Military Base Closures: Socioeconomic Impacts
Released: 2012-02-07T00:00:00

Background

To better confront the military demands of a post-Cold War world, as well as to reduce costs of maintaining excess military infrastructure, Congress authorizes the Department of Defense (DOD) to realign or close military bases. Following an examination of its military forces and installations, the department compiles a list of recommended Base Realignment and Closing (BRAC) actions. This proposed list of base closures and realignments is presented to an independent BRAC Commission, which reviews the proposed actions and sends the list to the President with any recommended changes. After the President reviews and approves the list, it is sent to Congress. The recommended list is automatically enacted unless Congress passes a joint resolution disapproving the list as a whole and sustains it over a potential presidential veto. Following the actual base closings and realignments, the DOD carries out an environmental remediation plan to enable the conveyance of surplus federal land to other entities.

Four separate BRAC rounds were initiated in 1988, 1991, 1993, and 1995. In total, 97 bases were closed or realigned under these rounds. By 2001, the DOD had implemented the recommendations from the previous rounds, although significant environmental remediation and asset transfers remain unfinished in many of the affected communities. Congress authorized a fifth round of military base realignments and closures for 2005 through the National Defense Authorization Act of 2002 ( P.L. 107 - 107 ). A primary objective of the 2005 BRAC round was "joint activity"—integration and realignment of cross-service functions in such areas as industrial, supply and storage facilities, technical, training, headquarters, and support activities. The list of recommended actions to achieve these objectives was presented to the BRAC Commission on May 13, 2005. The report became law on November 10, 2005.

Community Economic Impact Analyses

Small-area economic impact analysis can be a difficult and imprecise undertaking. Assumptions and supporting statistical reasoning can lead to predictions that are, in hindsight at least, inaccurate. For example, multiplier effects—measures of the rate at which a direct effect (e.g., base job losses) creates indirect effects—are central elements in estimating the socioeconomic impact of a base closing or realignment. If, for example, one assumes that a base job has a large indirect employment multiplier (e.g., 2.5-3.0), then for each direct job lost, employment indirectly related to the base job within some defined geographic area is also predicted to be lost. Similarly, an income multiplier allows one to estimate the total income generated by a military base and the resulting income loss or gain within a region. Assumptions about the extent to which base incomes are spent within a particular community can lead to very different assessments of the impacts from the loss of that income.

A shift to a smaller employment multiplier will show a much reduced total employment loss from closure. Using data from military base closings between 1971 and 1994, one 2001 study estimated multipliers of less than one and concluded that employment impacts were mostly limited to the direct job loss associated with military transfers out of the region. On average, the study found that per capita income was little affected by the closures. Base closings in communities that have been declining economically for some time, however, may produce impacts different from (and possibly more severe than) those of base closings in communities where growth and economic diversification are more in evidence.

The relative strength or weakness of the national or regional economy also can strongly influence the magnitude of community effects from base closure or realignment and the length of time for economic recovery. Evidence from earlier base closures suggests that the impacts can be less than expected because, unlike many other major employers, military bases may be relatively isolated economic entities, purchasing base needs outside the community and spending income at the base rather than in the local community.

Local communities are also concerned about the fiscal impacts borne by local governments, especially rural governments. Revenue from property taxes, sales tax, licenses and permits, and state and federal aid is influenced by population gains and losses. With population loss, and related changes to local income, base closures can affect the ability of local governments to raise revenue and support existing services. Similarly, with significant population increases, a community may find greater demand for public services (e.g., transportation, schools, public safety, water and sewerage) without the necessary revenue to support the additional demand. Even where increased revenue can contribute to mitigating the impact of base expansion, the planning and adjustment costs impose other burdens on communities and residents.

Local government expenditures and services can also be affected by closure and realignment, depending on the extent to which the military base is integrated into the community's fiscal planning. Here as well, statistical assumptions can lead to significant differences in estimated impact. For example, an economic development analyst estimated that the closure of Hanscom Air Force Base would mean the loss of about $200 million in defense contracts to Massachusetts's firms. Another analysis estimated the same losses at $3 billion. A review of impacts on local government revenue and expenditures, however, generally confirmed that these impacts were, like those impacts affecting the economy, not as severe as had been originally projected.

The announcements of previous BRAC Commissions have been greeted in affected communities and elsewhere by significant concern over the potential consequences of closing or significantly realigning a military installation. Military bases in many rural areas, for example, provide an economic anchor to local communities. Even where the local and regional economy is more diversified, military bases provide a strong social and cultural identification that can be shaken by the announcement that a base is closing or being downsized. Not only can there be an immediate impact from the loss of military and civilian jobs, local tax revenues also can decline, leaving counties and communities less able to provide public services. School districts with a high proportion of children from military families can experience significant declines in enrollment. With these effects can come related reductions in state and/or federal funding. With the importance given to joint service activity in the 2005 BRAC round, some bases saw their functions moved to other bases. Other bases, however, are expanding and creating impacts on schools, housing, traffic, and local government services (e.g., Fort Belvoir, Virginia). DOD's Office of Economic Adjustment identified 20 locations where expected growth as a result of force realignments in FY2006-FY2012 would adversely affect surrounding communities.

