Revisiting stories: military spending, the Gunbelt, and Montgomery County vs. Fairfax County

The Brookings Institution is presenting "Defense Spending in the 50 States" on Tuesday, March 19, 2019 10:00 — 11:30 a.m.

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I have some pieces about how concerns in Montgomery County about lagging vis a vis Fairfax County comes down to the difference in the level of military spending in the two jurisdictions.

-- "Montgomery County's real economic development problem: it's not part of the military economy," 2011
-- "Montgomery County's real jobs problem is that it is an adjunct, not a full-fledged, member of the military-industrial complex," 2012

According to the Department of Defense webpage Defense Spending by State - Fiscal Year 2017, Fairfax has about 6x the level of military spending compared to Montgomery. (But Montgomery County does have significant federal spending on health and sciences through the National Institutes of Health, the Food and Drug Administration, other HHS units, and the National Institute for Science and Technology.)

The webpage has breakdowns for all the states and is a great illustration of how military spending is more about providing monies to activities in various Congressional districts, rather than a focus on war readiness.

When I wrote the pieces about Montgomery versus Fairfax, I came across work by Ann Markusen that I didn't know about--these days Professor Markusen is more focused on the economic benefits of arts-related uses--The Rise of the Gunbelt: The Military Remapping of Industrial America.

The basic point of the book is that the Sunbelt's (and Boston's) success was driven mostly by military spending. This is the summary of the book:

Since World War II, America's economic landscape has undergone a profound transformation. The effects of this change can be seen in the decline of the traditional industrial heartland and the emergence of new high tech industrial complexes in California, Texas, Boston, and Florida. The Rise of the Gunbelt demonstrates that this economic restructuring is a direct result of the rise of the military industrial complex (MIC) and a wholly new industry based on defense spending and Pentagon contacts. Chronicling the dramatic growth of this vast complex, the authors analyze the roles played by the shift from land and sea warfare to aerial combat in World War II, the Cold War, the birth of aerospace and the consequent radical transformation of the airplane industry, and labor and major defense corporations such as Boeing, Lockheed, and McDonnell Douglas. Exploring the reasons for the shifts in defense spending--including the role of lobbyists and the Department of Defense in awarding contracts--and the effects on regional and national economic development, this comprehensive study reveals the complexities of the MIC.

The nature of DC's federally-related "business" is coordination, not doing

On Monday, the Washington Post ran a story, "Why a Silicon Valley venture fund thinks Baltimore can be an East Coast tech hub," about how Baltimore's Port Covington development is landing DataTribe, a leading cybersecurity business incubator, as an anchor tenant.  Alongside the incubator is its relationship with a major venture capital firm, Allegis Capital, which has a specialty in the cyber security sector also.

The article makes the point that this will put the Baltimore area -- which also is closer to Fort Meade, where the National Security Agency is based -- ahead of the DC area in terms of reaping the benefits from this business sector in terms of business development and employment.

The article ends with a discussion of the study of the cyber security sector in the DC area, how there are 800 companies involved, but few are based in DC proper.  From the article:

A 2017 study of D.C.-area cybersecurity businesses by Amplifier Ventures and the Kogod School of Business at American University found more than 800 companies engaged in cybersecurity work but noted that about 95 percent of them are focused on government services. The study noted a “profound lack” of cybersecurity companies building cybersecurity products for the commercial business world.

But the District has largely failed to harness those assets. With a few notable exceptions — such as a D.C.-based encryption start-up called Virtru that has raised $76.8 million from investors — there are few sizable cybersecurity companies working within the District.

“D.C.’s infrastructure is really good for government and government services, but that’s not what we’re building here,” Ackerman said. “If you go out to Silicon Valley, it could not be any more different than what you find in downtown Washington, D.C.”

This reminds me of something that I wrote more than 6 years ago, when the Gray Administration suggested that DC could reap the benefits of the IT and software required to implement "Obamacare."

I made the point that it isn't about letting the contracts to do it--which is what the Department of Health and Human Services (in this case the Centers for Medicare and Medicaid Services, which is based in Baltimore County)--it's about having the expertise in software development around health care, having highly rated computer science and engineering programs at local universities, etc.

It's tough for DC proper to develop strength in IT and software development outside of "coordination of business activities" because the actual doing of whatever form of exchange is underway, tends to occur elsewhere.

Federal laboratories versus federal agencies. By contrast, the federal government supports many research laboratories mostly across the country, but some in the DC area.  These agencies tend to be much more successful in developing new technologies, although frequently they are more focused on discovery and hand off implementation to others.

DC area examples include primarilyr the National Institutes of Health in Montgomery County, but also an agriculture research facility in Beltsville, Maryland and the National Institute for Science and Technology also in Montgomery County.

-- "A follow up example with regard to Metropolitan Revolutions: the National Science Foundation moving to Alexandria," 2013

New York City. NYC's not having the equivalent kind of software and data science expertise comparable to that of Boston-Cambridge in Harvard and MIT, the Silicon Valley in Stanford University, and the Austin area with the University of Texas is what led then Mayor Bloomberg to put out an RFP to create such an institution in NYC to anchor these sectors ("New York's Silicon Alley Is (Still) No Match for Silicon Valley," Businessweek/).

