Military Base Closures: Socioeconomic Impacts







Prepared for Members and Committees of Congress



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. 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.
For additional information on the BRAC process, see CRS Report RL32216, Military Base
Closures: Implementing the 2005 Round, by David E. Lockwood; and CRS Report RL33766,
Military Base Closures and Realignment: Status of the 2005 Implementation Plan, by Kristine E.
Blackwell.






Backgr ound ..................................................................................................................................... 1
Community Economic Impact Analyses.........................................................................................1
Planning for Economic Redevelopment..........................................................................................4
Environmental Cleanup...................................................................................................................5
Author Contact Information............................................................................................................6






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 1
(DOD) to realign or close military bases. Following an examination of its military forces and
installations, the department compiles 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 2
remediation plan to enable the conveyance of surplus federal land to other entities.
Four separate BRAC rounds were initiated in 1988, 1991, 1993, and 1995.3 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.

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 or realignment. 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 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.

1 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.
2 For a detailed examination of the BRAC process, see CRS Report RS22061, Military Base Closures: The 2005 BRAC
Commission, by Daniel H. Else and David E. Lockwood.
3 Military bases were also closed between 1960 and 1987, but not under the BRAC process as authorized by Congress.





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 4
study found that per capita income was little affected by the closures. Base closings in
communities that have been declining 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 5
base rather than in the local community.
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, public
safety, water and sewerage) without the necessary revenue to support the added the added
demand. Even where added revenue can contribute to mitigating the impact of base expansion,
the planning and adjustment costs impose other burdens on communities and residents.
Local government expenditures and services 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 6
Massachusetts’s firms. Another analysis estimated the same losses at $3 billion. 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 7
anticipated.
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

4 Mark A. Hooker and Michael M. Knetter, “Measuring the economic effects of military base closures,” Economic
Inquiry, 39(4), 2001.
5 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).
6 Matt Viser, “Analyst: Dont overestimate impact of Hanscom closure,Boston Globe, April 3, 2005.
7 M. Hattery and R. Koch, “The fiscal impacts of base closures: Insights for rural local governments,Government
Finance Review, April 1995.





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 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 are seeing their
functions moved to other bases. Other bases, however, are expanding and creating impacts on
schools, housing, traffic, and local government services (e.g., Fort Belvoir, Virginia). DOD’s
Office of Economic Adjustment has identified 20 locations where expected growth as a result of 8
force realignments in FY2006-FY2012 will adversely affect surrounding communities.
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 9
can be uneven. 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 10


and the revitalization of their communities especially difficult challenges. 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

8 See Governmental Accountability Office (GAO), Defense Infrastructure: DOD Funding for Infrastructure and Road
Improvement Surrounding Growth Installations, GAO-08-602R, April 2008.
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.





the jobs lost. Significant 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 11
community.

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 (e.g,
Charleston, South Carolina). 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 12
community redevelopment efforts.
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 13
necessary initial step in the economic redevelopment process. 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 14
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 15
closures. Other sources of federal assistance may also be available to assist communities in 16
recovering from a base closure.
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. One generality that

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: Cleanup of Contaminated Properties for Civilian Reuse, by David M.
Bearden.
12 In response to protracted negotiations over property values in many communities, Congress created theNo 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, Base Realignment and Closure (BRAC): Property Transfer and Disposal, by Aaron M. Flynn.
14 For a list of Local Redevelopment Authorities (LRAs) that have been recognized by the Secretary of Defense, as well
as contact information for the LRAs, see DOD’s Office of Economic Adjustment website at http://www.oea.gov/
oeaweb.nsf/LRA?readform.
15 Government Accountability Office, Military Base Closures: Updated Status of Prior Base Realignments and
Closings, GAO 05-138, January 5, 2005.
16 CRS Report RS22184, Military Base Closures: Redevelopment Assistance Programs, by Baird Webel.





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.

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 17
costs involved once funds are allocated, environmental cleanup times can be lengthy.
Approximately 10% of property from bases closed in prior BRAC rounds has yet to be cleaned 18
for transfer. 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 19
economic calamity in local economies. 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.

17 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.
18 Government Accountability Office, Military Base Closures: Updated Status of Prior Base Realignments and
Closures, GAO-05-138, January 2005. See pp. 10-19.
19 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).





Tadlock Cowan Oscar R. Gonzales
Analyst in Natural Resources and Rural Analyst in Economic Development Policy
Development ogonzales@crs.loc.gov, 7-0764
tcowan@crs.loc.gov, 7-7600