Jones Lang LaSalle
For sale by Army: Its Jersey gold mine
Pentagon's new rules let it cash in on Ft. Monmouth
Sunday, April 30, 2006
BY WAYNE WOOLLEY
Star-Ledger Staff
Everyone agrees Fort Mon mouth sits on some of the most valuable real estate in New Jersey. Thanks to new thinking at the Pentagon, we may find out exactly how valuable after the Army closes the communications research center in 2011.
The Pentagon, after years of practically giving away closed installations in the spirit of job creation and economic development, is likely to chase top dollar for pieces of the 1,110-acre site in Mon mouth County, government officials and defense analysts say.
And that could mean as much as $2 billion.
"The Department of Defense is realizing that some of these parcels of land are worth quite a bit," said Ellen Stein, director of New Jersey's office of military affairs. "So they're moving away from 'economic-benefit' conveyances to market-value sales."
As it stands now, Pentagon regulations are open to interpretation on when land would be sold to the highest bidder or to local redevelopment officials at a "market- value" price set by appraisers on both sides.
Tim Ford, executive director of the Association of Installation Developers, foresees potential colli sions between Pentagon "disposal" plans for land and the redevelopment plans created by local officials.
"It's unclear what would move the Pentagon to a public auction, but they have a lot of wiggle room and we're afraid they're going to do what they want," said Ford, whose organization represents officials redeveloping closed installations.
As a signal of how serious the Pentagon is about getting top dol lar for Fort Monmouth, the Army this month told the FBI and the Department of Homeland Security they must pay market value for the land and buildings they now oc cupy -- if they want to stay at Fort Monmouth after the military leaves, according to correspon dence obtained by The Star-Ledger.
Overall, Fort Monmouth, which sits in affluent northern Monmouth County, could fetch between $650 million and $2 billion on the open market, according to government officials who already have been approached by developers.
Most officials envision Fort Monmouth's land being separated into parcels. New housing is likely on some, businesses parks possible on others. The Pentagon also re tains the right to transfer land for free for parks, airports, hospitals, wildlife conservation or education.
But most expect market-value transactions to be the standard.
In an interview Friday, Gov. Jon Corzine said he's not opposed to the federal government getting all it can for its land -- as long as some of that windfall is shared with local officials who are trying to replace lost jobs.
"We'd like to see some of that federal money returned," Corzine said.
Fort Monmouth was among 33 major installations ordered closed in November as part of an ongoing consolidation of the nation's military infrastructure. The congressionally mandated process, known as Base Realignment and Closure, shut 97 other bases -- including the Military Ocean Terminal in Bayonne -- between 1988 and 1995.
Fort Monmouth is among the most valuable real estate in this round of closures, according to the Association of Defense Communities.
Emile Haddad, chief investment officer of Lennar Corp., which is redeveloping four closed installations in California, said every major developer is "in an assessment mode" studying best sites.
"All of us have been watching the ones we have interest in," Had dad said. "Everybody is trying to assess what the deal would be about."
IT'S ABOUT THE MONEY
There was a time when major developers weren't particularly interested in old bases, largely be cause many were severely polluted or in remote areas.
That changed in 2002, when the Navy put the former Marine Air Station El Toro in Orange County, Calif., up for sale. Ordered closed by the Pentagon in 1993, the 3,700 acre-facility sat undeveloped for nearly a decade as some local officials fought a losing battle to turn it into a commercial airport.
Three companies bid for El Toro last February. Lennar Corp. walked away the winner, for $650 million.
The Navy was soon touting the unprecedented sale as its new model for disposing of closed facilities. New rules governing how the Pentagon rids itself of bases went into effect in January. Those rules emphasize market-value sales.
"We're going back to the policies of the early 1990s when the emphasis was on the negotiated sale, DOD trying to get values out of these properties," said Ford, of the Association of Installation Developers. "But things got stuck. Not a lot of those properties were changing hands."
During those years, the Defense Department shed more than 500,000 acres and collected just over $550 million -- an average of about $1,100 an acre, according to Pentagon figures.
In many cases, land the Pentagon was trying to transfer to local redevelopment authorities at below market cost or for free took a decade or more to turn over. For example, the Military Ocean Terminal in Bayonne was ordered closed in 1995, but not fully turned over to the redevelopment authority until last year.
Now, with a hot real estate market and desirable properties to sell, the Pentagon sees a way to make money -- and move properties quickly, Ford and others say.
After some brief stirrings in Congress and some notable resistance, there doesn't seem to anything in the way of stopping the Pentagon from doing just that.
LOCATION, ETC.
