January 15, 2020 3:11PM

When Debating Base Closure, Look at the Data

By James Knupp and Christopher A. Preble

Despite years of calls from the Pentagon for a new round of Base Realignment and Closure (BRAC), Congress has refused to authorize one since 2005. With the Department of Defense running at 22 percent excess capacity and constant calls for more money for operations and modernization, Congress should allow the Pentagon to reallocate funds away from unnecessary bases into more urgent projects. But fears of communities losing their bases and watching their local economies suffer as a result has kept talk of a new BRAC off the table.

BRAC opponents should take a look at some of the data measuring the economic health of post‐​BRAC communities. Research shows that while there may be some short‐​term pain, in the long run most communities rebound — and oftentimes end up in a much stronger position before. A presentation last year at the Association of Defense Communities’ Base Redevelopment Forum looked at three very different cases: Pease Air Force Base in Portsmouth, New Hampshire (1988); Bergstrom Air Force Base in Austin, Texas (1991); and the Philadelphia Naval Shipyard (1991). With both large and small communities represented, the evidence reveals BRAC’s actual effects.

We looked at four measures of economic and community health: housing prices, municipal bond rating, tax revenue per capita, and population growth. As the following charts show, these measures did not change in the same ways for each case, reflecting more regional trends than national.

For housing prices, we used data from the Federal Housing Finance Agency (FHFA) on single family home prices and looked at an index of median single‐​family home prices for each community compared to the national index. These indices from the FHFA used sales and appraisals of single‐​family homes and are not seasonally adjusted. The chart reflects the change over time to median home prices. We have set both the local and national indexes to begin at the same date and an index value of 100. Values over 100 represent an increase in value, values under 100 represent a decrease.

As can be seen in the charts, in all three cases housing prices were at or above their values within 10 years of base closure. In the case of Philadelphia, housing prices remained relatively steady, following the national trend, while Austin’s post‐​closure housing prices actually grew at a faster rate than the national trends. Only Portsmouth, New Hampshire, saw a significant drop in home prices following the closure of Pease AFB, but within a decade its housing market has rebounded, and price changes today are on par with national trends.

As a measure of a community’s economic health, municipal bond rating is about as literal as it gets. Using information from Michael Touchton and Amanda J. Ashley’s research, we looked at what these communities had as their bond ratings before closure, and several years after closure.

In each case, bond ratings increased, sometimes substantially. In the cases of Portsmouth and Philadelphia, both went from Ba (below investment grade) to Aaa, the highest grade possible.

Another key marker is total tax revenue, but that must be controlled for population growth. We looked at tax revenue per capita and found in each of the three cases this key metric has increased over time. Only Austin experienced a brief decline, and it quickly recovered.

And finally, we decided to look at population growth. One of the biggest fears with base closure is that associated job losses will cause people to move away in search of better prospects elsewhere.

Here, the picture is more mixed. Both Portsmouth and Philadelphia experienced population loss, with Portsmouth seeing a 21.5 percent decline between 1990 and 2000. As the smallest of the communities studied (population 26,160), the loss of the base would prove more significant than for Austin or Philly. At closure, Pease had employed over 4,500 people, both active duty military and civilians. The Air Force had also estimated that Pease created 2,466 secondary jobs in the surrounding communities. As for Philadelphia, the city had been experiencing population losses for at least a decade prior to the closure of the Philadelphia Naval Shipyard, but it has begun to recover somewhat, so its hard to say whether the base closure had an effect or not. By comparison, Austin has seen considerable population growth, likely due to a number of factors completely unrelated to the closure of Bergstrom AFB.

These three cases, and these measures of economic health, are merely snapshots into how base closure can affect a community, but they provide an important perspective. Taken together, they reveal how post‐​BRAC communities recover following a base closure. These facts should be taken into consideration in any future discussion over whether or not to authorize another BRAC round.