The winner was a joint venture of Cornell University and Israel's Technion Institute of Technology ("Cornell Tech officially opens campus on New York City's Roosevelt Island," Inside Higher Education).
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Incubators are the primary tool, but aren't always enough. Most cities are content to act in developing IT/software business activities by creating or supporting incubators although in DC that hasn't totally worked out ("The Sad Story of How a DC Tech Incubator Fell Apart," Washingtonian).

But the same goes for large scale Maker Spaces more generally (TechShop's Crystal City makerspace closes as company shuts down," Technical.ly).  Others have failed in Brooklyn and Philadelphia.

Higher education efforts.  Some higher education efforts, but not on the scale of New York City, are focused on bolstering higher education efforts, recognizing how universities in Boston's Route 128 corridor and in the Silicon Valley for technology, and in Cambridge for biotechnology, have been key (see Saxenian's discussion of IT and clustering in Regional Advantage: Culture and Competition in Silicon Valley and Route 128).

One interesting effort is in San Antonio, where the University of Texas San Antonio is building a downtown campus, not just for the College of Business, but also a new School of Data Science ("UTSA plans downtown growth on city and county land," San Antonio Express-News). From the article:

The parcels belonging to the city will become the locations of the university’s $33 million National Security Collaboration Center and $57 million School of Data Science. The UT System Board of Regents committed $70 million from the state’s Permanent University Fund at its Sept. 6 meeting for both projects.

Businessman Graham Weston, meanwhile, has pledged $15 million toward the School of Data Science, his largest one-time personal donation to a single project and the university’s largest-ever cash gift, Eighmy said. ...

Companies have been forced to leave San Antonio because they couldn’t recruit qualified local employees, said Weston, who has been devoted to building a technology hub in San Antonio and rehabilitating downtown.

Programs like UTSA’s are crucial for that development because they strengthen the pipeline from college to the workforce, he said. ...

The city, county and university leaders also pointed to a downtown transformation in Phoenix after Arizona State University created a new campus downtown. It drew more than 10,000 students, reinvigorated a sleepy downtown and contributed to sales tax revenue growth. ...

UTSA has been working to make the downtown campus more optimal for students to complete their coursework without having to go to the main campus about 20 miles northwest, just inside Loop 1604. This year’s incoming students in the university’s colleges of public policy and architecture, construction and planning can fulfill degree requirements entirely downtown, university officials have said.

San Antonio's Brooks City Base.  Elsewhere in San Antonio is the effort to reshape the decommissioned Brooks Air Force Base as a science and technology center ("Brooks City Base enlists development partner, kicks off plans for 75-acre industrial park," San Antonio Business Journal), including a new medical school and other health science schools of the University of Incarnate Word.  They just landed a US headquarters for a European firm which will bring more than 1,000 jobs ("San Antonio getting U.S. headquarters for European company, bringing 1,400 jobs," San Antonio Express-News).

Another is how the Joint School of Nanoscience and Nanoengineering in Greensboro, North Carolina is a joint venture between the University of North Carolina campus and North Carolina A&T, and the school anchors a research park ("Scientists at the Joint School of Nanoscience and Nanoengineering look for future technological marvels," Winston-Salem Journal).

Baltimore does have the advantage of proximity to Fort Meade.  Even so, it ought to look at expanding the curriculum at the University of Maryland at Baltimore, which currently is focused on the medical sciences, into the computing science and engineering arena as well, to bolster and extend its current recent success.

Note that Northern Virginia's different in terms of its place in the military/cyber economy because they've had more direct IT/software connections with different military units including the Defense Advance Research Projects Agency ("Montgomery County's real economic development problem: it's not part of the military economy," 2011) and the military's need for high speed IT connections.

Note that more than 20 years ago, Virginia developed the Center for Innovative Technology in the Dulles Corridor as a way to extend its place in the cyber economy ("Dulles trapezoid could be anchor for development," Washington Post), given that it was much stronger in other places (Boston-Cambridge, Silicon Valley, Austin/Texas) elsewhere in the United States.

CIT.

Even so, Loudoun County is pretty far from the center of the region and CIT seems to not be enough to lure Amazon's HQ2 that far out as it appears that Crystal City in Arlington County is much better positioned ("Amazon HQ2 Watch: Northern Virginia Checks the Most Boxes," New York Times).

Interesting with Crystal City is the "naturally occurring research park" on the Wilson Boulevard corridor, although it is anchored by the National Science Foundation, which is moving to Alexandria.

I have written in the past that DC has the building blocks for this kind of development, but that the talent and resources of the city's resident universities are dis-coordinated and unrealized.

-- "Better leveraging higher education institutions in cities and counties: Greensboro; Spokane; Mesa; Phoenix; Montgomery County, Maryland; Washington, DC," 2016
-- "Naturally occurring innovation districts | Technology districts and the tech sector," 2014

This is another example.

