Friday, March 26, 2010

Laurelwood: Monmouth County's "Road to Nowhere"

All the talk this past week about the Department of Navy's exchanges with the NJ DOT pertaining to construction of a two-mile road from a few hundred meters south of NWS Earle's main gate and thru the weapons base to the privatized Laurelwood homes got us thinking that it was worth stepping back a bit to recount the monetary parameters of the road, which as we all know would provide anyone with unimpeded access (i.e. no guards, no background checks).

NOPE's position, of course, is not that any road-construction estimates be refined or allocations changed, but rather that the Navy simply buy out the Laurelwood property and avoid the entire presumed $10.8 million expense to build and enclose the road in 7-foot security fencing. (Again, we say this recognizing that NOPE's primary argument - to void the Laurelwood lease - is moot, with the DoN having signed away this contractual right once it allowed Laurelwood's owner to refinance the mortage in 2002.) This estimate does not include the costs for environmental remediation. That $10.8 million initial cost, plus ongoing maintenance, represents what NOPE's Business Case Analyst Fulton Wilcox points out as a powerful argument for not moving ahead with “unfettered access.”

Published comments from the Acting Assistant Secretary of the Navy suggest that about half the costs of building the access road would be paid by the Navy to acquire and build fencing, gates, bridges, and other non-roadway specific costs. The other half, constituting construction costs of the actual roadway, is apparently to be paid by Laurelwood Homes, LLC, owner of the housing units. Based on our partial understanding of who pays how much, Fulton shares an impact estimate.
"The Navy’s $5.4 million share of construction costs will reduce the Navy’s expected savings by not having to buy the Laurelwood housing units from perhaps $25 million to $20 million. In addition, as we have previously published, the Navy will incur thirty years of ongoing costs to maintain and secure these improvements and in providing security and various services to the tenants living at Laurelwood, and those costs almost certainly will far exceed the purported savings.

It is also important to estimate the potential impact of the approximately $5.4 million cost of the roadway on the civilian tenants occupying Laurelwood. Although these are rough estimates and subject to error, they do highlight the burden of having to support a single-purpose 1.4-mile long “driveway.”

Assuming that the private cost of money is 6% per year, the property owner would need to increase monthly rents by about $110 per unit just to recover the $5.4 million investment and associated interest payments. Also, the road needs to be maintained over thirty years. If annual road maintenance consumes about 3% of the original cost of the road, the additional rent needed to recover roadway maintenance would be about $45 per month.

Therefore, the total cost per housing unit of this enormously extended driveway will probably be more than $150 per month. What that added $150 per month provides the tenant is a circuitous drive between high security fencing and, behind the fencing, a view of assorted military structures, a superfund site or two, and of ammunition-handling trucks and trains."

As can easily be seen, based on Fulton's commentary and NOPE's view of the Navy-NJDOT permit application mess, the DoN's EIS proves nothing more than a flawed, cursory document that Navy leaders in Washington had hoped would sneak through without anyone's notice. NOPE will continue to keep issues such as this in the public eye, to highlight how ludicrous it would be to provide civilian renters unimpeded access thru a fully functional Naval weapons storage depot for the next 30 years, solely because the DoN got itself into a bad housing contract in the 1980s and does not want to do the right thing and buy out the contract. Again, NOPE is not a mouthpiece for Laurelwood Homes, LLC, for it is not our concern whether the owner makes another cent from a deal for which the DoN has already paid $70-$75 million; rather, the realities of the situation and the documentation put forth by NOPE dictate that buyout is the only logical fate for the Laurelwood homes.

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