Communities Face Challenge of Adaptive Reuse of Major Military Base Closures

Government, Military, Public and Private Sectors, and Communities Join Together for Highest and Best Use of Former Military Bases

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By Sasha M Pardy

October 3, 2007

On September 15, 2005, President George W. Bush approved the 2005 Base Realignment and Closure list issued by the U.S. Department of Defense (DOD), which recommended 33 major U.S. military bases be closed and 29 others be "realigned," a term indicating gains or losses of staff or facilities to be completed at the bases.

The list is the fourth issued since the Base Realignment and Closure (BRAC) process was started in 1988. Two more followed in 1991 and 1993. In total, the four lists have identified 97 bases for closure.

September 15, 2007 was the deadline for the Secretary of Defense to begin implementing the base recommendations made in the 2005 BRAC and the process must be completed by September 15, 2011.

While many questions about the BRAC process and the feasibility of meeting the 2011 deadline for the relocation of certain major installations remain, the challenge facing communities affected by a base closure is very clear: How to replace the loss or disruption of sometimes thousands of civilian and military jobs and millions of dollars in residual income by converting what amounts to a huge brownfield site into vibrant, tax-paying, master-planned development.

CoStar spoke with Paul Kalomiris, Executive Director of the Association of Defense Communities (ADC), formerly known as the NAID. Based in Washington, DC, ADC is a national organization that provides support to communities with active, closed and closing defense installations. Kalomiris had much to say about the opportunities and challenges redevelopment of closed military bases present.

" 'Free Ain't Cheap.' That's one of my favorite sayings of one of our members. Sure, BRAC land could be transferred to a community by the military at no cost, but that doesn't mean it doesn't come without a price. To prepare these properties for reuse is a very costly process," said Kalomiris.

When a base is scheduled for closure, the affected community typically forms a task force specifically to manage the planning and execution of reuse of the base. Sometimes communities decide to take on the role of master developer themselves, or they farm that task out to " "public-private" joint venture, or sell the land all together. However it's done, it's a lengthy and costly process that involves a high level of community, public and private entities working together to accomplish one common goal: bringing a former economic engine for the community back to productivity in another form.

These aren't the only challenges presented. Environmental cleanup at old bases is almost always involved. The way it works is the military is responsible for cleaning up (paying for and executing) an affected plot of land. When it deems the land clean, it will then convey the property to the community.

For major base closures, these phases of cleanup can last several years, which factors into the cost equation as well.

"The longer the property goes unused, the longer it's having no economic impact. An Environmental Services Cooperative Agreement allows a community a little more control over the cleanup process, the government still pays, but the community takes more involvement to expedite the process so the property can be conveyed," explained Kalomiris. Undertaking environmental cleanup can be a very daunting task for a community.

Kalomiris explained that the opportunity BRAC can present in urban and suburban communities can be great. "A community almost never has such an opportunity to integrate or add a large piece of property into the community," he said. "It's an opportunity to be even more creative about the future of your community. These reuse plans demand a lot of community input and are the product of many meetings between local redevelopment authorities and community members; it a great example of how citizens can get involved on a large scale."

Kalomiris explained the loss and reuse of a base from an economic perspective, "Reuse creates a different kind of benefit. When it was military, it wasn't being taxed. If it becomes a live-work-play village, for example, you get property tax from all the entities that weren't there already. When you lose a military base, there's a range of jobs that you're losing, a high percentage of which were well paid and filtering that income into the community. If you replace those jobs with retail and commercial jobs, you're not getting the income impact, but getting the tax impact instead; which could potentially equal the loss of the closure."

(Editor's Note: In this article, as we hear from CoStar Group newsreaders we will update the story regularly throughout the day. We'd like to post your comments on the subject, too. Tell us what you think. E-mail me at spardy@CoStar.com. Read excerpts from pertinent follow up comments at the end of the story as they are added.)

Tustin Legacy, Orange County, CA

The Marine Corps Air Station Tustin in Tustin, CA, was in operation for 57 years as a Navy and Marine Corps training facility before it was realigned and closed on July 2, 1999, in accordance with the 1991 BRAC. Instead of taking the approach of many communities and opposing the base's closure, the City of Tustin immediately recognized the possible opportunities for reusing the prime 1,600-acre parcel and began the planning process. Now 17 years later, Tustin Legacy is home to residential, retail, entertainment, and public uses, with much more on the way.

The 1,600+ acre development will ultimately include 4,600 homes and nearly 11 million square feet of non-residential space, including office, retail, entertainment, business park, educational and community support facilities. More than 275 acres of Tustin Legacy is dedicated to green space, including parks, recreational areas and an 170-acre, two-mile long park dotted with trails, playgrounds, sports facilities and more.

Tustin Legacy's residences will be nearly 20% affordable housing. John Laing Homes is the builder for Tustin Field I and Tustin Field II, and its 565 residences (which includes 118 affordable units) is sold out and built out. A partnership between Lennar and William Lane Homes is about 60% to 65% complete with the Villages of Columbus, which includes 1,077 homes at Columbus Square and 465 homes at Columbus Grove. 2,105 homes will be built by built by Tustin Legacy Community Partners, which is lead by Aliso Viejo-based Shea Properties.