Fort Monmouth is a land planner's dream because it represents some of the only remaining developable land in northern Monmouth County. It's just off Exit 105 of the Garden State Parkway, five miles from the Atlantic Ocean and a 10-minute drive from Rumson's es tates and the horse-breeding farms OF Colts Neck.
The "main post" covers 640 acres and is dotted by three- and four-story office buildings and expansive parade fields. The NJ Transit commuter rail runs across the eastern edge of the main post. A separate piece of post called the Charles Wood area, a 490-acre tract just to the west, has a golf course and an office complex. And be cause Fort Monmouth pioneered Army communication technology -- from carrier pigeons to satellites -- it is believed to be much less contaminated than installations with large weapons ranges.
New Jersey officials say it is too early to predict what will come to Fort Monmouth when the Army leaves. The Pentagon won't reach a decision on how it wants to get rid of the land until May 2008 at the earliest.
On Friday, Corzine signed legislation creating a 10-member local redevelopment authority, which will include state, county and local officials -- including the mayors of neighboring Eatontown, Oceanport and Tinton Falls. The authority's main responsibility will be to soften the impact of the loss of Fort Mon mouth's 5,000 high-paying civilian jobs.
When a base like Fort Mon mouth closes, experts say, the sur rounding communities lose major economic engines. Troops and civilians transfer to new installations. Small businesses near the bases usually suffer, and work for local contractors dries up. A Rutgers University study puts the economic impact of Fort Monmouth -- the county's second-largest employer -- at $2 billion.
Redevelopment authority members say they will try to acquire Fort Monmouth's land at no cost -- and devise a strategy to pay for it if needed.
Eatontown Mayor Gerald Ta rantolo, a member of the authority, said he is not opposed in principle to a developer buying pieces of Fort Monmouth -- as long as the redevelopment authority has final say on every part of the project.
He said developers have been a fixture at monthly meetings local mayors have been holding since September on potential new uses for Fort Monmouth.
"We get a good turnout of developers, some really heavy hitters -- and then we all get calls from them wanting to take us to din ner," he said. "I understand why everyone is interested. We have some of the most desirable land in Monmouth County, or the state of New Jersey, for that matter."
Wayne Woolley covers the military. He can be reached at woolley@starledger.com or (973) 392-1559.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
For sale by Army: Its Jersey gold mine
Pentagon's new rules let it cash in on Ft. Monmouth
Sunday, April 30, 2006
BY WAYNE WOOLLEY
Star-Ledger Staff
Everyone agrees Fort Mon mouth sits on some of the most valuable real estate in New Jersey. Thanks to new thinking at the Pentagon, we may find out exactly how valuable after the Army closes the communications research center in 2011.
The Pentagon, after years of practically giving away closed installations in the spirit of job creation and economic development, is likely to chase top dollar for pieces of the 1,110-acre site in Mon mouth County, government officials and defense analysts say.
And that could mean as much as $2 billion.
"The Department of Defense is realizing that some of these parcels of land are worth quite a bit," said Ellen Stein, director of New Jersey's office of military affairs. "So they're moving away from 'economic-benefit' conveyances to market-value sales."
As it stands now, Pentagon regulations are open to interpretation on when land would be sold to the highest bidder or to local redevelopment officials at a "market- value" price set by appraisers on both sides.
Tim Ford, executive director of the Association of Installation Developers, foresees potential colli sions between Pentagon "disposal" plans for land and the redevelopment plans created by local officials.
"It's unclear what would move the Pentagon to a public auction, but they have a lot of wiggle room and we're afraid they're going to do what they want," said Ford, whose organization represents officials redeveloping closed installations.
As a signal of how serious the Pentagon is about getting top dol lar for Fort Monmouth, the Army this month told the FBI and the Department of Homeland Security they must pay market value for the land and buildings they now oc cupy -- if they want to stay at Fort Monmouth after the military leaves, according to correspon dence obtained by The Star-Ledger.
Overall, Fort Monmouth, which sits in affluent northern Monmouth County, could fetch between $650 million and $2 billion on the open market, according to government officials who already have been approached by developers.
Most officials envision Fort Monmouth's land being separated into parcels. New housing is likely on some, businesses parks possible on others. The Pentagon also re tains the right to transfer land for free for parks, airports, hospitals, wildlife conservation or education.
But most expect market-value transactions to be the standard.
In an interview Friday, Gov. Jon Corzine said he's not opposed to the federal government getting all it can for its land -- as long as some of that windfall is shared with local officials who are trying to replace lost jobs.
"We'd like to see some of that federal money returned," Corzine said.