DC does have assets.  Note that DC has higher education assets that can be leveraged--medical schools at Georgetown, GWU, and Howard University; schools of engineering at Howard, Catholic University, and GWU (although most of that school is at a satellite suburban campus in Virginia) , a library science school at Catholic--many such schools such at at UC Berkeley and the University of Michigan have been transformed into combo library, information science, data science, programs in nursing and health fields at many of the schools, etc.

Meanwhile, for a couple decades, Catholic University has talked about creating a research park adjacent to their campus.

This piece discusses how to create such an initiative around biotechnology:

-- "Ordinary versus Extraordinary Planning around the rebuilding of the United Medical Center in Southeast Washington DC | Part Two: Creating a graduate health and biotechnology research initiative on the St. Elizabeths campus," 2018

The Urbanophile on "Washington" "DC"

Aaron Renn, the Urbanophile blogger, who also writes for the Manhattan Institute's City Journal, has an interesting take, "Hail Columbia! Welcome to America’s New Second City," on Washington now taking on the role of the nation's "Second City," because of the rise in importance and dominance of the federal government over more and more of the nation's economy.

From the piece:

1. Washington has developed a unique prosperity in the modern economy that goes well beyond its traditional recession-proof nature. Cities like Dallas boast “horizontal” success in adding people and jobs. Places like San Francisco boast of “vertical” success in raising per capita GDP and income. But Washington alone among big cities combines the stunning wealth and productivity of a New York with the volumetric growth of a Houston. It is a city simply without peer in America.

2. The scale of Washington now enables it to play with the big boys. In 2000, Chicago’s economy was about 50% bigger than Washington’s. Now it is only 25% bigger. Washington has more people with graduate degrees than Chicago and is on the verge of passing Los Angeles. At current growth rates, the combined Washington-Baltimore region will pass the 10 million population threshold in about 15 years to join the ranks of the world’s megacities.

3. Washington’s wealth extraction model has evolved from simply profiting from federal spending to a form of economic hegemony based on the regulatory superstate. The region may actually take a blow in the near term from fiscal retrenchment at the federal level, but the increasingly intrusive, fine grained control of the federal government over every aspect of American life ensures that the country will continue to pay tribute to Washington no matter what, and means you basically have to play in Washington to make it as an industry in America today.

It's tough with this kind of article in terms of distinguishing between Washington the city and the Washington metropolitan region, which is comprised of not just Washington DC but  also multiple suburban cities and counties. That was a problem also in the recent NYT Sunday Magazine piece on the same general subject "Washington Versus America").

The military and health sectors are two of the most significant economic drivers in the nation. And increase in the federal role in these areas has economic return to the Washington Metropolitan Region.

We don't realize how much this is the case. See "America’s staggering defense budget, in charts" from the Post. 20% of the federal budget is spent on the military.

As the NYT piece pointed out (as did a series in the Washington Post, see the blog entry "Montgomery County's real jobs problem is that it is an adjunct, not a full-fledged, member of the military-industrial complex") much of the metropolitan area's success in the last decade has been driven by the escalation of federal spending on the military generally and "homeland security" specifically--and this largesse by the way has mostly bypassed Washington the city and is spent in the suburbs and elsewhere in Maryland and Virginia.

The military spending tends to be much greater and has more immediate impact. This accounts for the relatively greater success of Northern Virginia vis-a-vis Suburban Maryland.  As this spending falls off (see "Charleston's economy girds for leaner defense budgets" and "Defense budget cuts hit businesses, localities" from USA Today), there is a greater likelihood of economic decline in Northern Virginia especially.

While all that Aaron writes is true, at the same time the primary economic development priority for the "local" Washington is to work to develop a local economy that is not fully dependent on the "federal government" for success. Right now it mostly is--the real estate market is hot because of the law firms, trade associations, contractors, and federal government agencies needing to be housed.

Eventually (post-grand jury duty), I plan to write a kind of review essay on this subject, in the context of the city's recent economic development "plan."  (Also see "One of the stupidest ideas of all time: "trading" the Washington Redskins for the FBI headquarters.")

Montgomery County's real jobs problem is that it is an adjunct, not a full-fledged, member of the military-industrial complex

In the past I have discussed University of Minnesota professor Ann Markusen's earlier work, The Rise of the Gunbelt: The Military Remapping of Industrial America, assessing the impact of military spending on local economic development.  The book makes the point that much of the "Sunbelt's" prosperity has been driven by military spending.

Of course, the Washington, DC Metropolitan Area, home of the federal government, benefits significantly from federal spending in many ways, and it both boosts and insulates the local economy.  While much of the region's economic activity is federally-based, the type of activity varies in terms of how it may aid the development of new businesses and contractors.

One can argue that the book needs some updating in terms of how military contractors spread the work around most Congressional districts, to ensure continued funding, but also how the increased digitalization of military activity has shifted impact to software and related functions. 

For example the Washington Post series on the rise of the homeland security function ("Top Secret America") outlines how the rise of the National Security State in the post-9/11 environment has significantly benefited the DC region, and more IT-related military contractors (like SAIC) are relocating their headequarters to Northern Virginia to be closer to their clients.

