Bay Area Is Braced for Navy Cutbacks : Economy: The Cold War’s end may be costly for many in the region, which is still reeling from the recession and the 1989 earthquake.

SAN FRANCISCO —  When the United States began cranking up its military machine before World War II, Alameda sprang into being. Now a pleasant bay-side community with scores of renovated Victorians and a serene, 1950s feel, it came of age as a Navy town just south of Oakland.

With the coming closure of the Alameda Naval Air Station and a key tenant, the Alameda Naval Aviation Depot--and the eventual loss of about 8,700 military and civilian jobs--the city of 80,000 faces dramatic changes.

Alameda is far from alone in the Bay Area, which is absorbing one of the biggest hits in the country as the federal government continues to pare its armed forces in response to the end of the Cold War.

All told, the region--already hit hard by recession, the 1989 earthquake and the 1991 East Bay hills fire--stands to lose between 25,000 and 28,000 military and civilian jobs. The base closures are expected to take place during the next few years.

In an 11th-hour rescue Sunday, the Defense Base Closure and Realignment Commission spared the Naval Supply Center in Oakland but voted to shut the Oakland Naval Hospital and Navy Public Works Center in San Francisco.

Also slated for closure are Mare Island Naval Shipyard in Vallejo and Treasure Island Naval Station in San Francisco Bay, midway between San Francisco and Oakland.

With the lost jobs will go much of the economic strength that has helped sustain cities such as Alameda, Vallejo and Oakland and provided livelihoods for a plethora of car dealers, barbers and shopkeepers.

In Alameda, where some Navy and civilian jobs have already been phased out in anticipation of the closure, which has been in the cards for months, the city faces a decline of $2.5 million in its budgeted revenues for next year, City Manager William C. Norton said Monday. That’s out of a total of $37 million.

“I don’t know that I want to get emotional about it--calling it dreadful, horrible,” Norton said of the closure. “We’ll deal with it and move on.”

Nonetheless, merchants near the facility who depended on the business from military and civilian personnel cannot help but feel morose.

“Some businesses will be hurt worse than others, but of course everybody’s going to be hurt,” said Ed Clark, owner of Webster Pharmacy, a mile from Alameda Naval Air Station. “There doesn’t seem to be any other industry that will absorb” the workers.

Clark figures the closure’s worst effect will be to create a soft real estate market. Housing prices in the island community are already down 15% from a mid-1989 peak and are expected to drop further.

But George Gadsby, a local real estate agent, maintains that home sales will bounce back after a temporary decline because Alameda is a desirable place to live, with ample recreation, well-manicured lawns, good weather and low crime. He questions how much effect the base personnel have on Alameda merchants, since most of the military people shop, bowl, eat and go to movies on base.

His chief concern is that the federal government will snap up hundreds of off-base apartment units that have been used for military personnel and convert them to low-income housing. That would empty existing buildings and “would be devastating to the city of Alameda,” he said.

If it seems that the Bay Area is under siege because of peace, many cities concerned with closures are trying to make the best of a tough situation and figure out how best to adjust.

In Alameda, the ASK Group, a company that markets Ingres information management software, is single-handedly making up much of the shortfall in sales taxes, Norton said. The company, which set up shop in an Alameda business park eight years ago and sells its products by phone, has 500 employees.

In Vallejo, Mare Island’s well-trained engineers hope to find work helping to clean up toxic wastes as the region’s many military facilities are readied for other uses.

In Oakland--which has reeled in recent years from earthquake and fire devastation on top of a severe recession and the sudden closings of big employers such as Sears and Mervyn’s--officials contend that the closures will not be a devastating blow. That is despite the fact that a city study showed that the closures could increase the city’s unemployment rate to about 14% from the current 9.6%.

Robert L. Toney, president and chief executive of the Oakland Chamber of Commerce, said the panel “threw us a bone” by deciding to keep alive the Oakland Naval Supply Center.

Ironically, said Toney, a retired rear admiral, Oakland had liked the idea of tacking the facility’s 600 acres on to the Port of Oakland, an action that would have doubled the port’s size overnight.

The best bet for Oakland, he added, would be to push for a lease on that land. “It’s essential,” he said.

In Orange County, the economic impact of the shutdown of El Toro Marine Corps Air Station is not expected to be as drastic as that in the Bay Area.

If the commission’s recommendations are upheld, the base must shift 8,350 military and civilian jobs to the Miramar Naval Air Station in San Diego over the next four to six years. But analysts have said the short-term economic losses should be easily offset if the shutdown is gradual and occurs during an economic upturn.

One study indicates that the conversion of El Toro into a commercial airport could actually help Orange County’s economy, creating more than 52,000 jobs, pumping at least $4.3 billion into the regional economy by 2005, and providing a catalyst for more development.

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