Fort Monmouth was among 33 major installations ordered closed in November as part of an ongoing consolidation of the nation's military infrastructure. The congressionally mandated process, known as Base Realignment and Closure, shut 97 other bases -- including the Military Ocean Terminal in Bayonne -- between 1988 and 1995.
Fort Monmouth is among the most valuable real estate in this round of closures, according to the Association of Defense Communities.
Emile Haddad, chief investment officer of Lennar Corp., which is redeveloping four closed installations in California, said every major developer is "in an assessment mode" studying best sites.
"All of us have been watching the ones we have interest in," Had dad said. "Everybody is trying to assess what the deal would be about."
IT'S ABOUT THE MONEY
There was a time when major developers weren't particularly interested in old bases, largely be cause many were severely polluted or in remote areas.
That changed in 2002, when the Navy put the former Marine Air Station El Toro in Orange County, Calif., up for sale. Ordered closed by the Pentagon in 1993, the 3,700 acre-facility sat undeveloped for nearly a decade as some local officials fought a losing battle to turn it into a commercial airport.
Three companies bid for El Toro last February. Lennar Corp. walked away the winner, for $650 million.
The Navy was soon touting the unprecedented sale as its new model for disposing of closed facilities. New rules governing how the Pentagon rids itself of bases went into effect in January. Those rules emphasize market-value sales.
"We're going back to the policies of the early 1990s when the emphasis was on the negotiated sale, DOD trying to get values out of these properties," said Ford, of the Association of Installation Developers. "But things got stuck. Not a lot of those properties were changing hands."
During those years, the Defense Department shed more than 500,000 acres and collected just over $550 million -- an average of about $1,100 an acre, according to Pentagon figures.
In many cases, land the Pentagon was trying to transfer to local redevelopment authorities at below market cost or for free took a decade or more to turn over. For example, the Military Ocean Terminal in Bayonne was ordered closed in 1995, but not fully turned over to the redevelopment authority until last year.
Now, with a hot real estate market and desirable properties to sell, the Pentagon sees a way to make money -- and move properties quickly, Ford and others say.
After some brief stirrings in Congress and some notable resistance, there doesn't seem to anything in the way of stopping the Pentagon from doing just that.
LOCATION, ETC.
Fort Monmouth is a land planner's dream because it represents some of the only remaining developable land in northern Monmouth County. It's just off Exit 105 of the Garden State Parkway, five miles from the Atlantic Ocean and a 10-minute drive from Rumson's es tates and the horse-breeding farms OF Colts Neck.
The "main post" covers 640 acres and is dotted by three- and four-story office buildings and expansive parade fields. The NJ Transit commuter rail runs across the eastern edge of the main post. A separate piece of post called the Charles Wood area, a 490-acre tract just to the west, has a golf course and an office complex. And be cause Fort Monmouth pioneered Army communication technology -- from carrier pigeons to satellites -- it is believed to be much less contaminated than installations with large weapons ranges.
New Jersey officials say it is too early to predict what will come to Fort Monmouth when the Army leaves. The Pentagon won't reach a decision on how it wants to get rid of the land until May 2008 at the earliest.
On Friday, Corzine signed legislation creating a 10-member local redevelopment authority, which will include state, county and local officials -- including the mayors of neighboring Eatontown, Oceanport and Tinton Falls. The authority's main responsibility will be to soften the impact of the loss of Fort Mon mouth's 5,000 high-paying civilian jobs.
When a base like Fort Mon mouth closes, experts say, the sur rounding communities lose major economic engines. Troops and civilians transfer to new installations. Small businesses near the bases usually suffer, and work for local contractors dries up. A Rutgers University study puts the economic impact of Fort Monmouth -- the county's second-largest employer -- at $2 billion.
Redevelopment authority members say they will try to acquire Fort Monmouth's land at no cost -- and devise a strategy to pay for it if needed.
Eatontown Mayor Gerald Ta rantolo, a member of the authority, said he is not opposed in principle to a developer buying pieces of Fort Monmouth -- as long as the redevelopment authority has final say on every part of the project.
He said developers have been a fixture at monthly meetings local mayors have been holding since September on potential new uses for Fort Monmouth.
"We get a good turnout of developers, some really heavy hitters -- and then we all get calls from them wanting to take us to din ner," he said. "I understand why everyone is interested. We have some of the most desirable land in Monmouth County, or the state of New Jersey, for that matter."
Wayne Woolley covers the military. He can be reached at woolley@starledger.com or (973) 392-1559.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
posted by Jones Lang LaSalle NJ News Blog at 9:50 AM
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