Photo of the Pentagon by James Thresher of the Washington Post.

In the region, Northern Virginia, because it is the location of the Department of Defense, has traditionally benefited from military-related spending, on units of the DOD, on technology and other contractors serving the DOD, and in telecommunications.  Many of these firms are located in Fairfax and Prince William Counties.

Montgomery County is home to the National Institutes of Health, which both funds independent research and conducts research, the National Institute for Standards and Technology, and the Food and Drug Administration, and when the US Government was more involved in satellite communications, having the headquarters of Comsat helped to make the county strong in certain satellite communications activities.

Aerial of the NIH from the NIH Library Flickr collection.

Sure Lockheed-Martin is headquartered in the county, but there are limited number of military-related contractors located within Montgomery County compared to Northern Virginia, and the number of locally-based private companies spun out of the work of NIH and NIST are fewer when compared to the number of locally-based businesses benefiting from military spending.

While there are medical and pharmaceutical related companies based in the MoCo area, the region just hasn't been able to hold its own against San Diego and San Francisco in terms of retaining biomedical related companies and in significantly developing the cluster (see "Human Genome Sciences' sale to GlaxoSmithKline: What it means for the D.C. area" from the Washington Business Journal).

And because FDA is regulatory not so much a research-initiating organization, not adding to knowledge in the same way that research at NIH can lead to new economic activity, it doesn't have the kind of business-building impact that other agencies can have.

In short, while Montgomery County laments that Fairfax County "is more successful" in generating jobs ("Study compares Fairfax, Montgomery by the numbers:Report requested by Leventhal is a ‘tale of two great counties,' Floreen says" from a 2010 issue of the Gazette) and in today's Examiner, "Montgomery lawmaker laments county's sluggish job growth," I don't think that it's necessarily because Fairfax County is a better place to do business or because their policies are so much better than Montgomery County's as much as the county benefits from the clustering benefits (agglomeration economies) resulting from being on the same side of the Potomac River as the Pentagon.

On 26 September 1931, the keel of USS Ranger (CV 4) was laid at Newport News, VA. Ranger was the first U.S. Navy ship designed and constructed as an aircraft carrier. This image shows the launching of Ranger at the Newport News Ship Building and Dry Dock Company on 25 February 1933. National Archives image 80-G-1007392.

As the U.S. military budget contracts over the next decade, this will have disproportionate negative impact on Virginia, Northern Virginia, and Fairfax and Prince Williams Counties, and less negative impact on Montgomery County, although Lockheed Martin's headquarters personnel won't be happy.

It might even be that Maryland military installations at Fort Meade, Fort Detrick, Patuxent, and the Aberdeen Proving Grounds will be less impacted, because of the nature of their "business activity" being more in keeping with the change of the military force structure (unlike say Hampton Roads, which has lots of in-service ships based there).

Rather than focus on comparisons with Fairfax County so much, Montgomery County needs to focus on reshaping its economic environment for a changing future, aiming to benefit more than it does from federal government-related economic activity (as the so-called "Science City" plan aims to do, see "Montgomery council gives the go-ahead to 'science city' plan" and "Science city plan deepens rift between east, west Montgomery" from the Washington Post), while also expanding and extending the breadth of business activity in the county beyond being focused and dependent on the federal government.

The Gunbelt in DC...

I mentioned recently the book The Rise of the Gunbelt: The Military Remapping of Industrial America, published in 1991, in the context of economic comparisons of Montgomery County, Maryland to Fairfax County, Virginia, in the blog entry, "Montgomery County's real economic development problem: it's not part of the military economy."

While both counties are dependent on the federal government for their economic success, I credited the greater proportion of military-related economic activity in Fairfax County as a reason for the difference between the two. In fact, Virginia is heavily dependent on military spending, and if the U.S. does in fact reduce military spending, this could have a disproportionate impact across the State of Virginia, from military installations across the state, to the contractors clustered in Northern Virginia.

Interestingly, DC is staking the future of the redevelopment of the St. Elizabeth's Hospital east campus, around the "innovation economy" surrounding "homeland security."

See "St. Elizabeths: Deal close for Microsoft innovation center at St. E`s" from the Washington Business Journal and this presentation from the DC Deputy Mayor's Office for Planning and Economic Development, SAINT ELIZABETHS REDEVELOPMENT INITIATIVE: “The Chesapeake Crescent Region: The Emerging National Leader in Security Innovation”.

The WBJ article mentions that Microsoft may open a research center at the campus, and the city is trying to get General Dynamics to locate some of its functions there as well. Another recent WBJ article, "Northrop Grumman looked close at St. Elizabeths," mentioned a previous proposal to give the campus to Northrup-Grumman, when they were planning their headquarters move from California to the DC region.

I suppose when the most consistent source of federal spending, other than on social security and medicare, is the military, it makes sense for DC to try to get in on the action. But, it's still somewhat troubling.

