Order Code RS22147
Updated September 19, 2008
Military Base Closures:
Socioeconomic Impacts
Tadlock Cowan
Analyst in Natural Resources and Rural Development Policy
Resources, Science, and Industry Division
Baird Webel
Analyst in Economics
Government and Finance Division
Summary
The most recent Base Realignment and Closure (BRAC) Commission submitted
its final report to the Administration on September 8, 2005. Implementation of the
BRAC round is occurring and, barring future congressional action, will be completed
by 2011.1 In the report, the commission rejected 13 of the initial Department of Defense
recommendations, significantly modified the recommendations for 13 other
installations, and approved 22 major closures. The loss of related jobs, and efforts to
replace them and to implement a viable base reuse plan, can pose significant challenges
for affected communities. However, while base closures and realignments often create
socioeconomic distress in communities initially, research has shown that they generally
have not had the dire effects that many communities expected. For rural areas, however,
the impacts can be greater and the economic recovery slower. Drawing from existing
studies, this report assesses the potential community impacts and proposals for
minimizing those impacts.
Background. To better confront the military demands of a post-Cold War world,
as well as to reduce costs of maintaining excess military infrastructure, Congress
authorizes the Department of Defense (DOD) to realign or close military bases.2
Following an examination of its military forces and installations, the department compiles
1 See CRS Report RL32216, Military Base Closures: Implementing the 2005 Round, by David
E. Lockwood, for additional information on the BRAC process.
2 10 U.S.C. Section 2687 authorizes the Base Realignment and Closing (BRAC) process for
military installations at which at least 300 civilian personnel are authorized to be employed, or
the realignment of any military installation where at least 300 civilian personnel are authorized
to be employed and where it is intended to reduce the work force by more than 1,000 or by more
than 50% of the number of civilian personnel authorized to be employed at the installation.
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a list of recommended Base Realignment and Closing (BRAC) actions. This proposed
list of base closures and realignments is presented to an independent BRAC Commission,
which reviews the proposed actions and sends the list to the President with any
recommended changes. After the President reviews and approves the list, it is sent to
Congress. The recommended list is automatically enacted unless Congress passes a joint
resolution disapproving the list as a whole and sustains it over a potential presidential
veto. Following the actual base closings and realignments, the DOD carries out an
environmental remediation plan to enable the conveyance of surplus federal land to other
entities.3
Four separate BRAC rounds were initiated in 1988, 1991, 1993, and 1995.4 In total,
97 bases were closed or realigned under these rounds. By 2001, the DOD had
implemented the recommendations from the previous rounds, although significant
environmental remediation and asset transfers remain unfinished in many of the affected
communities. Congress authorized a fifth round of military base realignments and
closures for 2005 through the National Defense Authorization Act of 2002 (P.L. 107-
107). A primary objective of the 2005 BRAC round was “joint activity” — integration
and realignment of cross-service functions in such areas as industrial, supply and storage
facilities, technical, training, headquarters, and support activities. The list of
recommended actions to achieve these objectives was presented to the BRAC
Commission on May 13, 2005. The report became law on November 10, 2005.
Community Economic Impact Analyses. Small-area economic impact
analysis can be a difficult and imprecise undertaking. Assumptions and supporting
statistical reasoning may lead to predictions that are, in hindsight at least, inaccurate. For
example, multiplier effects, — which measure the rate at which a direct effect (e.g., base
job losses) creates indirect effects — are central elements in estimating the impact of a
base closing. If, for example, one assumes that a base job has a large indirect employment
multiplier (e.g., 2.5-3.0), then for each direct base job lost, employment indirectly related
to the base job within some defined geographic area is also predicted to be lost as a result.
Similarly, an income multiplier allows one to estimate the total income generated by a
military base and the resulting income loss or gain within a region. Assumptions about
the extent to which base incomes are spent within a community can lead to very different
assessments of the impacts from the loss of that income.
