DOT letter suggests Navy Catch-22, Laurelwood buyout as clear option

A December 23, 2009 letter from the Department of Navy (DoN) to the New Jersey Department of Transportation, obtained Friday by NOPE, suggests that Navy leadership was grossly misguided to think that obtaining state permits to build an unimpeded access road for civilian housing at NWS Earle would be a cakewalk, or that the state should compromise its standards. (We will post the letter once we have a more-legible version.)

In short, and without getting technical about key terms mentioned in the letter such as "sovereign immunity" and the New Jersey "Access Code," it seems at first glance that the DoN inadvertently caught itself in a Catch-22 that may have the benign effect of causing it to miss its deadline to open the base and 300 Laurelwood military houses to civilian renters, and invoke the contract-agreed buyout process.

Earle's public works officer wrote to the NJDOT director that, by the Navy’s account, the Navy (as landowner) is restricted by Federal law from applying for the permits. At the same time, by the Navy’s account, if Laurelwood Homes LLC (the owner/developer of the 300 homes at Earle) has not itself requested permits, no actionable highway connection permit request exists. From what we can tell, the developer has applied for no such permits. And since the developer does not own the right-of-way land, DOT has stated that the developer does not qualify for a permit.

In terms of NOPE's interest in preventing civilian housing for the next 30 years at NWS Earle, this is potentially good news, in that:

1. The DoN procrastinated on what was an urgent and, as we have now learn, controversial permitting process. The Navy knew what permits were needed as of May 22, 2009 when it issued its Record of Decision picking Route Alignment 4. The DoN also knew that it had made a contractual commitment to have permits in place by April 30, 2010.
2. The DoN did not move promptly to have its partner, Laurelwood, secure permits. The Navy’s spurious “Need and Purpose” described in the Laurelwood Environmental Impact Statement (EIS) was to “satisfy the contractual obligation” for unimpeded access, but a major critical path task was left until December.
3. What seemed to be a straightforward permit application matter, in fact, has morphed into a time-consuming , expensive exercise with follow-on ramifications. The DoN's genuine “purpose and need” for opening Earle to civilians was to stop paying $10,000-plus per day for renting empty housing, but its purposed solution is more costly than a buyout.

In NOPE's view, a buyout is the only way to end this entire Laurelwood civilian housing mess. Remember, DoN officials that NOPE met in mid-2008 in Washington, D.C. lied to our faces (and a U.S. congressman, we might add) about why the Department could not simply void the Laurelwood housing contract, as the contract language provided (if the U.S. was in a declared National Emergency) and as NOPE long argued. The excuse that a particular DoN representatives gave us was that the DoN did not want to be perceived as a "bad business partner." It was not until NOPE obtained and read the Laurelwood lease, however, that we learned the truth was that the DoN foolishly signed away this right in 2002 - less than a year after the 9/11 terror attacks - so that Laurelwood could refinance its mortgage! The DoN, of course, left this information out of the Laurelwood EIS.

This leaves the buyout option. Candidly, NOPE has no interest in whether Laurelwood gets a penny more from U.S. taxpayers from this housing debacle. The company has already collected $70 million-plus of rents from the DoN on the deal. We simply argue that, without the ability to void the contract in the interest of national defense, that the DoN wake up to the realization that the best option is to engage Laurelwood in some kind of process to bring this whole charade to an end and alleviate the stress on Earle's surrounding communities and the base itself. The DoN should be in the business of national defense, not as a property manager or host to civilian communities inside a military weapons base.

Are we stuck in the middle of a Navy-Laurelwood game of chicken?

This is a fair question in light of our reading of the Government Accountability Office's May 2009 report (GAO-09-352) on privatized military housing, especially as we are now within 100 days of the expiration of the Department of Navy's "in-lease" (i.e. military-use portion of a 52-year housing contract) of its pact with Laurelwood Homes LLC and the potential startup of unimpeded civilian access to one of our nation's biggest military weapons bases.