Also see these past blog entries:

-- Office Ghettos aren't quality economic development (2005)

-- Enclave development won't "save" Anacostia (2006)

-- Office buildings won't "save" Anacostia (2005)
-- Arson as a(nother) redevelopment strategem (2005)
-- Thinking really really really big for Poplar Point's park (2009)

Montgomery County's real economic development problem: it's not part of the military economy

The Post has an editorial that Montgomery County needs to get its act together in order to compete with Fairfax County, which by comparison has more residents, more jobs, schools that are almost as good, and lower taxes. See "Montgomery loses its edge."

This comes out of an almost two year discussion centered around the results of a report that the Montgomery County Council commissioned, Comparative Data on Montgomery County and Fairfax County ("Report shows how Montgomery, Fairfax measure up" from the Post).

Sure Montgomery County has some real assets. The National Institutes of Health and the National Institute for Science and Technology (formerly the National Bureau of Standards) are fundamental building blocks. It's because of NIH (and FDA) that Montgomery County has a number of biotechnology firms and assets--even though the West Coast remains supreme in this business sector.

Montgomery County has a number of technology companies along the I-270 corridor, plus Marriott (which used to be based in DC) and other lodging companies, and a whole lot of other businesses. (Also see The MD-355 / I-270 Technology Corridor Montgomery County, Maryland: Summary of Research, 2006-2007 from the Montgomery County Office of Planning.)

But Fairfax County benefits I think from being more centrally connected to and dependent upon the military-industrial complex, albeit not manufacturing related--even though Montgomery County does have military companies, such as Lockheed Martin (cf. Montgomery County's attempt to legislate against military spending, "Withdrawn Montgomery measure asking Congress to spend less on wars scrutinized" from the Post), although they are by no means dominant within the county. (Montgomery County used to be a center for the satellite business and technology, when Comsat was a going business, both telecommunications and military related, but as that sector became privatized, the assets were required and facilities left the county.)

A comparison between the counties and ascribing dependence on the military to Fairfax County is a little complicated because of the number of software related businesses based in Northern Virginia, but in large part these businesses developed in relationship to the Pentagon and/or the large build up of telecommunications assets in the area that were in large part developed out of the military's telecommunications needs.

In that piece by Andrew Ross that I mentioned yesterday ("Bird on Fire: Lessons from the World's Least Sustainable City" from Places Journal), he cites a work by Ann Markusen that I didn't know about--these days Professor Markusen is more focused on the economic benefits of arts-related uses--The Rise of the Gunbelt: The Military Remapping of Industrial America.

The basic point of the book is that the Sunbelt's (and Boston's) success was driven mostly by military spending. This is the summary of the book:

Since World War II, America's economic landscape has undergone a profound transformation. The effects of this change can be seen in the decline of the traditional industrial heartland and the emergence of new high tech industrial complexes in California, Texas, Boston, and Florida. The Rise of the Gunbelt demonstrates that this economic restructuring is a direct result of the rise of the military industrial complex (MIC) and a wholly new industry based on defense spending and Pentagon contacts. Chronicling the dramatic growth of this vast complex, the authors analyze the roles played by the shift from land and sea warfare to aerial combat in World War II, the Cold War, the birth of aerospace and the consequent radical transformation of the airplane industry, and labor and major defense corporations such as Boeing, Lockheed, and McDonnell Douglas. Exploring the reasons for the shifts in defense spending--including the role of lobbyists and the Department of Defense in awarding contracts--and the effects on regional and national economic development, this comprehensive study reveals the complexities of the MIC.

It's beyond my skill set to do a full analysis of the economies of Fairfax County and Montgomery County, producing what is called an input-output table analysis, but if one were performed (I got a bad grade in my economics class in college, in my course on international trade, but as the professor pointed out, you can do this kind of analysis on any level of an economy), I would bet that the results would show how much Fairfax County is dependent on military spending.

It's actually scary to consider how much of the US economy is dependent on military spending, how the US spends more money on the military than all other nations combined, and that if the Defense budget is slashed, this will have big implications for the economic success and failure of many communities.

Umm, duh, when military bases close, local businesses suffer

I know that media have to report on what is happening "now", but I remember back to high school, and reading about the impact of military base closures on local economies including the closure of air force bases in Michigan, which had been closed as the effects of the Cold War began to wane and the military no longer felt the need to have as many air force installations across the northern part of the U.S.

So it shouldn't be a surprise that restaurants and liquor stores are losing business now that the Walter Reed Medical Center has closed. See "Walter Reed closes, nearby businesses go bust" from WTOP Radio and the AOL story from 2005, "Military Base Closures and the Towns They Leave Behind."

From the AOL story:

When a military facility closes, the effects ripple throughout the surrounding community as families lose their neighbors, businesses lose their customers and workers lose their jobs. In a thriving city, a closure can be an adrenalin shot to the local economy as hundreds of acres of land are suddenly made available for municipal growth and expansion. But for many communities -- especially in rural or suburban areas -- closure can translate into years of struggle, as municipal planners strain to fill the empty spaces that the military leaves behind.

