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FieldWorkds (U.S. HUD) July/August Issue

PATIENCE, PERSISTENCE BRING SUCCESS TO BASE REDEVELOPMENT IN KEY WEST

Each time Congress announces another round of base closings, city officials around the nation hold their breath and cross their fingers, hoping their community will not be next. Often, even after base closures are announced, residents and elected leaders fight to keep the bases and the economic stability they bring to their communities. Other communities begin the long and often complicated process of closure, planning and implementing reuse, and environmental cleanup. Studies have shown that successful reuse after a base closing is based on a community's ability to organize and implement conversion planning and operations effectively.

Since 1988 four successive bipartisan Defense Base Closure and Realignment Commissions (BRAC) have recommended the closure of 352 major and minor military bases and installations and the operations realignment of 145 others, according to the Economic Development Administration (EDA) of the U.S. Department of Commerce. Although a base closing can severely affect a community's economy in the short term, it often can serve as a catalyst for economic development and diversification.

In the past 30 years, Key West, Florida, has been the site of both a base closing and a realignment. In 1974 the Navy transferred more than 3,000 military personnel and laid off nearly 600 civilian workers when it closed the Truman Annex Naval Station. In 1995 the Naval Air Station at Key West was subject to realignment under BRAC. Although redevelopment of the property from the 1974 closing proceeded slowly and took almost 20 years to complete, the city's leaders and residents used their experience to make redevelopment of the second parcel proceed more smoothly and quickly.

Two years after the Navy decommissioned and closed the Truman Annex the city of Key West established the Key West and Lower Keys Development Corporation (KWLKDC), a nonprofit economic development corporation, to manage base redevelopment and to promote economic diversification. This quasi-public agency was initially funded by EDA and the Department of Defense's Office of Economic Adjustment (OEA), which provides planning assistance to states and communities when major defense-related employment losses occur and helps them implement appropriate economic adjustment strategies. KWLKDC was reestablished in the late 1970s as the Key West Redevelopment Agency (RDA).

The agency's plan to concentrate redevelopment efforts on the tourism industry was hampered by intergovernmental conflict, including a delay in the transfer of the base from the Navy to the General Services Administration (GSA). The transfer to GSA, which must precede transfer of the property to the local government, took 3 years instead of the customary 3 months.

In an effort to create jobs, KWLKDC became the base's landlord and began renting space at the annex to a number of businesses. During this time, employment at the base reached a peak of 190 jobs. However, since the extent of redevelopment was still uncertain, many business owners were reluctant to maintain or improve the facilities, leading to deteriorated conditions.

Redevelopment of the annex was also delayed because "the government kept changing its mind," says Merili McCoy, a long-time Key West resident and current city commissioner. In 1980, after the city commission approved the reestablished RDA's development plan for the Truman Annex, the Navy reoccupied the base for the "Mariel boatlift" operation to process Cuban refugees. A year later, the Navy imposed a freeze on the disposition of the annex and announced plans to reopen the Naval Station at the Truman Annex. The Navy retained 47 acres of the original 133-acre disposition but also released 43 additional acres and the 26-acre Fuel Tank Island, located across from the base.

In 1983 a slow-growth majority was elected to the city commission, which asked RDA to include affordable housing and open public space in its development plan. After RDA refused to change its plan for luxury housing and a hotel, the city rescinded its approval of RDA's 1980 development plan. Shortly afterward, in 1986, RDA folded.

Frustrated by the city commission's demands on the project, GSA put the base up for sale at a public auction. Although a local developer offered to financially back the city's purchase of the base, the commission voted not to take the offer. "I think it was a mistake," says McCoy. The base was sold to a private developer for $17 million. The developer, Pritam Singh, initially promised to build parks, an aviary, and a meditation center in addition to both market-rate and affordable housing and hotel development. Singh and the city signed a development agreement but made more than 12 changes to it, notes McCoy. Because of these changes, affordable housing and open space did not result in a way that benefited the residents of Key West. In 1991 a weak real estate market forced Singh to lose majority control of the redevelopment project to his main creditor, Uni-Cal, a California-based savings and loan institution. Uni-Cal sold the commercial waterfront property and Fuel Tank Island (now called Sunset Island) to Ocean Properties of Boynton Beach, which built a 178-room hotel, a 410-car parking garage, a restaurant, and 45 houses.

Singh later joined a local development company, the Truman Annex Real Estate Company, and completed development of luxury housing and hotel and commercial uses, building a total of 425 housing units 75 single-family homes and 7 multifamily/condominium projects. The former base contributes approximately $2 million to the local tax rolls annually. McCoy admits the expansion of the tax base was beneficial for the city but has mixed feelings on what was developed. "It is predominantly housing and some tourist shops on the perimeter. The city had hoped for more economic development and green space for the public," she says. "The developer came in at the right time. Unemployment was growing and he brought in construction jobs."

Second redevelopment moves forward. "When the base closed [in 1974], we were a one-factory town. Tourism was just beginning. It was the cream, but the milk was the U.S. Navy," says McCoy. "Now, the city is tied in with tourism. We are back to being a one-factory town." The city is currently completing redevelopment of the land from the Naval Air Station that closed in 1995. It hopes this redevelopment, which involves a smaller parcel of land adjacent to the Truman Annex, will bring in economic diversification. Unlike the 1974 closing, the redevelopment of this property is subject to BRAC, which specifically outlines the process for conversion. McCoy admits that although the process is complex, it has probably made the second redevelopment more stable and predictable.

Two years after the base closing, the city submitted a community-driven development plan for federal approval. "It is our land. We do not want it to be in the hands of private developers. We lost the first piece of land this time we are being very careful," says McCoy. Since late 1998 the Navy has been transferring parcels of the property to the city, the county, and other federal agencies. The Local Redevelopment Authority (LRA), whose board is the same as the city commission, has managed this process and has been trying to negotiate public benefit conveyances with the federal agencies. "We have acquired 64 acres of wetlands, an historic cemetery, a police substation, and 20 acres of parklands," says LRA Director Bill Harrison. Harrison expects the current redevelopment to create 110 jobs but says the biggest issue the city faces is affordable housing. This effort includes affordable and low-cost housing. Both McCoy and Harrison say it has been difficult to attract and retain workers to the area because the cost of housing is so high. "We are trying to build 96 units of low-cost housing. If you build affordable housing, it is difficult to rent it as affordable because of the high costs of living on the island," says McCoy.

Reflecting on the city's experiences with both redevelopment processes, City Commissioner McCoy advises other communities undergoing base redevelopment to have patience and be persistent since the process is not always fast or smooth. She notes that having Harrison and the LRA manage the second redevelopment has made a big difference in the outcome for Key West. "You need a competent, experienced person who knows the procedure," she says. McCoy also recommends that city leaders and residents work together to define goals and a vision for the redevelopment.

For more information, contact: Merili McCoy, City Commissioner, City of Key West, 88 Hilton Haven Road, Key West, FL 33040, (305) 296-5123, merilimccoy@compuserve.com, or Bill Harrison, Director, Local Redevelopment Authority, 1662 Dunlap Drive, Number 3, Key West, FL 33040, (305) 293-8337, kwclra@aol.com.