A shift to a smaller employment multiplier will show a much reduced total
employment loss from closure. Using data from military base closings between 1971 and
1994, one 2001 study estimated multipliers of less than one and concluded that
employment impacts were mostly limited to the direct job loss associated with military
transfers out of the region. On average, the study found that per capita income was little
affected by the closures.5 Base closings in communities that have been declining
3 For a detailed examination of the BRAC process, see CRS Report RS22061, Military Base
Closures: The 2005 BRAC Commission, and CRS Report RS21822, Military Base Closures:
DOD’s 2005 Internal Selection Process, both by Daniel H. Else and David E. Lockwood.
4 Military bases were also closed between 1960 and 1987, but not under the BRAC process as
authorized by Congress.
5 Mark A. Hooker and Michael M. Knetter, “Measuring the economic effects of military base
closures,” Economic Inquiry, 39(4), 2001.
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economically for some time, however, may produce impacts different from (and possibly
more severe than) those of base closings in communities where growth and economic
diversification are more in evidence.
The relative strength or weakness of the national or regional economy also can
strongly influence the magnitude of community effects from base closure or realignment
and the length of time for economic recovery. Evidence from earlier base closures
suggests that the impacts can be less than expected because, unlike many other major
employers, military bases may be relatively isolated economic entities, purchasing base
needs outside the community and spending income on the base rather than in the local
community.6
Local communities are also concerned about the fiscal impacts borne by local
governments, especially rural governments. Revenue from property taxes, sales tax,
licenses and permits, and state and federal aid are influenced by population gains and
losses. With population loss, and related changes in local income, base closures can
affect the ability of local governments to raise revenue and support existing services.
Similarly, with significant population increases, a community may find greater demand
for public services (e.g., transportation, schools) without the necessary revenue to support
the added the added demand.
Local government expenditures and services, such as water and sewerage costs,
highways, public safety, and education, can also be affected by closure and realignment,
depending on the extent to which the military base is integrated into the community’s
fiscal planning. Here as well, statistical assumptions can lead to significant differences
in estimated impact. For example, an economic development analyst estimated that the
closure of Hanscom Air Force Base would mean the loss of about $200 million in defense
contracts to Massachusetts’s firms. Another analysis estimated the same losses at $3
billion.7 A general review of impacts on local government revenue and expenditures,
however, generally confirmed that these impacts were, like those impacts affecting the
economy, not as severe as had been originally anticipated.8
The announcements of previous BRAC Commissions have been greeted in affected
communities and elsewhere by significant concern over the potential consequences of
closing or significantly realigning a military installation. Military bases in many rural
areas, for example, provide an economic anchor to local communities. Even where the
local and regional economy is more diversified, military bases provide a strong social and
6 D. Daicoff, D. D. McCluggage, C. K. Warriner, and R. R. Olsen, “Economic impact of military
base closings,” Arms Control/Disarmament Agency/E-90, I and II (Washington, D.C: U.S. Arms
Control and Disarmament Agency, April 1970); D. A. MacKinnon, “Military base closures: Long
range economic effects and implications for industrial development,” American Industrial
Development Council Journal 13(3), 1978; T. Muller, R. Hansen, and R. A. Hutchinson, The
Local Economic and Fiscal Impact of New DOD Facilities: A Retrospective Analysis (Bethesda,
MD: Logistics Management Institute, 1991).
7 Matt Viser, “Analyst: Don’t overestimate impact of Hanscom closure,” Boston Globe, April 3,
2005.
8 M. Hattery and R. Koch, “The fiscal impacts of base closures: Insights for rural local
governments,” Government Finance Review, April 1995.
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cultural identification that can be shaken by the announcement that a base is closing or
being downsized. Not only can there be an immediate impact from the loss of military
and civilian jobs, but local tax revenues can decline, leaving counties and communities
less able to provide public services. School districts with a high proportion of children
from military families can experience significant declines in enrollment. With these
effects can come related reductions in state and/or federal funding. With the importance
given to joint service activity in the 2005 BRAC round, some bases will see their
functions moved to other bases. Other bases, however, will expand, creating potential
impacts on schools, housing, traffic, and local government services.