From the WTOP story:

Kate Singh, co-owner of Mayfair Liquors on Georgia Avenue near the hospital, says when Walter Reed essentially shut down, her business took a beating.

"It's like, you know, a tsunami came," she says. Singh says business is down 75 percent and she spends her days looking at the door. "I'm so overwhelmed. All day long, I'm looking at the door, and wondering is someone walking in here?"

She's had to let three employees go and now mans the store by herself.

The issue is that this was predictable and the impact on these businesses could have been mitigated with advanced planning and programs.

From the Congressional Research Service report, Military Base Closures: Socioeconomic Impacts:

The loss of related jobs, and efforts to replace them and to implement a viable base reuse plan, can pose significant challenges for affected communities. However, while base closures and realignments often create socioeconomic distress in communities initially, research has shown that they generally have not had the dire effects that many communities expected. For rural areas, however, the impacts can be greater and the economic recovery slower. Drawing from existing studies, this report assesses the potential community impacts and proposals for minimizing those impacts.

Granted, over time "DC" will recover greatly from being able to redevelop the military base into a mixed use community. But that will come at some individual cost, to owners of businesses like Mayfair Liquors, who won't be able to survive the 10 to 20 year process that redevelopment will take.

I don't know if the DC Office of Planning and Economic Development asked for mitigation monies to address the loss of business on Georgia Avenue in DC. I did write about this last year, spurred by a blog entry that Casey Anderson of Silver Spring wrote earlier last year. See "Impact of the closure of Walter Reed Hospital on Silver Spring."

I guess I should have considered mitigation issues then...

The Examiner can never resist taking a cheap shot against local government

Yesterday's Examiner's editorial, "BRAC exposes failure of local government 'planning'" is the cheapest of cheap shots. From the article:

The academy study blames "fundamental flaws" in the BRAC decision-making process and "poor communication" between military installations and local transportation authorities. All true, but well-paid city, county and state officials have known about the BRAC relocation for five years -- well before the 2008 economic downturn. They were also told well in advance that the Defense Department generally does not pay for local road improvements. Their collective failure to make critical transportation improvements well in advance of the long-awaited BRAC move is simply inexcusable. Local voters should remember those responsible when the next election rolls around.

What I think is inexcusable is that the BRAC process fails to consider transportation impacts and fails to provide funding to mitigate the transportation impacts and needs it creates. Where's the editorial about that?

First, the BRAC military base consolidation process specifically ignored transportation impacts of changes in the location of military installations.

In fact, I wrote about this as a major problem back in August 2005 ("Military Base Relocation").

Even this Baltimore Examiner (no longer published) article from 2007, "Army informs county of effects of BRAC's population influx," illustrates the problem, as the presentation indicated that as a result of the base consolidations affecting the Aberdeen Proving Grounds, 52,000 more people were expected to relocate to Maryland as a result. This over a 4 year period.

And the Examiner expects the local governments to react immediately and with unlimited funding I suppose? Just because the Examiner wasn't around in 2005 (then it was still the Suburban Journal Newspaper Group) doesn't excuse them from failing to acknowledge the nature and extent of the problems foisted on local governments.

Second, the BRAC legislation limits Department of Defense "responsibility" for paying for any necessary improvements to transportation infrastructure, although funds can be obtained in separate appropriations processes.

Third, this is the classic definition of a kind of unfunded mandate, because changes in job location to more distant and disconnected places increases the demand for new transportation infrastructure.

These evident problems with the BRAC process have nothing to do with the ability or lack thereof on the part of local planners, and everything to do with how the process was structured, both by the Department of Defense and by Congress.

Fourth, even in a well-funded and planned situation, transportation infrastructure, especially of any significance, takes upwards of 8-10 years to be constructed, after the various planning, design, engineering, impact studies, appropriations, contracting, and construction steps are taken into consideration.

E.g., the H Street reconstruction in NE DC is a fast tracked project. Planning for that started in 2003. It's now 2011, and it should be finished next year (if you include other streetcar electrification requirements). That's very good. It's quite rare for transportation projects to go immediately into design and engineering after the planning phase (although the relatively simple improvements in Brookland on 12th Street NE have occurred even faster).

Add 10 years to the 2005 promulgation of changes as a result of BRAC decisions made in August 2005, and you get 2015.

But most of the time, planners are emasculated: BRAC edition

The Post has an article in the Metro section today, "Study: Pentagon should pay for transportation improvements necessitated by BRAC," which states:

The Defense Department has shirked responsibility to pay for hundreds of millions of dollars in transportation improvements required as it transfers thousands of workers to Fort Belvoir, Fort Meade and the National Naval Medical Center in Bethesda, according to a congressionally mandated study released Monday.

I have to laugh.

Below is what I wrote about this on August 20th, 2005. (Later, I did a follow up entry on how BRAC was really about sprawl promotion.) Note the first two sentences of paragraph 3:

My concerns center around the sprawl-promoting aspects of the move. Making Fort Belvoir a bigger regional military center increases car trips because it's not well connected to the current transportation infrastructure.

