November 2018 Archives

The Fort Ord Military Base Shuts down.

            Imagine the impact of removing approximately 10,000 military related consumers from the Monterey peninsula in 1994.  The loss of income to local businesses could be devastating.  Marina and Seaside suffered the greatest financial loss; Del Rey Oaks and Monterey were impacted to a lesser degree and possibly Monterey County suffered the least.

When it closed in 1994, Fort Ord was fully operational with more than two thousand residential structures supplied with water, gas, electrical power, and all the amenities of a developed community. 

It is difficult to understand why the Fort Ord Reuse Authority (FORA), a third-party agency, was created to handle the conversion of Fort Ord when it appears the simplest solution would have Monterey County or the Special district "LAFCO" convey various portions of the military base to those jurisdictions most affected with city boundaries adjacent to the land being transferred.  Moreover, there was a possible savings to the U.S. taxpayer if the land had been transferred "at no cost" to the various jurisdictions with the condition they would be responsible for the removal of dilapidated buildings and resolve, in partnership with the U.S. Army, all pollution problems existing in their area.   The exception to this is the unexploded ordinance, on what is now known as the Fort Ord National Monument (covering some 14,600 acres).  In 2007 FORA received a $97.7-million federal grant and another $6.8-million in 2016 to clear up the ordinance problem.

            FORA's administrative budget is more than $3-million per year and many structures are still standing  - vacant and battered wooden buildings - with no functioning infra-structure. 

            Never-the-less, there are some who claim that the Fort Ord transition effort is a successful model for base closures everywhere.  This claim, of course, is tiresome and possibly erroneous.  Those of us who followed the closure of McClellan AFB (near Sacramento) might claim their efforts to be a model for success.  McClellan was closed in 2001 and ten years later the transition was complete; whereas, Fort Ord some 24 years later, is yet to complete the job.

McClellan AFB: a model for success.

The former McClellan Air force Base, since closing in 2001, has become a model, both nationally and internationally for successful environmental cleanup and simultaneous transformative redevelopment.  When the Base Realignment and Closure (BRAC) Commission announced in 1995 that McClellan Air Force Base would close, the surrounding community feared it was a death knell for the region. Now, some 10 years later, approximately 13,500 employees and visitors are at the 240 businesses located at the former base on an average day, more than worked at the base when closure was announced.

As a method for rapid redevelopment of McClellan AFB, the Air Force. Sacramento County, and McClellan Business Park, (the developer selected by the County to transform the former base), implemented a "hot transfer" to immediately lease the entire 3,OO0 acre base to McClellan Park when the base closed in July 2001. That enabled McClellan Park to begin the improvements necessary to create a thriving mixed-use business park.  Fences and gateways came down, infrastructure was updated and buildings were refurbished to welcome the community into McClellan Park.

The Officer's Club became Lions Gate Hotel and Conference Center; officers' housing in the historic area became upscale, urban rental units. Rows of warehouses were converted to offices for the local school district, small businesses, major manufacturers, federal agencies, and more. Ballfie1ds are now being considered for a community park. Airplanes that once flew in and out of McClellan are the major attraction at a world-class aerospace museum.

Not only is the former base an example of successful reuse, it is a model of "green" transformation. Home to two solar energy panel manufacturers. numerous recycling businesses, and a host of businesses that implement green and sustainable features in their building designs, McClellan Park is building a reputation as a green park. McClellan Business Park, the developer, has worked hard to implement environmentally friendly practices from the ground up, from water-wise landscaping and sustainable storm drains, to natural skylights and cool reflective roofing. solar panel covered parking lots, energy efficient lighting throughout the park, and electric golf carts for the maintenance crews.

Groundwater contamination was discovered at McClellan in 1979. In 1987, the U.S. Environmental Protection Agency listed the entire base on its National Priorities List as a "Superfund" site. This listing requires the Air Force to follow the cleanup process prescribed in the Comprehensive Environmental Response, Compensation and liability Act (CERCLA) with regulatory oversight from the US EPA and the State of California.

This cleanup program was the largest such activity in the State of California. with ten radiologically contaminated landfills that may eventually have to be excavated, at a cost to the taxpayer of $1.5 billion.