Shea is responsible for developing 820 acres of Tustin Legacy. Currently undergoing mass grading, Shea will construct 6.7 million square feet of non-residential space and the 170-acre lineal park. Specifically, the non-residential uses of Shea's plan are comprised of 494,604 square feet of retail space, 4.72 million square feet of office space, 627,046 square feet of industrial space, 158,994 square feet for congregate care, at least 500 hotel rooms, and more. Non-residential product on Shea grounds is expected to rise towards the end of next year; the company just hired a new vice president of marketing dedicated to promoting Tustin Legacy in order to attract tenants and additional development partners. Another element is a 300,000-square-foot former Hangar, that is expected to be transformed into an $100 million sports and leisure center including a tribute to military veterans by Industrial Realty Group.

Tustin Legacy's educational facilities include a Sherriff's Regional Training Academy. The 50,000-square-foot facility broke ground November 2005 and recently delivered; it is built to service 400 students annually. In addition, there is a high school and two elementary schools planned for the development, which fall within Shea's footprint. Under control by the school board, the sites for the schools are undergoing the state process and clearing any environmental contamination. Design plans for the schools are currently under review.

Other public uses on the former base will include an abused children's facility, numerous non-profits, and the Village of Hope, a project that will provide accommodations to the homeless. Homeless accommodations are a requirement for any master plan of a former base closed in accordance with BRAC.

Central to Tustin Legacy and developed by Phoenix-based Vestar Development in partnership with Kimco, The District at Tustin Legacy is a 1-million-square-foot open-air retail center that recently delivered nearly 100% leased, thanks to the leasing help of Newport Beach, CA-based Strategic Retail Advisors.

The District's tenant list is lengthy and impressive. Retailers include Costco, Lowe's, Target, Whole Foods Market, TJ Maxx/Home Goods, DSW, Petsmart, Best Buy, Borders, Office Depot, Borders Books, Finish Line, Hot Topic, Justice, Michael's, Rocky Mountain Chocolate Factory, Sunglass Hut, ULTA, Zumiez, and more. Restaurants include Panera Bread, Chaparosa Grill, Bluewater Grill, RA Sushi, Thai Bamboo, Johnny Rockets, Pei Wei, Peet's Coffee, The Winery Restaurant, and more. Entertainment tenants include a 14-screen AMC Theatre and Strike Rock & Roll Bowling.

Christine Shingleton, Tustin's assistant city manager and a past president of the NAID (now known as the ADC), is responsible for managing the base reuse plan for the City of Tustin. She explained the challenges presented in the reuse of the Tustin base and her experience in the reuse of other bases across the country.

"Stepping into reuse of these facilities, you're dealing with infrastructure and buildings that were built under military standards and are really obsolete for use of urban development, so you have to go through a deconstruction process to remove them. Here we had in excess of 3 million square feet of abandoned military buildings, we had roads, access points, gas lines, and pipelines that were abandoned. The cost and time involved in that deconstruction and removal and getting the site ready for development is huge and can delay development," said Shingleton.

"The other issue is environmental constraints. These bases were used for heavy military operation, in our case a helicopter facility where we had fuel in repair facilities and saturation into the soil, etc," she said. "We had to design the reuse around the environmental constraints of the property so that we're not putting residential uses in areas that will not be remediated over time to a standard that makes them safe for public use."

"Right now we have about 95 acres that has yet been conveyed by the Navy because they're still determined unsafe. Environmental remediation can be a big barrier in getting development to proceed in a timely manner. The military has an obligation to do the remediation, but the timing of them doing that work is based on factors that the local community can't control, including federal funding. The military is going to use the most cost efficient approach to environmental remediation, but unfortunately, the most cost efficient method for the Navy may not get the property into rapid reuse," explained Shingleton.

"We're talking about millions and millions of dollars and timeframes that can extend into the next century in some cases to adequately remediate the site. Development can occur around the remediation, but there are development constraints tied to the remediation that you have to work around. This site in Tustin is one of the cleanest seen on military bases. Our initial conveyance was over 977 acres from the Navy and that was one of the largest in history," she said commenting that Tustin has constraints but is more fortunate that many sites across the country.

When asked to comment on the opportunity reuse of a base presents, Shingleton said, "The opportunities really relate to the market. Tustin Legacy is a donut hole in Orange County. It made it easy, even with the constraints, to design a development program that responded to the market demand for uses here. That's not the case in every one of these base closures. I believe its much more difficult in non-urban settings to create a use that the market will be responsive to."

Giving advice to other cities and developers challenged with reuse of bases, Shingleton said, "Listening to the community in terms of where they want is important because it will reduce opposition, particularly in the entitlement process. The more you can create collaborations with your adjacent communities and agencies that you're working with and create support in the community for your reuse program, the less constraints you'll have to moving forward in a timely manner."

