Battles Won--and Lost--in Military Base Conversions

From a gold-plated success story at Sacramento’s Army Depot to Long Beach, which was hit harder by base closings than any municipality in the country, California’s experience in closing nearly 30 major military facilities over the last decade has demonstrated both potential and fiasco.

Now, with the Pentagon recommending two more rounds of closures, California officials are well aware of the haunting consequences.

They are also better prepared.

Officials have learned that many of the hurdles that stand in the way of converting a closed base are far higher than they had anticipated when the first bases were closed. Toxic soil, substandard infrastructure and hostile neighbors have stalled or dashed several grand visions. So far, nine years after the first bases were targeted for shutdown, just 22% of the vacant military acreage in California has been sold or leased and barely 14% of the lost jobs have been restored.

Still, drawing boards today contain billions of dollars in ideas that remain a hopeful--if shaky--glimpse of the future.

This week, the state Trade and Commerce Agency published a national magazine advertisement that boasts of mammoth vacant structures as if they are more blessing than curse.

“Eight airports, four deep-water ports, 50,000 acres and 20 million square feet of building space and capital equipment worth millions [are] ready for sale or lease,” the advertisement says. “Now you can afford to do business in the world’s seventh-largest economy and in the nation’s most desirable state--all at bargain rates.”

Seizing the Opportunities

If there is a lesson in the base conversions to date, California officials say it is that opportunities must be seized immediately. The longer it takes, the more coagulated the process becomes.

The experiences in Sacramento and Long Beach demonstrate a sharp contrast in both approaches and outcomes.

In Long Beach, where a vaunted World War II naval station and adjoining shipyard were closed in 1991 and 1995, respectively, the effort to convert the closed properties has been a struggle against a deepening political and legal swamp.

In Sacramento, lawmakers and bureaucrats prodded their federal, state and local governments into uncharacteristic speed.

Even then, officials say the Sacramento project required a lot of luck. Officials at several levels of government had to work simultaneously toward the same goal. If one office had simply slowed down it could have killed the project.

If successful base conversion could be done anywhere, officials said, it was in Sacramento.

The Army munitions depot targeted for closure in 1991, was a near-perfect fit for a rapidly growing computer maker that was desperately seeking new quarters.

Finding the Perfect Match

Packard Bell was already looking for a larger manufacturing plant when its Chatsworth facility was badly damaged in the 1994 Northridge earthquake. The destruction, which forced the company to move some of its assembly line work temporarily out of doors, naturally accelerated the effort.

Corporate planners looked at sites in Massachusetts, Oregon and Utah. Meanwhile, California assigned a special “Red Team” to the project--a multi-agency task force that parachutes into troubled business situations in hopes of preventing major employers from leaving the state.

The team surveyed its economic development contacts statewide for tips on a facility meeting Packard Bell’s needs for space, utilities, labor force and other factors. The Army depot site, still nearly three years from its scheduled closure by the military, was suggested by SACTO--the Sacramento Area Commerce and Trade Organization.

Packard Bell officials who toured the 407-acre depot in the fall of 1994 decided almost immediately that it would work--if there were government incentives to outweigh a cash offer from Utah.

“It was a little bit of the planets lining up and some very aggressive economic development activity,” said Al Gianini, executive director of SACTO.

But even with that seemingly obvious match, completing the process was not easy.

First, the Army had to shrink its normal paperwork process for conveying military property to private use from several years to a few months. It also expedited a toxic spill cleanup that had to be completed before the property could be transferred.

Sacramento Mayor Joe Serna pushed through a $26-million, low-interest loan the company needed to convert the depot’s storage warehouses into environmentally controlled assembly lines.

The Sacramento City Council also told Packard Bell it could lease the property for 15 years and then purchase it for $1.

In the state Legislature, a bill creating a new enterprise zone with tax credits for Packard Bell was threatened by hostile amendments from Southern California lawmakers who did not want the company to move north.

