Smart Redevelopment is Returning Former Military Bases to Economic Engines

Written by Amanda Maher

The end of the Cold War ushered in an era of reduced expenditures for the U.S. military. As budgets were slashed, the military faced increased pressure to realign bases and sell off underutilized property. Since 1988, there have been more than 350 military installations closed through five rounds of Base Realignment and Closure (BRAC), a process initiated by the federal government to increase Department of Defense efficiency.

In many cities and towns, military bases served as a driver for the local economy. Bases provided jobs, housing, retail and even educational facilities. Base closures threatened a tremendous blow to these communities throughout the country. The “Socioeconomic Impact Analysis Study” produced in advance of the Myrtle Beach Air Force base closing in 1993, for instance, projected 5,100 jobs losses, 1,500 homes dumped into the real estate market, a 15 percent drop in school children and an unemployment rate that would near 20 percent. Total economic losses would top $91 million from payrolls, taxes and other revenues, the study estimated.

As Myrtle Beach later found, smart planning can ward off the negative effects of the base closures.

Nearly 20 years later, the former Myrtle Beach Air Force Base has become a thriving mixed-use commercial district. The 3,937-acre site has been transformed to include more than 1,200 houses, new commercial airport terminals, a technology and aerospace business park, recreation fields and higher education facilities. At the heart of the “urban village” is Market Common, which includes a mix of retail and restaurants.

Getting to that point wasn’t always a smooth ride. The Myrtle Beach Air Base Redevelopment Authority took control of the land and steered its redevelopment, but the Authority lacked the resources to make the needed upgrades to the base’s roads, utilities and other infrastructure to make it a viable redevelopment site. At first, it was mostly nonprofit and advocacy organizations that lobbied to use the site at little or no cost. Though it was politically unpopular, the Authority remained committed to preserving the property for private development.  In 1995, the Authority experienced a big win when electronic manufacturer AVX Corporartion decided to build a $6 million R&D facility on the site. The Authority then granted a conveyance to Horry-Georgetown Technical College to build a satellite campus on the property. In an effort to boost development at the former base, the state legislature earmarked a new stream of revenue that would funnel $1.8 million to the Authority, which was then reinvested in renovating housing, sewer lines and roads at the former base. The city supplemented this funding by issuing more than $40 million in bonds to help pay for public infrastructure at the base.

But the concept of mixed-use development was still new to most of the real estate world. It wasn’t until 2004 that the Authority found two development groups—one out of New York and one out of Chicago—to collaborate and take on the project in earnest. Despite the ebbs and flows over the real estate market in the past 20 years, the Authority held firm in its commitment to transforming the base into a premier mixed-used development.

“When we first started, we didn’t have a crystal clear understanding of what we wanted the neighborhoods to look like,” explained Myrtle Beach Planning Director Jack Walker. “As we got more into it, the view of what could happen became clearer. Even so, we never envisioned an urban village with the quality we have out there now. We’ve done as good a job of redevelopment, if not better, than anybody I’ve ever seen.”

Successful redevelopment of military bases hinges on a few key factors, including development expertise, access to capital and location. Land Redevelopment Authorities (LDAs) often assume control of the sites, but many LDAs don’t have the planning, finance or development expertise to see the redevelopment through to completion. Private sector expertise is critical for these unusually large sites.

Lining up various sources of capital is often necessary to move projects forward. For example, the redevelopment of Massachusetts’ former South Weymouth Naval Air Station (now, Southfield, a $1.5 billion mixed-use project) has been in the making for nearly 17 years, but has stalled because the developer and the state are at an impasse as to who will spend the estimated $20 to$40 million necessary to complete a vital access road to the site. The Commonwealth of Massachusetts has already contributed more than $45 million toward the project. Often, both state and federal funding is needed for environmental remediation, as many former military bases are so heavily contaminated that cleanup can be cost-prohibitive for private developers.

“With the right investments and federal funding, we can redevelop bases and spur economic growth,” explained U.S. Senator Angus King (I-Maine), who has introduced a provision to the 2015 National Defense Authorization Act that would improve the eligibility criteria under the HUBZone program—a designation which gives businesses located on former military bases preferential access to federal procurement opportunities. Under the current guidelines, to qualify, at least 35 percent of a business’s employees must reside on the closed base. But very few people typically live on former bases, especially prior to large-scale redevelopment taking place.

Finally, the location of the military base plays a large role in its redevelopment potential. Bases in urban areas typically fare better than those in rural areas, given access to the surrounding housing and employment centers. The 1,866-acre former Lowry Air Force Base has attracted significant development interest given its location between Denver and Aurora, CO. At full build-out, the $1.3 billion master-planned district will include 4,500 new homes, 1.8 million sq. ft. of office space employing 6,500 people, 130,000 sq. ft of retail, eight new schools and more than 800 acres of open space. Near Boston, Fort Devens has experienced significant growth given that it’s only 35 miles outside of Boston. “In that part of the world, a 100-acre tract is a lot of land,” said Peter Allsopp, former base reuse coordinator at Devens. Devens has been particularly attractive for life science companies who want the benefits of Boston’s biotechnology cluster but cannot afford the city’s high costs.

Bases outside of the urban core face greater challenges: “We’re a little bit unique because of our remoteness,” said Brian Hamel, former president of the Loring Development Authority, which oversees the redevelopment of the Loring Air Force Base in Limestone, Maine. “Our location in some people’s minds is a problem. We’re not going to be attractive to every company.”

Reuse of military bases certainly presents its challenges, but it also offers a unique opportunity to build dense, mixed-use development. When done properly, former military bases can be revived into the economic engines they once served for so many cities and towns.