However, due to the time-consuming nature of the environmental investigations and cleanup, property transfers under this traditional approach occur gradually. To address that, in 2007 McClellan became the first Department of Defense site in the nation to complete an "early transfer with privatized cleanup." Under this scenario, the Air force completes the investigation and may even determine the appropriate cleanup remedy, then transfers the property to the County and McClellan Business Park, with a negotiated cost paid by the Air Force to fund the remaining cleanup. McClellan Business Park then implements the cleanup with US EPA making the cleanup decisions and providing regulatory oversight. This allows for a quicker, more efficient cleanup and redevelopment as the cleanup can occur concurrently with site preparation for a new business to move on site.

When the environmental cleanup for each portion of the base is complete, that portion can be submitted for careful review and approval by the federal and state regulatory agencies.  As properties within McClellan are determined suitable for transfer, the Air Force transfers ownership by deed to McClellan Park through Sacramento County.  

Base Conversion: Why FORA?

            At the time of the base closure, there were more than 2,000 residential housing units which could now be available to rent or sell.  The impact, if these units actually became available, would create a tremendous glut of residential housing on the local real estate market.  The possible catastrophic drop in real estate prices and rental income could very well have been a factor in selecting a process to delay conversion of this military post to civilian use.

            In any case, Fort Ord's residential housing did not immediately impact the local market because FORA did not transfer jurisdictional property until 2001.  This means that rentable residential units sat empty for seven years subject to vandalism and other problems.

No doubt there was the question of who would be the beneficiary of the this incredibly valuable land and all the improvements therein?  Possibly, those cities like Salinas, Sand City, Pacific Grove and Carmel not immediately adjacent to Fort Ord, felt some sort of entitlement but had to settle for membership on the FORA Board of Directors where they could have some influence on how the base was to be developed - in other words, if they cannot have a piece of the pie, they could tell the recipients how to develop their property.

An analysis as to why the Fort Ord conversion compares rather poorly with McClellan AFB could be summed up in terms of the infamous " Formula for Failure" principle.

Formula for failure

The first step in a formula to fail is to get as many divergent views as possible so that no one can agree on a single mandate for success.  In this case members of FORA's voting board include Carmel, Del Rey Oaks, Marina, Monterey, Pacific Grove, Sand City, Salinas, Seaside and Monterey County.  Add to this the 12 "Ex-Officio Members" and now you have the basis for divergent views and the necessary elements for failure.  Navigation toward failure requires numerous conflicting solutions proposed by many different factions.  It is desirable for each contingent to be the only one with the perfect solution.  Of course, everyone must be open for compromise, but to promote failure, it is desirable to exclude, as preconditions, certain items from consideration.

A Major Precondition:

Those cities benefitting from the base closure should have no say in how their portion is to be developed.

A Herald editorial entitled "FORA Rules A Crock" (January 10, 2013) points out those cities benefitting from the Fort Ord land gift were conspiring to "craft a new set of FORA rules that would enable them to independently make planning decisions for the property each jurisdiction holds at Fort Ord."  Instead, it is argued these various cities cannot be trusted to make development decisions which would not damage the Peninsula's attractiveness as a tourist destination; therefore, it is necessary for all cities in the area to sit in judgment on any planned development.   What a fascinating concept!

The Fort Ord Reuse Authority (FORA) adopted a state and federally required Base Reuse Plan (BRP) in 1997.  Under state law, FORA oversees planning, financing, and implementing reuse and recovery programs in the 1997 BRP (Base Reuse Program)." A Fort Ord Base Reuse Plan was adopted June 10, 2016 and a publication entitled "Regional Urban Design Guidelines," was provided by FORA.  This plan was a result of months of meetings at a cost of $500,000 and forces jurisdictional compliance by benefitting cities even though these cities have established their own planning and building requirements.

Conversely, consider this:  Let us suppose I give a huge parcel of land to you and four or five of your neighbors.  This land comes to you at no cost - except, well there is this governmental board comprised of thirteen voting members and twelve "ex-officio" non-voting members plus a full time executive and management offices which will cost you an estimated $3 million or more per year.  Moreover, if you sell or rent portions of the property, you would be required to pay half the proceeds to this independent agency.  When you decide to develop your property, a thirteen-member board gets to determine if your development plans are acceptable with respect to local tourism.