Getting the bill through the legislature required “luck, and there was arm twisting, and there was perseverance,” said Alex Ives, chief of staff to the bill’s author, state Sen. Leroy Greene (D-Carmichael).

Finally, three months after the Army closed the depot in March 1995--two years ahead of its own schedule--Packard Bell opened the doors of its new headquarters. It had ben less than a year since company officials first toured the site.

The company had also worked fast. In less than 12 months, it hired nearly 4,000 new workers from the Sacramento area--more than the Army depot had ever employed. With the state’s help, nearly 40% of those employees were referred from unemployment rolls and public assistance programs such as welfare.

Sacramento’s experience is especially notable when compared with the rest of the state’s base conversions. The Sacramento depot represents a fraction of 1% of the total acreage in the bases being closed, but it now accounts for nearly a third of all the private employees hired in conversion projects.

“It shows what can be done,” said Ben Williams, a deputy planner for military base conversions in Gov. Pete Wilson’s office. “But I don’t think it’s reasonable to expect that is going to happen on every base site--even by a stretch of the imagination.”

Consider Long Beach.

The city estimates that defense layoffs in the 1990s eliminated 50,000 local jobs, a larger base-related job loss than in any other city in the country.

Still, when the Pentagon decided to close the Long Beach Naval Station in 1991, local and state officials expected the prime waterfront site to find a new occupant in a flash.

Six years later, the Navy has pulled out and the 130-acre station has grown thick with weeds. The city’s plan to meld the land into the surrounding harbor and turn it into a cargo terminal for a Chinese shipping line is in tatters.

“Base closure is basically a nightmare,” said Gerald R. Miller, chief of the city’s Economic Development Bureau. “Frankly, I think it’s largely not the community’s fault. It’s difficult to wrest this property out of the federal government’s dying grasp.”

Reinventing Military Sites

For a city that was once the Navy’s dominant West Coast port, Long Beach has taken some significant steps to reinvent its abandoned military sites, officials say.

A cluster of old Navy barracks was reborn as the Savannah Academy, an innovative public school. And demolition work on a former Navy hospital site is set for August to make way for a retail shopping center. City officials recently discovered they will have to pay the Navy $8 million to repurchase the hospital site, which the city originally sold to the Navy for $10 about 30 years ago.

But by far the city’s most valuable properties--the Naval Station and the adjacent shipyard--have yet to be transformed. At least in part, that’s because the age and level of development of the sites added obstacles to what city officials say was already a maze of federal base-closure procedures.

In October, port officials signed a lease with one of their fastest-growing customers, China Ocean Shipping Co., that would ultimately make 300 acres of the property into terminal space for the company.

The deal seemed to make sense from a business perspective. The company, known as Cosco, wanted to expand to accommodate greater cargo volume, and port officials, hungry for the additional revenue, wanted to oblige.

Navigating the plan through the base closure process, however, proved problematic. Separate analyses of the use of properties by each of the armed services, federal agencies, state agencies and the local interests took months, Miller said.

And closer studies showed that the waterfront sites, while in an enviable location, were not as ready for development as some had believed. A cluster of World War II-era buildings on the Naval Station were designed by prominent African American architect Paul R. Williams and were eligible for the National Register of Historic Places. The base also was home to a colony of black-crowned night herons, a species protected by environmental laws. And tests showed that silt in the basin was contaminated.

Environmentalists protested the plan before the state Coastal Commission. Preservationists sued to spare the historic buildings. Critics raised questions about whether a lease with Cosco, a company owned by the Chinese government, would be a breach of national security.

Earlier this month, the preservationists prevailed in court. A judge ruled that the port had improperly rushed the process by sending a letter of intent to lease the land to Cosco before completing the environmental impact report. Transfer and development of the land has now been delayed indefinitely.

But even though the port ran into legal trouble because it moved too quickly, Miller suggests the ultimate reason the city faltered is that it didn’t move quickly enough.

“The longer it takes to get something done, the easier it is for people to forget what the problem was,” Miller said.