There is no dialogue specific to Laurelwood housing in GAO-09-352, but we point readers' attention to a few interesting GAO findings:

• Military housing constructed before 1996 is inferior
• Some installation commanders interviewed by the GAO expressed reservations to private developers about having civilians living in military privatized housing (p. 25, footnote 11)
• The DoD's housing privatization goal was to minimize its role in operating military family housing (renting the Laurelwood homes to civilians will increase Earle's role in managing a new population of 1,200-plus civilian tenants and add millions of dollars of cost to the DoN...and hundreds of millions more to our communities)
• Credit rating agency (i.e. Moody's, S&P) downgrades of military housing bonds, especially during the 2009 market downturn, will make loans for military housing contractors more expensive and difficult to come by and these military partners to reserve more cash to cover liabilities
• The percentage of military housing projects below the desired 90% occupancy might be grossly understated (30% in 2009, down from 36% in 2006) because the military includes non-military tenants in its data (i.e. military bachelors, civilian contractors, civilians); in short, privatization does not work as argued by the U.S. Military

Our fourth bullet point, about credit ratings, may seem complicated, but brings us to our headline question of whether Monmouth County residents (and those who live nearest to NWS Earle, in particular) are simply in the middle of a game of chicken that has the Department of Navy and Laurelwood Homes, LLC staring each other down.

The findings in GAO-09-352 suggest as much, considering that NOPE understands that Laurelwood (and perhaps the Navy itself) will need to secure millions of dollars of third-party financing for road construction, security fence rentals and home improvements, to name a few upfront costs. In addition, any insurer insane enough to insure 300 townhomes in the middle of a powderkeg will probably charge Laurelwood a massive premium to cover the potential for accidents and endangerment to civilian tenants over the 30-year rental period on a weapons depot. Logistically, can Laurelwood even GET insurance for civilian rentals?

Considering the Department of Navy has shown zero willingness to engage in a fair buyout process (we already know that in 2002 the DoN foolishly signed away its right to void the contract, so NOPE's early proposal for voiding the deal in the nation's best security interest is out the window), we are only left to speculate that the DoN is playing chicken with Laurelwood in hopes of driving down the buyout price.

Perhaps a skillful bargaining measure on the DoN's part, but one that surely upsets the neighbors of NWS Earle like us, who are left to fear that DoN leadership has lost its mind and has zero regard for the well-being of its longstanding neighbors surround the base, nor for national security and the interests of service members stationed at NWS Earle.

Interesting Op-Ed in the NY Daily News

In light of the Fort Hood massacre, the Daily News author's argument in an op-ed piece this weekend that "the U.S. owes far better vigilance to the men and women who serve our nation in uniform" applies especially well to the service-members at Naval Weapons Station Earle. This is particularly true as we approach the 100-day deadline for the Department of Navy to blow open a hole in its security fencing to allow for unimpeded access to civilian housing at Earle thru 2040, simply to get out of a bad 1980s privatized housing contract.

The DoN's actions are deplorable, and will only endanger the staff and mission at Earle.

"Lessons" from Fort Hood

NOPE's business case analyst Fulton Wilcox points us toward an independent study (released Friday by the Department of Defense) of the "lessons learned" from the Fort Hood, TX massacre called Protecting the Force.

Here we've attached Fulton's recap of the report, as it relates to NOPE's objections to proposed unimpeded civilian housing and access at NWS Earle, but the crux of Fulton's analysis is that if we were to overlay the Laurelwood scenario to this report, many of the gaps and "to-do" lists in the Fort Hood study not only apply to Earle, but will be further complicated by the presence of a small civilian town on the base.

It estimated the elapsed time from the first notice to first responders to the disabling of the perpetrator as taking about just under 5 minutes, which is very good response, but enough time for the shooter to kill 13 people and wound many more. Although Secretary of Defense Gates charged the study team with looking at “simultaneous” attacks that matter apparently had to do with separate multiple installations rather than the implications if the Fort Hood shooter had been a team rather than a lone individual.

The report stated that “DoD mandates 100% credential inspection for access to DoD CONUS [Continental United States] installations” (pg.34). It is a significant question as to whether the Laurelwood chain link fence justifies an exception. The study group expressed concern that there was no one “in charge” and suggested that DoD designate a senior DoD person to make policy decisions on such force protection matters (pg. 26).

The report touches on a variety of subjects regarding behavioral signals, but left for future study matters such as how DoD detects incipient dangerous behavior in non-affiliated civilians. It also touches on information sharing and policy – e.g., regarding vehicle registrations, private firearms handling, etc., but again not specifically with respect to entirely non-affiliated civilian residents and visitors.

On of the relevant findings (Finding 4.1) was that DoD’s emergency services are not interoperable across military and local civilian organization. Finding 4.2 was that DoD’s implementation of internal 911 is laggard. Many 911 calls went into the County system, and then had to be relayed back to Fort Hood.

New York-based Epoch Times also gives a well-considered recap of the Fort Hood report.