Federal City, New Orleans, LA

The Naval Support Activity Base in New Orleans, LA, is one of those that was slated for realignment in the 2005 BRAC. The 156-acre base, located along the West Bank of the Mississippi River directly across from and less than two miles East of downtown New Orleans along State Highway 90, is home to approximately 2,000 military personnel and more than 600 civilians. Together with the lingering affects of Hurricane Katrina, the Navy's realignment of the base could have even worse repercussions for the local economy than other military base realignments. The New Orleans Federal Alliance (NOFA) intends to prevent that through reuse of this base into a "live-work-train" district including military, government, commercial, and public uses.

The Federal City project is currently in the process of selecting a master developer, scheduled to be chosen the middle of this month. Recognizable real estate developers and agencies on the registered list include First Industrial Realty Trust, Carnegie Management & Development, CB Richard Ellis, Cushman & Wakefield, Lincoln-Patrician, Transwestern, and many more.

NOFA expects the master developer chosen will farm out responsibility for certain portions of Federal City's reuse plan to those with expertise in a certain area. A developer with a full range of commercial development experience, including BRAC experience, is very unlikely, which is why NOFA and BearingPoint are involved.

With $100 million pledged by the state of Louisiana for Federal City, entities were asked to submit proposals to become the developer in charge of creating a new kind of federal office park that will attract a large and diverse set of government and commercial tenants to drive local economic redevelopment.

NOFA wants the master plan to open up the bases to the community, incorporating state-of-the-art facilities, a concentric design allowing force protection via three separate levels of security, energy efficient buildings and systems, use of the latest hurricane and flood protection methods, housing for 200 military personnel, temporary lodging for visitors, recreation facilities, higher education use, and amenities including child care, retail and restaurants, a library, church, conference center, parking, parade grounds, and green space.

Another requirement is that the project accommodate the relocation of 1,900 personnel from the Marine Forces Reserve, which requires that a facility with 306,000 square feet of administrative space and 132,000 square feet of special purpose space break ground by Sept. 30, 2008, and be complete by first quarter of 2010. The rest of the development will follow at that point. That's a tall order, but many developers are rising to the occasion.

"Federal City is a unique approach to BRAC implementation that really focuses on a partnership between the Department of the Navy (DON), NOFA, and a master developer," said Mark Frye, a managing director with BearingPoint, the consulting firm hired by Federal City that has worked on similar BRAC-related projects in other areas of the country.

Because the project is a realignment that has a commitment by the Marines to relocate a facility, Federal City's reuse plan process differs from the typical BRAC closure project, allowing it to achieve full reuse in a timelier manner. In a typical situation, the community comes up with three preferred plans and then presents that to the military for approval, and then goes on to select a master developer.

"With Federal City, we are bringing in a master developer much earlier in the process which will really put the meat on the bones of the project when we present it to the DON," Frye explained.

Federal City is also fortunate in that its level of environmental contamination on the site is very low, eliminating most of the environmental constraints typical closed base reuse projects face.

Frye explained a challenge presented at Federal City, because it is a realignment plan that will open up the base to the community, is how to handle security. Since 9-11, the government has heightened security requirements for protection of its military personnel, which has caused thousands of personnel working off-base in many office environments to be relocated onto bases certified for that high level of security.

"The state and the community definitely sees Federal City as an economic development project, supporting the military as a secondary benefit," noted David Mize, a retired two-star Marine Corps general who is leading the efforts of NOFA for Federal City.

"Federal City aims to retain as many current jobs as possible, so that the New Orleans economy, which is rebuilding from Hurricane Katrina and goes up and down with tourism, gas and oil, etc., doesn't lose a foundation piece, as the Department of Defense and federal work forces have been one of the more stable parts of economy," Mize added. "The prospect of losing that was very concerning. Federal City also aims to create a really attractive, 21st century, very efficient and effective, new kind of base that in addition to retaining as many federal jobs as it can, will also attract new federal jobs because of its modern facilities, force protection, energy efficiency, low-cost options, and location at the mouth of the Mississippi River. It will bring together like-kind agencies that can coordinate and cooperate on issues that state and federal agencies have a common interest in at a convenient, first-class base."

"We're excited because we're trying to create a model for what a new 21st century Department of Defense (DOD) installation and federal base ought to be in this country," Mize said. "We have a chance to start from scratch in building a small to mid-sized base and doing it a little different than before to take into account technology and to blend together needs of the DOD and federal agencies in terms of force protection. We have the chance to lead the pack and make a real model for the country and get our area out of being known for some poorer capabilities - we want to have a leading, cutting edge capability here that will give our military and federal folks a real first-class facility so that New Orleans can be a place of choice to come to.

"As this is successful its going to give a real psychological boost to the community as they see some real projects rising up out of the ground and one of the number one foundations of their economy coming back strong," he said.

Frye, who has been involved with BRAC since 1991 and has seen its evolution said, "The 2005 round of BRAC, I would characterize as the most successful simply because the new communities have done a very good job of getting together with communities that have been through this before, and with organizations like ADC, bringing past experience to the folks to whom BRAC was new. Lesson learned number one is organize, speak with one voice, and get the right expertise to the table. Bring the private sector on as early as possible, because that's where the development expertise lies."