eyes problems, opportunities in base closures: hungry developers salivate over conversion prospects.

A statewide panel appointed by Gov. Pete Wilson is expected to deliver a report by the end of January that will, among other things, outline both the opportunities and the obstacles that will face the real estate development community when the state's military bases are closed by the federal government. Deal-hungry Southland developers, planners and consultants are eagerly awaiting the report, hoping that conversion of California bases to civilian uses will provide much-needed work.

Members of Wilson's California Military Base Reuse Task Force, and others already working on converting some of the 29 California bases thus far targeted for closing, said the report will offer guidelines on how best to convert military bases to civilian uses.

According to Malissa Hathaway McKeith, an attorney at the downtown L.A. law firm of Loeb and Loeb and a member of the Wilson task force, the bases could present opportunities in the near future for Los Angeles-area real estate companies. In the near term, McKeith said, the main base conversion-related demand will be for planning firms, environmental consultants and some legal consultants. The legal consultants are needed because the local agencies designated to oversee the base conversions will need someone to negotiate memorandums of understanding with the U.S. Department of Defense, as well as to review consultant reports and draft leases for interim tenants or final sale documents when the properties are transferred to the private sector.

Eventually, there will be a need for developers, architectural firms, environmental consultants, law firms and the other types of private-sector consulting firms that would be involved in developing any large, multi-use operation.

However, McKeith said, a number of questions must be answered before the bases can be developed, which is why Wilson appointed the base reuse committee. The mission of the committee, headed by San Diego Mayor Susan Golding, is to identify the chief obstacles to redeveloping the bases and to propose solutions for eliminating those obstacles.

Issues to be resolved range from jurisdictional questions about who will actually control the reuse of the bases to environmental considerations and questions about how the developments will be financed. McKeith and Jerry Walsh, a Cox, Castle and Nicholson attorney who worked on one reuse proposal for Norton Air Force Base in San Bernardino, both said control of the bases and environmental considerations are two of the most important issues that must be resolved.

In the case of Norton, which is already well along in its reuse plan, the question of control has already been settled through the formation of a local joint powers authority called the Inland Valley Development Agency. But disputes remain regarding who will control a number of other bases, including El Toro Marine Base in Orange County.

As for El Toro, the Orange County Board of Supervisors and some of the cities in south Orange County are vying for control of the base, which has resulted in a delay in designating a specific reuse agency. McKeith said such disputes can delay the reuse plans because the Department of Defense tends to take a hands-off approach in such matters.

"The DOD in these situations tends to step back and say, 'Call us when you know who the reuse agency is.' These are large regional assets, but they could sit idle if these disputes aren't settled," McKeith said.

McKeith further said the task force's report will also include a large section on environmental considerations. She said it will address questions like where the money should come from for environmental cleanups of the bases.

Walsh pointed out that the bases often have a history of environmental contamination from jet and diesel fuels, gasoline and solvents used in manufacturing.

"Some types of manufacturing rely on a pretty heavy use of solvents. You've got to get comfortable that you can do something about that before you can develop the property," he said.

Reuse agencies have yet to be designated for many of the bases, but the Inland Valley Development Agency overseeing the Norton Air Force Base conversion was created in 1989 by an act of the California Legislature.

Bill Bopf, executive director of the agency, said it got a jump on others because Norton was one of the first bases targeted for closing. It also helped that the city and county of San Bernardino and the cities of Colton and Loma Linda quickly agreed to cooperate in forming the agency.

Bopf said his agency has redevelopment authority over the 2,000-acre base and 13,000 acres surrounding it. The agency is funded by $1.8 million a year in tax revenue and has received some federal grants to help in the two public works projects it has already begun as part of the base conversion. The two projects include a $12 million job to construct an off-base feeder road from nearby freeways to the base and a $7 million reconstruction of some roads within the base.

Bopf said these, however, are just a drop in the bucket compared with the huge expenditures that will be required to convert the base for civilian uses. He said the base will require an estimated $270 million to demolish existing buildings, rebuild roads and sewage systems and modernize the infrastructure of the base. Demolition costs alone are estimated at $90 million, Bopf said, because most of the 250 buildings are 1940s and 1950s vintage structures that must be torn down. Of this $90 million, approximately $20 million will be for asbestos removal.

"When these closures were first talked about, many of the cities viewed the bases as assets because of the land and facilities involved," Bopf said. "They can be assets once they are converted, but they are generally big liabilities right now because market conditions are bad and there are no big master developers active right now. Much of the infrastructure is actually a negative because it has to be torn down."

Bopf said the Norton base is already being used for private industry by Lockheed Commercial Aircraft Co., a unit of Lockheed Corp., for maintenance of 747s and other large aircraft. Bopf's agency has spun off an airport authority that was scheduled to sign a 55-year lease in mid-January to use 1,345 acres of the base for passenger and freight service. Of the remaining 655 acres on the base, Bopf said approximately 500 will be available for development and 155 acres -- including a golf course and a number of warehouses and other buildings -- will go to a variety of governmental and private groups. Approximately 22 of those 155 acres will go to two groups for aiding the homeless, San Bernardino-based Western Eagle and the Apostolic Church of San Bernardino. Western Eagle is slated to get 20 acres of land and five warehouses containing about 750,000 square feet of space, while the Apostolic Church is to receive two acres, including a base chapel. Bopf said Western Eagle plans to open a food distribution center on its facilities, while the church plans to open a center to train youths in its programs for aiding the homeless.

The acreage was assigned to the various groups by federal officials under terms of federal regulations that allow numerous types of community groups to vie for use of closed bases.

Among the other types of uses being considered for the base are various technology companies, a warehouse-type grocery store at the commissary site, a computer-training company, a catering business, trucking and various high-tech operations. His agency's goal, Bopf said, is to convert the base for uses that will bring jobs to the area.

McKeith said Wilson's reuse committee is hoping to provide suggestions on enterprise zone-type incentives to encourage manufacturers to come back from out of state and relocate on the bases. She said the actual uses will depend on the individual bases and what they are best suited for.

According to Walsh, bases like Norton represent a rare chance for development.

"Especially with bases like Norton, this is a once-in-a-lifetime opportunity because it sits right in the middle of developing communities, and yet, it's a large parcel of land that can undergo the redevelopment process. How it is developed could have a profound effect on what happens there for the next 100 years," Walsh said. "I don't know of any reasons you would have to constrain the uses of these bases. As long as the environmental concerns are answered, conceptually you could even put housing on some of them."