Communities have until 2011 to adjust to the changes and plan for transfer of the
base to the community for redevelopment. While it is predictable that communities will
react to news of a base’s closing with concern and anxiety, evidence from past BRAC
rounds shows that local economies are, in many cases, more resilient after an economic
shock than they expected. Some worst-case scenarios predicted for communities did not
occur, perhaps because they were based, in part, on assumptions about economic
multipliers, the perceived versus actual role of a base in the local economy, and over-
generalization from individual cases where there was significant economic dislocation.
Many communities that developed a comprehensive and realistic plan for economic
redevelopment were able to replace many of the lost jobs and restore lost income. The
DOD programs for assisting communities with base redevelopment (e.g., the Office of
Economic Adjustment) are also likely to have played a role in mitigating some of the
effects of base closure. Some communities came to regard the closing as an opportunity
for revitalizing and diversifying their economies. Other communities found they were in
stronger economic shape after several years than they thought possible on first learning
their bases were closing.
Coping with the closure in the short term and revitalizing communities over the long
haul can, nonetheless, be daunting tasks. Not all communities recover, and for those that
do, the recovery can be uneven.9 The Government Accountability Office (GAO) found
that many communities in 2005 were still recovering from prior closures. Rural areas in
particular can find the loss of a base and the revitalization of their communities especially
difficult challenges.10 The effects on individuals may also vary. For example, persons
who lose jobs in a closure may not have the kinds of skills that are needed by the
economic activity generated by the redevelopment. Individuals may relocate to other
regions where the jobs they find may not match the wages of the jobs lost. Significant
9 The Government Accountability Office (GAO) has monitored the BRAC process since 1988.
Part of that effort has been to assess how communities fared since a base was closed or realigned.
Using data on the number of jobs recovered, unemployment rates, and per capita income, the
GAO concluded that nearly 70% of jobs lost to base closings between 1988 and 1995 had been
recovered by 2004. See Government Accountability Office, Military Base Closures: Updated
Status of Prior Base Realignments and Closures, GAO-05-138, January 5, 2005, at [http://www.
gao.gov/new.items/d05138.pdf].
10 In counties where military bases closed between 1969 and 1988, two-thirds of the communities
regained as many civilian jobs as were lost. However, rural (i.e., non-metropolitan) base-closing
counties lost more than twice as large a proportion of total county employment through civilian
on-base job cuts as did metro base-closing counties. See Peter L. Sternberg and Thomas D.
Rowley, “A comparison of military base closures in metro and nonmetro counties,” Government
Finance Review, October 1993.
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environmental cleanup costs from toxic elements on bases can delay the transfer of the
base to local authorities and limit the kinds of redevelopment options available to a
community.11
Planning for Economic Redevelopment. In some respects, a closed military
base shares similarities with other closed industrial facilities such as steel mills, oil
refineries, or port facilities. Research and previous economic development experience
suggest that converting a closed military base into a source of new competitive advantage
is a major community effort. Some bases closed in earlier BRAC rounds have been
successfully redeveloped into manufacturing facilities, airports, and research laboratories.
Bases also may hold certain advantages for redevelopment that are not shared by other
industrial sites. Pricing for the closed bases might be steeply discounted and liability for
environmental protection indemnified. Federal grants and incentives also exist to aid
community redevelopment efforts.12
Once a base is slated for closing, consideration of property transfer mechanisms, the
extent of environmental cleanup necessary, and a realistic base reuse plan for the
transferred property become central elements in organizing the economic development
process. Establishing a Local Redevelopment Authority (LRA) with power to assume
ownership of the transferred land is a necessary initial step in the economic
redevelopment process.13 The LRA must be approved by the DOD before property can
be transferred. The DOD’s Office of Economic Adjustment (OEA) is a resource available
to communities seeking assistance in managing the impact of a base closing or
realignment. The OEA awards planning grants to communities and also provides
technical and planning assistance to local redevelopment authorities. By 2002, a
cumulative $1.9 billion in DOD and other federal funds had been expended to assist
communities affected by base closures.14 Other sources of federal assistance may also
be available to assist communities in recovering from a base closure.15
Given the variance in the economic conditions of the local area and the usable
facilities left behind, there is no single template for redeveloping a closed military base.
