Sell Those Bases!
Taxpayers appear to have won a stunning victory over military waste. A Pentagon commission has recommended the closure of 86 unneeded bases, to yield annual savings of $700 million. Congress must pass the entire package of proposed closings on a yes-or-no basis. This clever twist, courtesy of Texas congressman Dick Armey, is designed to undercut the usual pork-barrel politics that have prevented any base closures in more than a decade.
But don't cheer yet. Even these modest savings are threatened. And far larger potential savings—perhaps $5 billion more—aren't even on the agenda.
Representatives with targeted bases in their districts are already trying to stop the closures, whining about job losses. But the facts are against them. A Booz Allen Hamilton study of 12 converted bases found that in almost every case, the civilian jobs lost due to base closure were offset by an equal or greater number of new jobs. A 1986 Pentagon follow-up study of 100 closures found that 138,000 new jobs replaced the 93,000 jobs lost.
The reason is obvious. Military bases are prefabricated industrial parks. They already have a great deal of infrastructure—roads, sewers, electricity, and often usable buildings. No wonder most closed bases have been recycled into office parks, assembly plants, schools, and airports. In short, these are valuable properties.
But there's the other problem. Because of the stupid way in which the government disposes of property, the $700 million in annual "savings" comes mostly from reduced operating costs. What's being ignored is the potentially huge revenue available for deficit reduction if these bases were sold as commercial property.
Instead, here's what the feds do. First, they try to give the base away to other military services. If none of them wants it, they offer it to other federal agencies. Next in line are state and county governments. Only if all else fails do the feds actually try to sell the property to the public—that is, the private sector.
How much revenue is being forgone? Fort Sheridan, on the lakeshore north of Chicago, is valued at $100 million—but the projected operating-cost savings from its closure are only $9 million a year. Many other bases are on even more valuable land. The sale of just 50 bases at an average price of $100 million each would yield $5 billion.
Excuses abound for not selling these properties. Since many are air bases and we need more airports, the conventional response is to give those bases to local governments. After all, everybody knows that only governments can run airports! Likewise, it's assumed that a facility like the Philadelphia Naval Hospital could only be recycled into a public hospital, not a private one. This kind of blindness robs the taxpayers of billions.
Perhaps the most outrageous case is that of the Presidio, overlooking the Pacific and the Golden Gate Bridge in San Francisco. This beautiful 1,400-acre property, complete with golf course, athletic fields, medical center, and 1,375 units of housing, is widely acknowledged to be one of the most valuable properties in the world. Yet selling even parts of it is considered unthinkable.
In fact, a 1977 law mandates that if the base is closed, all but 36.5 acres must be turned over to the National Park Service to become part of the Golden Gate National Recreation Area. The little parcel can be leased to the city or sold—in the usual governmental way.
There are no detailed estimates of the value of this land. But it is clearly in the billions, according to experts like real estate broker Raymond Brown, who specializes in the nearby Pacific Heights area.
Privatizing most of the Presidio land would solve three large problems facing San Francisco. First, of course, is the job losses that would occur if 1,375 base families are kicked out to make way for a park. The Chamber of Commerce estimates that base employees account for 2 percent of the city's economic activity.
The second problem is a severe housing shortage. Removing 1,375 units—rather than adding several thousand more—would make a bad situation worse.
Then there's the city's worsening fiscal crisis. As a park, the Presidio land would remain off the property tax rolls. But in private hands and developed with houses, condos, restaurants, etc. (plus plenty of open space, to be sure), the land plus improvements might be worth $50 billion. One percent of that each year (the maximum take under Proposition 13) is $500 million, more than doubling the city's current property tax revenue.
Even if the citizens of San Francisco are blind to these benefits, other American taxpayers are not. Federal properties like the Presidio belong to all of us. Not very many of us will ever gambol about in the Golden Gate National Recreation Area (which already has 73,000 acres!). The only way we all can benefit from the base closures is for the feds to sell these properties commercially and use the proceeds to reduce the crushing burden of debt and deficits. And commercial sale would also maximize the likelihood of new-job creation, as these properties find their economically most-beneficial uses.
The real battle of the base closures has just begun. Taxpayers will not emerge victorious until these properties go on the auction block.
This article originally appeared in print under the headline "Sell Those Bases!".