Do you really need a congressional study to determine if you move lots of jobs from a concentrated place with highly developed alternative transportation modes, to places that are farther out in the region(s), inducing longer trips, to places where the presence of efficient non-automobile based transportation modes are limited, without investing significantly in new transportation infrastructure that there will be problems?

Or are that many people unaware about how things work in real life?

Military Base Relocation

Security personnel checks vehicles entering Walter Reed Army Medical Center in Washington August 25, 2005. A military panel voted on Thursday to close the Walter Reed Army Medical Center, which has treated U.S. presidents and soldiers including Iraq-war casualties over nearly a century in the U.S. capital. (Larry Downing/Reuters)

Today's papers report on the BRAC decisions with regard to various military installations in the Washington region as well as the broader region including "out-state" Maryland and Virginia. Stephen Pearlstein's column "Base Closings are an open door," argues that these moves will help broaden the business mix and lead to longer term health of the local economy by not being so reliant on the military. (This is also discussed in "TRANSFORMING DC'S OUTDATED MILITARY FACILITIES INTO CITY REVENUES" from the NARPAC website.)

More generally, the State of Maryland is a big winner in this process, as the Baltimore Sun reports in "Panel vote would bring over 7,000 jobs to Md.: Base closing, realignment boosts Fort Meade, Aberdeen Proving Ground; State could end up with largest net gain in jobs."

My concerns center around the sprawl-promoting aspects of the move. Making Fort Belvoir a bigger regional military center increases car trips because it's not well connected to the current transportation infrastructure. And proposals to extend Metro to Fort Belvoir and even to Fort Meade in Maryland (suggested by state officials in Maryland) will add to the transportation infrastructure, but in a way that makes the newly connected area more likely to be developed in traditional sprawling patterns.

As far as Walter Reed goes, people are probably right that if the District can get control of this property (a very long process as pointed out by Delegate Norton) there will be a long-term net gain to the city as it is likely that most of the people working at Walter Reed are suburban residents.

In the old days, when people walked or took streetcars to work, most people lived relatively close to work. For example, perusing Census enumeration sheets for the H Street neighborhood for the early part of the last century finds that hundreds of people work for the Government Printing Office, located a short distance away at North Capitol and H Street, or the Bureau of Engraving and Printing, which spun off the GPO, or at private printers that grew up in the area as a cluster of printing skills developed (e.g, the headquarters of XM Satellite Radio was once a printing plant). Today, if a handful of GPO workers live in Greater Capitol Hill, I would be very surprised.

Economic impact of arts-culture events vs. incentives for corporate headquarters vs. building a local economy

Baltimore City had a study done of the economic impact of some of the major events it supports, Artscape--a four day arts and crafts street festival; the book festival (which usually runs during the same time as the one in DC that appears on the National Mall); and a New Year's Festival in Inner Harbor, and found the economic impact of the three events to be $36 million.

See "Report points to city arts' economic impact" from the Baltimore Sun. From the article:

•Baltimore's 2009 Artscape festival cost $860,000 and returned $25.97 million in art and food sales, taxes collected, hotel bookings and other revenues.

•The 2009 Baltimore Book Festival cost $162,000 and had an economic impact of $4.51 million.

•The 2010 New Year's celebration at the Inner Harbor cost $150,000, all privately underwritten, and generated $6.9 million, even though crowds were smaller than usual due to rainy weather.

Interestingly enough, Steve Pearlstein, the Post business columnist, wrote yesterday, in "In scramble for Northrop, the usual foolishness," about why the dog and pony show of jurisdictions showering benefits onto relocating corporate headquarters, specifically writing about Northrop Grumman, which is relocating from Southern California.* He writes:

There's nothing quite like the prospect of landing a corporate headquarters to get the competitive juices flowing among local politicians and economic development officials. ... Never mind that virtually every credible study finds that using taxpayer subsidies to chase after corporate locations rarely pays off. These testosterone-filled contests are never really about money so much as pride and ego and political bragging rights. By the time the competition ends, the benefits from winning have been pretty much bargained away and everyone comes off looking rather silly. ...

For the District, which is looking at a $200 million budget shortfall next year, getting into this bidding war is particularly loony. Virginia and Maryland officials can argue at least that the winner of the headquarters sweepstakes would collect income taxes on all those highly compensated executives, even if they commute home elsewhere. That's the way the tax system works in most places, but not in the District, which is prevented by Congress from imposing an income tax on employees who commute in from Virginia, Maryland or any other state. Without that, it would take decades for the District to recoup the $24.5 million that the mayor and D.C. Council have offered Northrop over the next 10 years.

The reality is that most of the economic studies don't show a significant positive impact on the municipality from such largesse, and yes, with regard to DC, if the people don't live in DC, then the city doesn't generate much in the way of income, other than property tax and income tax only from work conducted in the city property.

Now, you're not going to get me to say that it's better straight up to have cultural events like Artscape with an amazing economic return, and not support business development.