11 For a discussion of the particular issues surrounding environmental cleanup on military bases,
see Governmental Accountability Office, Military Bases Closures: Overview of Economic
Recovery, Property Transfer, and Environmental Cleanup, GAO-01-1054T, August 28, 2001,
at [http://www.gao.gov/new.items/d011054t.pdf]; and CRS Report RS22065, Military Base
Closures: Role and Costs of Environmental Cleanup, by David M. Bearden.
12 In response to protracted negotiations over property values in many communities, Congress
created the “No Cost Economic Development Conveyance” and a “No Cost Rural Economic
Development Conveyance” to convey the bases to local redevelopment authorities at virtually
no cost. (National Defense Authorization Act of 2000, P.L. 106-65). The 2005 BRAC legislation
requires the Department of Defense to seek fair market value for the property, but does permit
the Secretary to convey the bases at no cost for economic development.
13 CRS Report RL33092, Military Base Closures: Property Transfer and Disposal, by Aaron
Flynn.
14 Government Accountability Office, Military Base Closures: Updated Status of Prior Base
Realignments and Closings, GAO 05-138, January 5, 2005.
15 CRS Report RS22184, Military Base Closures: Redevelopment Assistance Programs, by Baird
Webel.
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One generality that might be applied to almost all cases, however, is that the sooner
economic redevelopment can begin after base closure, the better for local communities.
Base closure can be economically very difficult for a community, but closure with a long
lag in which the closed base is essentially a hole in the local economy is worse. While
many factors can delay the economic redevelopment of a closed base, the most common
may be the need for environmental cleanup of the closed property.
Environmental Cleanup. Except for limited circumstances, property from a
closed military base must be cleaned of environmental contamination before being
transferred for redevelopment. The degree of cleanup and the timetable for completion,
however, is left to DOD which is operating under the appropriations approved by
Congress. Because of the extent of contamination and magnitude of costs involved once
funds are allocated, environmental cleanup times can be lengthy.16 Approximately 10%
of property from bases closed in prior BRAC rounds has yet to be cleaned for transfer.17
A complicating factor in the cleanup process can be the different levels of cleanup that
might be completed. Land intended for use as housing or schools, for example, must be
cleaned to a greater degree than land intended for industrial use. DOD, however, is not
legally required to clean land past the point needed for industrial use. When a community
desires an ultimate land use that would require a greater level of cleanup than that done
by DOD, this may result in a property being left vacant until either another use is found
or until additional cleanup is done.
In general, previous base closures suggest that communities face many specialized
challenges, but there is little strong evidence that the closing of a base is the definitive
cause of a general economic calamity in local economies.18 On the other hand, many rural
areas may experience substantially greater and longer-term economic dislocation from a
base closing than urban and suburban areas. Rural areas with less diversified local
economies may be more dependent on the base as a key economic asset than urban/
suburban economies. Communities where bases are recommended for significant
expansion can also find the effects of growth a major challenge. Over the five- to six-year
phasing out of a base, however, successful property transfers to a local redevelopment
authority, environmental cleanup, and widespread community commitment to a sound
base reuse plan have been shown to be crucial elements in positioning communities for
life without a military base.
16 Government Accountability Office, Military Base Closures: Opportunities Exist to Improve
Environmental Cleanup Cost Reporting and to Expedite Transfer of Unneeded Property.
GAO-07-166, January 2007.
17 Government Accountability Office, Military Base Closures: Updated Status of Prior Base
Realignments and Closures, GAO-05-138, January 2005. See pp. 10-19.
18 A study by the RAND Corporation of the effect on communities of three base closures in
California (Castle Air Force Base, George Air Force Base, and Fort Ord) found that the impacts,
while not benign, were also not the nightmare that many had feared. The study, however, could
be faulted on the grounds that the research was done before the base closures were completed,
and thus the impact was understated. See M. Dardia, K. F. McCarthy, J. Malkin, and G. Vernez,
The Effects of Base Closures on Local Communities: A Short Term Perspective (Santa Monica:
RAND Corporation, 1996).