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(Cynthia J. Hoffman is editor of Real Estate Forum magazine.)

HOLLYWOOD, FL-The Congressional review period for the 2005 Base Realignment and Closure Commission’s report is coming to an end. As the deadline draws near, the focus for the US Department of Defense will be two-fold: first is to accelerate the disposition of bases tagged for closure or realignment. The second goal is to help local communities adjust to new growth where military installations are set for expansion.

So said Philip W. Grone, deputy under secretary of defense, installations and environment for the DoD, during an educational session yesterday at the National Association of Industrial and Office Properties’ annual convention here. “Whether closing or realigning, our objective is to get those properties off federal books as quickly as possible,” Grone said. According to the deputy under secretary, 25 major bases, defined as those with a military replacement value of $100 million or more, have been earmarked for closure. Another 26 installations are to be realigned.

He anticipates that by next May, the military’s plans for dealing with the assets will be set into motion. In the meantime, the DoD will be examining a number of options including public sales of the facilities. “Each asset has its own dynamics,” he stated. “We’ll let the marketplace speak in terms of their value.” Presently, each branch of the military is working with private-sector real estate advisory firms to help determine “the nature and value of each asset.”

Grone noted that, while the government will achieve a significant savings through the disposal or reuse of these properties—-DoD estimates put the total savings at $48.8 billion over 20 years—-certain up-front costs do exist. The four previous rounds of base closings had costs of $22 billion, “and we expect it to be that much or more” this time around.

One facet of the disposal process that the DoD hopes to simplify is dealing with remediation. “We’ll be looking at creative ways to do the clean-up faster” and get the properties back into use, Grone observed. One way to do this may be to allow a private developer to handle the remediation work after the property has been sold, with the purchase price reflecting the environmental condition of the asset. “If you look at the bases to be closed, there is a liability of $600 million to $650 million, so we’re not talking about a portfolio that’s replete with problems. Those problems are well-defined.”

The federal government will also try to encourage local redevelopment authorities, which will be charged with managing the redevelopment plans for the properties, and other municipal and state agencies to streamline such processes as zoning and permitting. “We’re trying to facilitate a dialog to get state and local entities to come to decisions quickly,” Grone told the group.

While most of the attention has been on base closures, Grone pointed out that several installations have been targeted for growth as functions shift from one facility to another and as overseas troops return to the US. According to session moderator Harry H. Kelso, chairman and CEO of Base Closures Partners LLC of Richmond, VA, 30 or so bases are slated for significant expansion.

Facilities such as Ft. Bliss in Texas, Georgia’s Ft. Benning and McGuire Air Force Base will be home to more than 1,000 military personnel, stated Kelso. In these locations, Grone noted that the government will work with state and local authorities on improving the infrastructure as these areas mature and to address other issues related to the sustainability of the installation over time.

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