But the real focus for an economic development strategy in DC ought to be figuring out how to leverage the innovation ecologies of the local universities, particularly their engineering, science, and technology departments. Many years ago I read an obituary of an engineering professor who taught at Catholic University. He had created many companies over the years, from technologies he studied and developed at CUA. But he lived in Columbia, Maryland, and that's where the businesses were based.

Blackboard, the software company that develops curriculum-teaching support programs that are used in many major universities, is an example of a company that developed in the city and still remains here. It would be interesting to see where the employees work, because as Pearlstein wrote about the kind of people who work at Northrop Grumman:

District officials are also kidding themselves if they think the accountants, engineers and retired generals who run the defense industry are going to give serious consideration to moving their headquarters to the still largely vacant neighborhood near the new baseball stadium. These are not hip, young, urban pioneers we're talking about -- and in any case, they're likely to be Dodger fans.

It becomes necessary to work to attract the kind of people and companies who see the city and all it has to offer as an asset, rather than as something to stay away from.

The point of the * is that the sad thing about the move of Northrop Grumman from the standpoint of innovation ecologies and clusters is that it demonstrates that now for companies like them, it's more important to be close to where the customer is--in this case the federal government, and it will be easier for the corporate bosses to lobby Congress on programs (Congresspeople like defense spending so long as it gets sprinkled around their various districts) as well as the executive branch agencies--rather than to be located close to the technologists, engineers, and scientists who develop the products.

Military base relocation and sprawl

In honor of Congressman Moran's op-ed in last Sunday's Post about the negative implications of base relocation in Northern Virginia in terms of how the decisions promote driving over transit and other sprawl promoting aspects, "Why Northern Virginia's traffic may be about to get worse," below I reprint (with a couple edits) a blog entry from August 25, 2005.

This paragraph is critical:

My concerns center around the sprawl-promoting aspects of the move. Making Fort Belvoir a bigger regional military center increases car trips because it's not well connected to the current transportation infrastruture.

Clearly, managing transportation impact was not part of the charge in decision making. And as I have said before, in the DC region, the transportation demand management requirements of the Federal Government have some serious gaps, at least as they are expressed in the Federal Elements of the DC Comprehensive Land Use Plan.

Federal facilities, for the most part, should be required to be sited within 0.5 miles of a transit station at the most, and right at the station preferably (see "Pondering the End of a Line" from the Washington Post as one example of why federal facilities should be located immediately adjacent to high capacity transit), primarily subway or light rail (not streetcar), secondarily by railroad or street car, or tertiary by a high capacity bus station. This isn't the case with current regulations, although federal government agencies are required to do significant transportation demand management planning.

Some agencies are more oriented to transit access than others. For example, while the Station Place Development adjacent to Union Station was not welcomed by many H Street neighborhood residents because of design considerations, the location was seen as desirable by the Securities and Exchange Commission, because already more than 50% of their employees used transit, mostly the subway, to get to work. On the other hand, many agencies move farther from the core.


Security personnel checks vehicles entering Walter Reed Army Medical Center in Washington August 25, 2005. A military panel voted on Thursday to close the Walter Reed Army Medical Center, which has treated U.S. presidents and soldiers including Iraq-war casualties over nearly a century in the U.S. capital. (Larry Downing/Reuters)

Today's papers report on the BRAC decisions with regard to various military installations in the Washington region as well as the broader region including "out-state" Maryland and Virginia. Stephen Pearlstein's column in the Post "Base Closings are an open door," argues that these moves will help broaden the business mix and lead to longer term health of the local economy by not being so reliant on the military. (This is also discussed in "TRANSFORMING DC'S OUTDATED MILITARY FACILITIES INTO CITY REVENUES" from the NARPAC website.)

More generally, the State of Maryland is a big winner in this process, as the Baltimore Sun reports in "Panel vote would bring over 7,000 jobs to Md.: Base closing, realignment boosts Fort Meade, Aberdeen Proving Ground; State could end up with largest net gain in jobs."

My concerns center around the sprawl-promoting aspects of the move. Making Fort Belvoir a bigger regional military center increases car trips because it's not well connected to the current transportation infrastruture.

And proposals to extend Metro to Fort Belvoir and even to Fort Meade in Maryland (suggested by state officials in Maryland) will add to the transportation infrastructure, but in a way that makes the newly connected area more likely to be developed in traditional sprawling patterns.

As far as Walter Reed goes, people are probably right that if the District can get control of this property (a very long process as pointed out by Delegate Norton) there will be a long-term net gain to the city as it is likely that most of the people working at Walter Reed are suburban residents.

In the old days, most people lived relatively close to work, and people walked or took streetcars to get to work. For example, perusing Census enumeration sheets for the H Street neighborhood for the early part of the last century finds that hundreds of people work for the Government Printing Office, located a short distance away at North Capitol and H Street, or the Bureau of Engraving and Printing, which spun off the GPO, or at private printers that grew up in the area as a cluster of printing skills developed (e.g, the headquarters of XM Satellite Radio was once a printing plant). Today, if a handful of GPO workers live in Greater Capitol Hill, I would be very surprised.