Who Will Pay for Air Base Property?

If Mike McGee has his way, the Horsham Land Redevelopment Authority will acquire 862 acres of federal property free of charge. 

McGee, executive director of the Horsham Land Redevelopment Authority, told Patch that portions of the former Willow Grove air base could be transferred from the federal government by the end of 2014, or beginning of 2015. 

Before that can happen, both sides need to agree on a purchase price and related terms.

“We want it for free,” McGee said. “They want whatever they want. We will negotiate.”

McGee has contended that the property “has very little value.” Water and sewer is non-existent in some portions of the property, much of the infrastructure has to be removed and existing buildings do not meet local or state building codes. 

Facts such as those, coupled with economic development conveyance plans outlining how new job centers would transform a closed military installation into a reinvigorated community oftentimes led the federal government to grant the land free of charge, McGee said. 

“Some of the most successful redevelopments were no cost (economic development conveyances),” McGee said.

But that changed in 2005 when the federal government amended its policy to “get fair market value for the land,” he said.

While the end price tag is still to be determined, it is likely that an entity, or entities will need to pay for the property. 

“There are many options of how to handle it,” McGee said. “I know where I would like the board to go.”

But, he told Patch that until Matrix Design Group presents its business plan on Dec. 18 he was “not prepared” to discuss it.

W. William Whiteside III, HLRA chairman and a Horsham Township Councilman, said that how the land would be paid for is part of the proposal that Matrix will present.

“Depending on the method you choose, the funding could come from a variety of different sources,” Whiteside said, adding that the HLRA is working to “do the best job we can for the community” while carrying out federally mandated necessary steps. “We want to make sure we pick the best option for the township.”

According to a 1999 report issued by the U.S. Department of Defense Office of Economic Adjustment, a master developer–either the land redevelopment authority, a private sector entity, or a combination of the two–handles land acquisition and ultimately its redevelopment.

“The master developer is responsible for managing the development and disposition of the site from initiation to final buildout, overseeing site preparation and infrastructure development, financing, marketing, and asset management,” the report states. “The master developer may or may not be involved in construction of buildings. In some cases they will simply sell improved building sites to other builders or developers.” 

The route HLRA opts to take will dictate how much it will cost the local government. Electing to be the site’s master developer, for instance, would mean that HLRA would need to purchase the land from the federal government and front the costs for infrastructure, improvements and related expenses, McGee said.

With the redevelopment of Glenview Naval Air Station in Chicago, Ill., described by McGee as a “close” community comparison to Horsham, the LRA led the redevelopment.

“They acted as their own developer,” McGee said, of the authority’s issuance of bonds, building roads and eventually selling off parcels.

Other authorities have used master developers to advance the redevelopment efforts, he said.

“It’s a team of developers and someone takes the lead and they pay all the bills,” McGee said. “It goes the entire gamut of ranges.”

The options are …

The Office of Economic Adjustment’s report lists five main types of public/private development roles.

• In-house development: Some land reuse authorities opt to carry out master development responsibilities themselves, either through sufficient development experience among staff, or by hiring new staff with development expertise.

• In-house development with developer/consultant input: Some LRAs have kept ownership and hired a private development company to advise as they redevelopment is undertaken. The developer functions as temporary staff and can earn a commission or flat fee, or some combination thereof. This option allows the LRA to retain control over the process and earn any revenues realized.

• Contract development: The LRA can retain ownership of the base and hire a development company on a for-fee basis to carry out master development tasks. The option allows the LRA to retain control over development as well as any financial returns. Financing would be secured with the assets of the LRA and without any developer equity.

•  Joint venture: This type of arrangement involves some sharing of responsibilities and revenues. Typically, the LRA contributes the land and most of the infrastructure replacement. The developer takes on management responsibility. Both parties secure the financing.

• Private development venture: The LRA seeks a private development company through a competitive bidding process to purchase the entire property and redevelop it according to the adopted reuse plan. This tends to be the simplest way for the LRA to acquire development expertise and minimize ongoing responsibilities. However, doing so means the LRA surrenders control over the redevelopment process and any revenues it might generate.

“This whole thing depends on a successful negotiation with the United States Navy,” McGee said, adding that he hopes to develop a “win-win situation” where “they’re happy and we’re happy.”

Ultimately, the plan is to “make this development a success and the township a success,” he said, adding that the HLRA wants to “recoup any investments put into the property.”

What do you think is the best redevelopment approach for Willow Grove air base? How much are you willing to pay for local control of the project? Tell us in the comments.