But there's more:

            FORA, in addition to receiving 50% of land sales or lease receipts, also charges impact fees to be paid by a developer - $22,530/Dwelling Unit would be charged effective for 2014 as a onetime Special Tax.

In addition to the FORA "Special Taxes" each of the jurisdictional recipients of Fort Ord property also had some form of "Impact or development Fees."  The City of Marina, for example, charges $ $18,474 per single family dwelling unit.

When adding Marina's $18,474 impact fee for a single family residence to FORA's $22,530 special one time tax, a developer is looking at over $40,000 per residence expense not to mention the premium price paid for prime coastal land encumbered with dilapidated wooden structures that have to be removed. 

There are endless requirements by prospective builders to provide an acceptable impact report, justify water use, air quality, additional traffic solutions, protection of unknown animal species "ad infinitum."

And if a project somehow gets past all this, there are fees for architectural reviews, permits and then, of course, the ultimate confrontation with planning commissions and city councils or county board of supervisors.  Since this is Fort Ord land, FORA also must approve the final plans.  But none of this covers the potential litigation put forth by the "smart growth" or "no growth" contingent.

According to FORA, curbs, gutters and infra-structure improvements are the responsibility of the builder - except for water and sewer which would be handled by Marina Coast Water District.  Accordingly, the Dunes developer is using provisions of Mello-Roos to recover related infrastructure costs including the "hookup costs for water and sewer. 

Mello-Roos

A Mello-Roos District is an area where a special property tax on real estate, in addition to the normal property tax, is imposed on those real property owners within a Community Facilities District. These districts seek public financing through the sale of bonds for the purpose of financing public improvements and services. These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly deve!oping areas. The tax paid is used to make the payments of principal and Interest on the bonds. Mello-Roos is deductible in some cases but not in others.

            When the builder tacks on Mello-Roos to pay for public improvements, it is difficult to imagine how the project can provide 20% "affordable" residential units as required by State law.

Fort Ord - What's Next?

            It's a little late in the base conversion planning to look back at what could have been as exemplified by McClellan's successful efforts in this regard, but if this transition planning begins with the idea that each jurisdiction is given the land outright and is responsible for the remaining problems therein, the rest of the transition is a matter of making details fit with this concept.

Suggestions:

1.     Bring to an end FORA's base-wide mitigation fees of 50% land sales or lease revenue and require each jurisdiction be responsible, as a city, for their portion of Fort Ord.  This means they must handle the remaining deteriorating buildings, and other related problems with the full use of land sales and/or lease revenue.

2.     Considering the fact that all cities and the county have zoning requirements, planning, architectural review, permits and a host of red tape, give up the idea that outside agencies and/or other cities have the right to tell another city how to develop their property.  There are plenty of State mandates and regulations that all cities are required to follow.

3.     Convert FORA's "Regional Urban Design Guidelines" to a suggestion rather than a mandatory step in the development process.

4.     Assignment of assets/liabilities/obligations:  Any land transfer can be handled by LAFCO, fixtures and equipment can be sold off and shared in accordance to their voting percentage.  Munitions removal on the Fort Ord National Monument (covering some 14,600 acres) is the single largest remaining obligation.   In 2007 FORA received a $97.7-million federal grant and another $6.8-million in 2016 to clear up the ordinance problem.  This clean-up has been contracted out and it would appear Monterey County could supervise the remaining obligation.

5.     Cal-PERS Pension - any accumulated funds to defray retirement costs of existing personnel would be transferred to the Cal-PERS State fund.

6.     Remaining obligations:  If allocated to improvements on a jurisdiction would have to be handled by that jurisdiction

7.     Capital Improvement Program (CIP):  That portion of the CIP funds collected for road systems outside the Fort Ord Base should be allocated and handled by the Transportation Agency of Monterey County (TAMC).  Those funds collected for improvement within the base would go to the jurisdiction involved.  In all cases these funds should be properly identified and used in accordance to sections 66001-66003 of the California Government Code.

8.     Habitat and environmental issues: Are routinely handled by each city as a part of an "Environmental Impact Report."

9.     Water/Wastewater:  Is already allocated to Marina Coast Water District.

Obviously, these are mere suggestions.  It is doubtful that anyone is in position to recommend solutions to an organization designed to fail.