Boston Business Journal
October 13, 2003

Land deal aimed to save Hanscom
State looks to acquire 48 acres to develop private industry around the targeted base

Edward Mason, Journal Staff

As part of its high-stakes effort to save Hanscom Air Force Base, the Romney administration is negotiating with the U.S. Navy to acquire 48 acres of land in Bedford for future development by private companies.

Massachusetts hopes that by having land ready for use by companies that do business with Hanscom, a hub of high-technology military research, it can give Hanscom an edge over other bases and stave off a possible 2005 base closing that could cost the state more than $3 billion worth of annual economic activity and nearly 30,000 jobs.

"This is a base that should have a competitive advantage," said Robert Pozen, the administration's commerce and labor chief. "When they go to the base-closing exercise, we can say we have available space to house technology companies."

MassDevelopment, one of the state's economic development agencies, is responsible for the negotiations. Michael Hogan, the agency's executive director, said the initiative signals that Massachusetts is serious about saving Hanscom.

"The message to the Pentagon is that the state wants to be a partner in enhancing the mission of Hanscom," said Hogan, who noted previous state aid to private corporations. "We're trying to give the same level of attention to Hanscom that was given to Fidelity or Fleet or Raytheon."

The plan is something of a gamble, state officials acknowledged, since the Pentagon has not publicized its criteria for judging a base's importance. That's not due to happen until December. Still, the Romney administration is acting without Pentagon guidance because of the magnitude of what the state stands to lose.

Hanscom Air Force Base, best known for its Electronics System Center involved in developing many of the high-tech weapons used during the Iraq war, is responsible for about $3.2 billion in economic activity and 29,000 jobs -- 3,000 on the base and more than 26,000 linked to the base through contracts with private companies and local universities, nearly all of which are in Massachusetts. Companies such as Andover-based Dynamics Research Corp., Mitre Corp. of Bedford, and the Massachusetts Institute of Technology's Lincoln Labs would be affected.

"We're trying to save a base of jobs equal to the biotech industry here," said Christopher Anderson, president of the Massachusetts High Technology Council, which backs the administration's initiative. "If the base closes, a lot of those jobs will go away."

It also reflects a larger job-creation strategy by the state. Pozen said Massachusetts believes that if Hanscom survives the next round of base closings, the property it is hoping to acquire for development can be used as a lure to employers who had contracts with the bases that were eliminated. As a result, those jobs would come to Massachusetts.

"If we have consolidation, we would hope the supporting companies would locate here," Pozen said.

The planned Navy property acquisition marks the latest attempt by the state to head off the possible closing of Hanscom. In May, the administration unveiled an economic development zone for Hanscom, which included 440 acres for businesses related to Hanscom. Businesses in the zone would be eligible for a 5 percent investment tax credit for 10 years and local property tax relief.

The state also is working with the Air Force on what is called "Enhanced Use Leasing." Congress allows the military to turn old and sometimes underused or poorly maintained base facilities into moneymakers by leasing them to private companies with which they have business relationships. So far, Hanscom has not taken advantage of the program. However, Hogan said it could reduce Hanscom's cost to the military by "tens of millions of dollars."

Massachusetts is racing the clock on the next round of base closings, overseen by the Base Closure and Realignment Commission. All U.S. military bases are under consideration to be closed. The Department of Defense is scheduled to give the commission its recommendations on base closings in May 2005. By November 2005, Congress must approve the entire list or the process begins again.

Massachusetts is not unique in working to give its bases a leg up, said Anthony Marken, vice president in ML Strategies' military installations section. Oklahoma, for instance, passed legislation cutting bases' utility rates.

In the past, political connections saved bases, but no more. Now it's about which bases cost too much to operate and which have unique advantages. As a result, the Romney administration's efforts to set Hanscom apart are critical, Marken said.

The Bedford property the state is negotiating for is divided into two parcels, and is north of land owned by the Massachusetts Port Authority. The state expects to be given the land because the property is contaminated, said MassDevelopment chief operating officer James Kane.

As a result, it's not clear how the land will be used. The state Department of Environmental Protection currently is evaluating the level of damage. The Navy will be responsible for decontaminating the property.

There are several options available to the state, Hogan said. It can build on the property and lease out those facilities, or it can lease the land and allow companies to build to their needs.

The deal for the property should close during the first quarter of 2004, Hogan said.

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Editorial

Hanscom maneuvers

The Hanscom Air Force Base has quietly supported a healthy cottage industry of high-tech defense researchers and suppliers, supporting directly or indirectly some 26,000 jobs and contracts worth $3.2 billion annually. Eastern Massachusetts' strength in cutting-edge electronics has made for a natural fit with the base, where many innovations are developed and tested at defense-related research centers and companies.

This successful relationship, however, is threatened by the U.S. military's need to rationalize its assets. The Department of Defense will recommend base closures to Congress' Base Realignment and Closure Commission in May 2005. Today's news on our front page, that economic development agency MassDevelopment is proposing to catalyze a public-private partnership with the military by acquiring Navy land at the base, shows that the state aims to turn the threat of closure into an opportunity to create an even more robust Hanscom.

The idea is to make Hanscom a more affordable and sensible option for the Air Force by exploiting the potential of the property there through private partnerships. The hope, as well, is that the Hanscom area will attract other defense-related companies should the base be kept open.

It only makes sense that as military operations grow more technically sophisticated, proximity to the high-tech intellectual capital in Greater Boston will become more important. Give the state's political leadership credit for getting out in front of this issue by trying to make Hanscom as viable as possible.

© 2003 American City Business Journals Inc.
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