Communities have until September 15, 2011, to implement the changes specified in the BRAC Commission Report. While it is predictable that communities will react to news of a base's closing with concern and anxiety, evidence from past BRAC rounds shows that local economies are, in many cases, more resilient after an economic shock than they expected. Some worst-case scenarios predicted for communities did not occur, perhaps because they were based, in part, on assumptions about economic multipliers, the perceived versus actual role of a base in the local economy, and over-generalization from individual cases where there was significant economic dislocation. Many communities that developed a comprehensive and realistic plan for economic redevelopment were able to replace many of the lost jobs and restore lost income. The DOD programs for assisting communities with base redevelopment (e.g., the Office of Economic Adjustment) have also played a role in mitigating some of the effects of base closure and/or realignment. Some communities came to regard the closing as an opportunity for revitalizing and diversifying their economies. Other communities found they were in stronger economic shape after several years than they thought possible on first learning their bases were closing.

Coping with the closure in the short term and revitalizing communities over the long haul can, nonetheless, be daunting tasks. Not all communities recover, and for those that do, the recovery can be uneven. The Government Accountability Office (GAO) found that many communities in 2005 were still recovering from prior closures. Rural areas in particular can find the loss of a base and the revitalization of their communities especially difficult challenges. The effects on individuals can also vary. For example, persons who lose jobs in a closure may not have the kinds of skills needed by the economic activity generated by the redevelopment. Individuals may relocate to other regions where the jobs they find may not match the wages of the jobs lost. Significant environmental cleanup costs from toxic elements at military installations can delay the transfer of the base to local authorities and limit the kinds of redevelopment options available to a community.

Planning for Economic Redevelopment

In some respects, a closed military base shares similarities with other closed industrial facilities such as steel mills, oil refineries, or port facilities. Research and previous economic development experience suggest that converting a closed military base into a source of new competitive advantage is a major community effort. Some bases closed in earlier BRAC rounds have been successfully redeveloped into manufacturing facilities, airports, and research laboratories (e.g., Charleston, SC). Bases also may hold certain advantages for redevelopment that are not shared by other industrial sites. Pricing for the closed bases might be steeply discounted and liability for environmental protection indemnified. Federal grants and incentives also exist to aid community redevelopment efforts.

Once a base is slated for closing, consideration of property transfer mechanisms, the extent of environmental cleanup necessary, and a realistic base reuse plan for the transferred property become central elements in organizing the economic development process. Establishing a Local Redevelopment Authority (LRA) with power to assume ownership of the transferred land is a necessary initial step in the economic redevelopment process. The LRA must be approved by the DOD before property can be transferred. The DOD's Office of Economic Adjustment (OEA) is a resource available to communities seeking assistance in managing the impact of a base closing or realignment. The OEA awards planning grants to communities and also provides technical and planning assistance to local redevelopment authorities. By 2002, a cumulative $1.9 billion in DOD and other federal funds had been expended to assist communities affected by base closures. Other sources of federal assistance may also be available to assist communities in recovering from a base closure.

Given the variance in the economic conditions of the local area and the usable facilities left behind, there is no single template for redeveloping a closed military base. One generality that might be applied to almost all cases, however, is that the sooner economic redevelopment can begin after base closure, the better for local communities. Base closure can be economically difficult for a community, but closure with a long lag in which the closed base is essentially a hole in the local economy can be worse. While many factors can delay the economic redevelopment of a closed base, the most common may be the need for environmental cleanup of the closed property.

Environmental Cleanup

Except for limited circumstances, property from a closed military base must be cleaned of environmental contamination before being transferred for redevelopment. The degree of cleanup and the timetable for completion, however, is left to DOD which operates under the appropriations authorized by Congress. Because of the extent of contamination and magnitude of costs involved once funds are allocated, the process of environmental cleanup can be lengthy. A complicating factor in the cleanup process can be the different levels of cleanup that might be completed. As of FY2009, 88% of sites from bases closed in prior BRAC rounds (so-called Legacy BRAC sites) that were not contaminated with munitions had been readied for transfer to local development authorities. Approximately 54% of the sites from the 2005 BRAC that were not contaminated with munitions have now been readied for transfer to local development authorities. For sites with munitions contamination, 68% of Legacy BRAC sites and 33% of 2005 BRAC sites had been readied for transfer at the end of FY2009. Land intended for use as housing or schools, for example, must be cleaned to a greater degree than land intended for industrial use. DOD, however, is not legally required to clean land past the point needed for industrial use. Sites that have been cleaned to DOD's satisfaction and readied for transfer to local authorities, may not have actually been transferred. When a community desires an ultimate land use that would require a greater level of cleanup than that done by DOD, this may result in a property being left vacant until either another use is found or until additional cleanup is done.

In general, previous base closures suggest that communities face many specialized challenges, but there is little strong evidence that the closing of a base is the definitive cause of a general economic calamity in local economies. On the other hand, rural areas could experience substantially greater and longer-term economic dislocation from a base closing than urban and suburban areas. Rural areas with less diversified local economies may be more dependent on the base as a key economic asset than urban/suburban economies. Communities where bases are recommended for significant expansion can also find the effects of growth a major challenge. Over the five- to six-year phasing out of a base, however, environmental cleanup, successful property transfers to a local redevelopment authority, and widespread community commitment to a sound base reuse plan have been shown to be crucial elements in positioning communities for life without a military installation.