Editorial: Fort Monroe

The Army is packing up, but a cornerstone of the reuse plan is crumbling

March 26, 2011

You're telling me Plan A won't work, we don't have Plan B, and the Army is leaving in six months. That is how one member of the Fort Monroe Authority summed up a briefing the board got on Thursday.

Plan A for the panel, which is responsible for the base's reuse when it reverts to the state, has been to lease property instead of selling. The FMA inherited the plan from its earlier incarnation, the Fort Monroe Development Authority. The FADA was optimistic about getting people to sign prepaid, long-term (50-99 years) leases on the base's 174 homes, many of them historic. And about attracting partners to lease land and build more than 700 new homes or reuse old buildings for this purpose.

Analysis by the panel's economic consultant threw cold water on those hopes. The plan's not likely to work for existing homes. The outlook is better for new construction or reuse, but even there it's problematic.

To sum up the cost-benefit analysis: The no-sale strategy will cost a lot and offer no benefits.

To sum up the situation: For several years the steward of this valuable site pursued an unusual plan. Now, with the Army starting to move out, the new version of the steward, appointed in 2010, is discovering that the plan may not work.

Responsibility for this lies largely with the FADA, which convinced itself that it could secure prepaid leases equivalent to 90 percent of property sale values. It defies understanding that it pursued this without critically examining the assumptions behind it.

Responsibility also lies with the lawmakers who, last year, wrote into law an explicit ban on the sale of real estate on the base.

What can you say but, "Well, duh." Problems with the leasehold concept may have eluded the FADA, but observers could see the issues the consultant confirmed: It will make it difficult to get the financing most people would need to prepay a lease. The unfamiliar concept will be hard to sell, reduce the pool of prospects and slow the leasing process.

So unusual is the plan that the consultant couldn't find another project in which lessees pay up front for long-term leases, pay for all maintenance (to historic preservation standards) and at the end have no ownership interest in the property, including improvements they paid for.

Leaseholds can also make it difficult to get homeowners' or mortgage insurance and home equity lines of credit, the consultant and panel members said.

Worse, the unusual arrangement offers no benefit. The advantage touted for this option — it would give the authority more power to ensure compliance with preservation standards — is an illusion. It would have no more control than if property were sold, and there are easier tools to achieve that control.

For zero benefit, the authority would pay a steep price. Leaseholds could reduce the prices it could charge by as much as 10 percent to 20 percent, according to the consultant.

The mischief wrought by lawmakers can be undone. Harder to undo, as FMA chairman Terrie Suit pointed out, will be the perception that grew up around it. "Not for sale" was sold to the public as essential to the promise to preserve Monroe's historic and natural assets. The myth that sales are bad took root in a now widespread Monroe mythology that also holds that development is bad, tourism will be the salvation and Hampton's economic needs can be ignored.

What's most disconcerting is the failure of state government to do justice to a historically, environmentally and economically significant state asset. The official panel and General Assembly delegation failed to come up with the compelling vision, sound analysis, detailed plans or legal underpinning it deserves.

The board today is stronger than it has been, thanks to the expertise of some of Gov. Bob McDonnell's appointments. But even this is a reminder that things change dramatically with each new governor.

The authority has breathing room to turn this around. The short-term plan to rely on rentals — although no favor to historic buildings — gives it time to craft a new real estate model. It's just unfortunate that so much time was wasted, and now it is so short.What's most disconcerting is the failure of state government to do justice to a historically, environmentally and economically significant state asset. The official panel and General Assembly delegation failed to come up with the compelling vision, sound analysis, detailed plans or legal underpinning it deserves.

The board today is stronger than it has been, thanks to the expertise of some of Gov. Bob McDonnell's appointments. But even this is a reminder that things change dramatically with each new governor.

The authority has breathing room to turn this around. The short-term plan to rely on rentals — although no favor to historic buildings — gives it time to craft a new real estate model. It's just unfortunate that so much time was wasted, and now it is so short.