City, Base Team to Secure Kelly's Future

For city leaders, the loss of San Antonio's largest employer was devastating news.

But the base and city quickly regrouped. Determined to make the best of a bad situation, military and civilian leaders created "a great opportunity for San Antonio" economic development, said Paul Roberson. The city selected Roberson to lead the effort to transform Kelly into a major aviation and distribution hub. The primary goal: Save Kelly jobs.
 
Keeping jobs at Kelly became possible when the administration decided to use Kelly as a test case for privatizing part of the work force there. Responding to the opportunity, a local citizens committee created the Greater Kelly Redevelopment Corp., a public, nonprofit organization with Roberson as its executive director.
 
In turn, the base appointed longtime civilian employee Tommy Jordan to direct privatization and realignment of Air Force units there. Jordan's group began working closely with Roberson's team to ensure Kelly not only remains a major employer but could, in fact, increase in size and importance.
 
The cornerstone of their plan is privatizing, in place, the San Antonio Air Logistics Center. The center employs more than 1,200 tradesmen and justifies thousands of other jobs in support organizations on Kelly. Under base realignment and closure procedures, the center and acres of warehouses belonging to the Defense Logistics Agency will close, and the Air Intelligence Agency, Air Force Reserve's 433rd Airlift Wing, the Texas Air National Guard's 149th Fighter Wing and Kelly's runway will realign to Lackland.
 
By law, all closure and realignment actions must be completed by July 13, 2001 -- six years from the date of Clinton's announcement. In the interim, the military and civilian organizations began complying with legal requirements -- environmental impact studies and reuse plans -- and hoped their vision of a bright future would materialize.
 
"We didn't waste any time [after the base realignment commission announcement] to begin planning Kelly's future," Roberson said from his office on Kelly property. "We brought on a team (a consortium of companies subcontracted by EG&G, a major defense contractor) to execute our reuse plan. We worked with the base to draft the plan as quickly as possible." Kelly completed the draft reuse plan in November, the first step toward the eventual transfer of all property to the local redevelopment authority (the DoD term for Roberson's corporation).
 
A high-tech company that has managed other federal properties, EG&G eventually will conduct marketing and leasing negotiations to refill the vacated base. Anyone visiting Kelly now, however, would have little reason to believe it's on the verge of shutting down.
 
"Not a lot has changed, yet," Roberson said. "But there already were empty buildings, and we moved quickly to bring in new employers." The corporation leased an empty hangar, then subleased it to Pratt and Whitney, which will use the hangar to upgrade engines on F-16s the Air Force is selling to the Kingdom of Jordan.
 
Because East Kelly, a 400-acre property adjacent to the main base, already is largely empty, the corporation was able to entice Railcar America, a rail car repair company, to lease property there. As part of the agreement, the company also will repair and upgrade rail lines coming into Kelly from a nearby Union Pacific switchyard.
 
By summer 1997, Kelly officials will know, however, if their most prized possession, the C-5 maintenance depot, will remain there. The Air Force will award the contract for privatization of the maintenance depot in July or August. Bids are public and private. If a public bidder wins-- even another defense depot -- the work most likely will leave Kelly. A winning private bidder would probably do the maintenance work at Kelly and hire mostly Kelly employees to do the work.
 
"The potential exists not only to have government work being done here by contract, but also to take advantage of the excess facilities to bring in commercial work," Roberson said. "If we do this well -- in partnership with the military -- we could be better off than if Kelly had not closed."
 
Roberson's goal is to create or retain at least 21,000 good-paying jobs at Kelly by the end of 2006. One roadblock to realizing this goal is the federal 60-40 law, which says only 40 percent of federal jobs at military depots can be outsourced or privatized.
 
"We need some relief from that law for the full workload at Kelly to be privatized in place," Roberson said. "Privatizing C-5 maintenance won't be a problem, and we can probably privatize some of the engine repair jobs here, but we won't be able to privatize as many as we'd like to without some modification of the 60-40 law."
 
Last year, Congress defeated a measure that would have eased outsourcing restrictions at maintenance depots. The current session most likely will readdress the issue, Roberson said. "I think it's unrealistic to expect a full repeal," he said, "but some modification -- 50-50, perhaps -- is realistic."
 
Meanwhile, Roberson said he's optimistic Kelly's facilities will attract private companies. "One of the things we hear from industries -- that attracts them to Kelly -- is the abundance of excellent facilities," he said. "We've got the largest free-standing hangar in the world, sophisticated machine shops, labs and foundries and modern warehouses. We've also got a lot of old buildings that could be torn down and replaced, plus a lot of open land ideally suited for construction. In fact, we anticipate a construction boom over the next several years, as we market East Kelly for light manufacturing, warehousing and other kinds of industries."
 
The Air Force will retain ownership and operation of the runway after Kelly closes. However, the city worked out a joint-use agreement with the service. Commercial aircraft may use the runway by paying the Air Force landing fees. Use of the runway, rail connections to the base and an excellent highway system that surrounds Kelly should also attract commercial enterprise, Roberson said. It's part of what feeds the city's vision for Kelly's future.
 
"In 2006, there's going to be a thriving aviation maintenance complex with 110 percent utilization," Roberson predicted. "The Defense Logistics Agency complex will be replaced by a multimodal distribution center that will serve as a staging center for trade between North America and Mexico. Trade will come and go via truck, rail and air. We'll have close linkage with the Port of Corpus Christi [120 miles south of Kelly] and an unending line of trucks and rail cars between here and the port.
 
"East Kelly will have been developed as an industrial park, with a combination of light manufacturing and warehousing. And the middle area of the base will be a support area for all companies involved, with recreation areas, dining, service facilities and administrative offices."
 
Jordan shares Roberson's vision and enthusiasm for Kelly's -- and San Antonio's -- future. "We have the opportunity to move San Antonio into a totally different economic structure than it has had," he said. "The city's economy historically has been built around tourism and the military. If we can convert Kelly into a major inland port and aviation depot, we can make a major shift in the economic basis of San Antonio" -- and new life for Kelly, he added.
 
"As we go through the BRAC process, our objective is to make sure we have relatively the same number of people driving to work every day on Kelly, regardless of whether they're federal or private sector employees. By creating new jobs, we'll be able to maintain that human level, and I believe there will not be any significant period that we have a large number of facilities that aren't used."