Baseless Concerns

By James Kitfield and National Journal

April 14, 1997

LONG BEACH, Calif.--Once the Cold War was over, the Pentagon began tightening its belt. Scores of military hardware contracts were scrapped or drastically cut back. Military bases that for generations had made scores of American cities and towns virtually recession-proof were suddenly shut down.

No other city in America was hit harder by the Defense Department drawdown than this coastal city. Sharply reduced orders for the military aircraft assembled at a nearby Douglas Aircraft Co. plant cost the community 30,000 high-paying jobs from 1990-94. With the closing of the Long Beach Naval Station in 1991 and the Naval Shipyard four years later, nearly 26,000 more local jobs evaporated, forever altering Long Beach's image as a cozy Navy town.

"Every city in the nation has been forced to adapt to change, but few as fast as Long Beach," Mayor Beverly O'Neill said in an interview. "We faced a crisis." In just five years, the city lost nearly $1.7 billion in wages and contracts and $4 billion in economic activity. Only four states, local officials say, have lost more in the current drawdown than the city of Long Beach alone.

Compounding Long Beach's problems were California's deep recession of the early 1990s and the spillover from the 1992 riots in neighboring Los Angeles. A steady flow of immigrants from Asia and Latin America, many of them unskilled, have settled here, creating social and economic strains. The city received another blow in 1992, when the Walt Disney Co. scrapped a shoreline development plan and gave the city back the keys to the Queen Mary, a local landmark that has never clicked as a tourist attraction and is now said to need a $40 million renovation.

Progress on converting the Naval Station to civilian uses was slowed by a legal action stemming from concerns about the destruction of historically valued buildings. And although the local Harbor Commission voted unanimously last month to proceed with a 145-acre, $200 million cargo terminal on a waterfront site at the former Naval Station, congressional and local opposition to leasing the facility to the China Ocean Shipping Co. (a Chinese-owned container shipping line that has operated out of Long Beach for 15 years) has held up that project as well.

Still, the early stages of Long Beach's response to the Pentagon's cuts have been successful. Ocean Blvd., which is lined with lush palm trees and gleaming office towers and hotels, hardly evokes fears of urban decay. Tourists stroll at water's edge among the shops and restaurants of upscale Shoreline Village and beside the downtown marina. Nearby is Long Beach Arena, new home of an International Hockey League team.

Next door is the massive Convention Center, which underwent a $100 million facelift in the early 1990s and a centerpiece of the "new" Long Beach. Just to the west, crews are hard at work on the partially built Aquarium of the Pacific, a $150 million gamble that city officials hope will anchor a revitalized Queensway Bay waterfront, a development modeled after Baltimore's successful Inner Harbor.

To help jump-start the town's efforts, the Pentagon's Office of Economic Adjustment chipped in $2.5 million to help pay for a blueprint for converting its naval installations for civilian use. The city has made plans to replace a naval hospital with a retail center, and is already well on its way to converting the naval housing area to a high school, federal Job Corps center, research facility and transitional housing area and training center for the homeless. With these and other investments--a total package of $3.5 billion in public and private funds--nearly in place, the town hopes by early next century to have replaced its nearly 60,000 lost defense-related paychecks with 85,000 new jobs.

Long Beach's rebound may hold important lessons for other communities whose bases and defense plants appear on the Pentagon's hit list. After a military facility is targeted for closing, local politicians have rarely failed to lament that their town is doomed to become an overgrown ruin. In general, though, communities that have had the most difficulty adjusting to cutbacks and closings, many authorities say, are in rural areas.

"Much as with real estate, the three most important factors in economic redevelopment are location, location, location," Paul Dempsey, director of the Pentagon's Base Closure and Community Reinvestment Office, said in an interview. Long Beach's experience is all the more notable because it appears to be the rule rather than the exception.

By James Kitfield and National Journal

April 14, 1997