Friday, May 21, 2010

NOPE Analyst Fulton Wilcox's response to Manning letter to the Asbury Park Press

NOPE is extremely fortunate to have an individual of Fulton Wilcox's character and professionalism. For those unfamiliar with Fulton's work or who are new to our case, Fulton spearheaded NOPE's business case for why the Navy's proposal for Laurelwood civilian housing and unimpeded civilian access through NWS Earle to the homes made zero fiscal (and mission-critical) sense.

Not only that, but Fulton had dutifully served in our armed forces and has a wealth of experience in military intelligence matters, and at times was confronted disrespectfully (namely, during our trips to testify in Trenton, by veterans housing advocates who we might add were reprimanded by Senate committee members for inappropriate conduct during testimony).  Our community is lucky to have such an upstanding citizen and is blessed by Fulton's leadership. He is a significant catalyst for why NOPE works.

Here is Fulton's perspective on why a recent "letter to the editor" from a Mr. James Manning was again out of line, and we hope his thoughts will appear on the Press' commentaries page in the days ahead.


"As a lifetime member of VFW as well as a business case “number-cruncher” supporting NOPE (Neighbors Opposed to the Privatization of Earle housing), I want to correct a misapprehension regarding the merits of renting Laurelwood housing located within Naval Weapons Station Earle to civilians and, more specifically veterans and homeless veterans.

Mr. James Manning in his recently published letter was mistaken in writing that “politicians did not know what is stake,” because the Navy very rigorously defined what was at stake note only for “Politicians,” but for citizens in NOPE. The Navy’s framing of the options did not invite nor permit any broad-based examination of a social or political nature. One reason NOPE itself was bipartisan (as was Congressional opposition to the Navy’s preference) was because the choices that the Navy defined simply defy conventional political categorization.

There is a misapprehension that because Laurelwood housing is “surplus” to Navy needs that, like other military surplus, it therefore must be “free” or at least “affordable” for use by veterans or in some other charitable context. Not only is Laurelwood housing not free, but because of its location within a working munitions handling facility it is burdened with extraordinary costs and risks compared to similar housing located outside such a military reservation. The Navy, out of worthy motives in the 1980s, inadvertently created a “money pit” from which it is presently trying to extricate itself, and it is hard to see the advantage of veterans groups jumping in.

The Navy described three options with respect to its “money pit,”, which perhaps can be thought of as Plan A, B and C. The Navy did not entertain the “Accettola Plan” as a Plan D., so what was at stake were the consequences of the Navy’s choice among these three options. Plan D could not win the Navy’s approval because the Navy defined what was in play.

To review briefly the Navy’s Plans A, B, and C.

Under plan A, known in the Navy’s jargon as the “Inlease” arrangement, the Navy contracted for the 300 Laurelwood rental units on a “take or pay” basis. After early full occupancy, for more than a decade under the “or pay” commitment the Navy has paid rent on hundreds of empty housing units. For both the Navy and the taxpayer, continuing to pay rent under Plan A for empty rental units made no sense. By the Navy’s account, it had investigated and satisfied itself that there were qualified and interested tenants for this “surplus” housing, so there was no prospect of occupying the 300 units. Although the Navy was determined to end paying rent under Plan A, it could not simply stop paying, so it wanted instead to implement Plan B – the “outlease” as described in the Navy’s terminology.

Under plan B, the private owner of the housing units would rent the 300 housing units within the civilian residential housing market. The Navy would therefore no longer have to pay rent to the owner, because the civilian tenants would do so. However, civilian tenants, their guests, tradespeople and others cannot access the secured base, so as a necessary part of plan B, the Navy had agreed to provide “unimpeded access” via an insecure entrance and access road from State highway 34. To isolate the insecure tenants from the secure base, the Navy at its expense would fence-in the 1.4 mile-long new road and the housing to create a civilian enclave within the otherwise secured base. The Laurelwood complex as well as what would be an extraordinarily expensive driveway all would remain under Navy/federal jurisdiction.

The Navy also possessed but did not admit to plan C - buy-out, meaning that the Navy would buy the 300 housing units (it never had relinquished ownership of the land). The buyout was always an elective option, but under the Navy’s contract, if by April 30, 2010 it had not put in place “unfettered access,” the Navy and the property owner both became obligated to end the relationship through buy-out. After buy-out, the Navy no longer has to pay rent under the “Inlease” terms nor will it incur the security risks and many costs associated with the “Outlease” and the unimpeded access road into the base.

NOPE’s primary objections to plan B - outlease and its reasons for preferring buyout were 1) security and safety advantages, and 2) the avoidance of many lifecycle costs, environmental impacts and complexities which made Plan B so expensive. For example, to meet Department of Defense and Department of the Navy security requirements, the Navy had to pick the longest, least convenient and most expensive of its access road options, increasing costs for both itself and the property owner and ultimately to prospective tenants. Consequently, the start-up cost of Plan B were quite large, beginning with a $10 million investment in the access road, roughly half to be paid by the Navy and half paid by the property owner.

Nothing that the Navy incorporated into its contract or into its public hearings regarding its preference for plan B was friendly to charitable endeavors, and at the time of the debates as to which option the Navy should choose all parties were struggling with how to reduce costs as opposed to having anything surplus to offer for “free” or at a discount. It appears that the Navy switched from its stubborn insistence on plan B – outlease to adopting plan C – buyout only because the complexities and startup costs of Plan B caused it to run out of time. Meanwhile, chronic terrorist interest in U.S. military facilities made it clear that meeting unavoidable security requirements is not an option, while Plan B added avoidable security obligations and competed for resources with mission-focused security.

In his letter, Mr. Manning expressed “shock” that NOPE or “politicians” encouraged the Navy to turn away from the “Outlease” option, but as the brief summary above highlights, the “Outlease” option itself was not deserving of NOPE’s support. What we know about the financial implications of “Outlease” does not suggest that it is friendly to the Accetolla Plan. For example, if the property went onto the rental market at market rates, for those interested in veterans housing it becomes just another commercial 300 unit rental property, except that it is disadvantageously situated in a military weapons handling facility.

If one looks at this situation from, for example, a HUD (Housing and Urban Affairs) perspective, the question becomes did it make sense for HUD to invest “fresh money” into a housing complex sitting in the costly and risky environment of a Naval munitions handling facility. Unlike the Navy, HUD has no prior commitments or accountabilities, so it can invest where its money produces the greatest good for the greatest number. It certainly seems doubtful that HUD or some other agency would want to put $5 million of “fresh money” into building an access road to a 300 unit complex. The same amount of HUD money invested in rental facilities and tenants not burdened with military and security complexities and costs might provide more housing for more veterans. Further, if HUD funded tenants and perhaps some necessary property improvements, that help tenants and perhaps the property owner, but also requires the Navy to pay the many “below the waterline” costs that in our view made “Outleasing” a net loser to the Navy.

NOPE took a bipartisan (and non-partisan) view of the options that the Navy created, and I believe that our preference for buy-out was consistent with the best interests of the Navy and other stakeholders such as State and local government."

1 comment:

Anonymous said...

Mr. Wilcox needs to make his comments more concise.