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Editorial: Promising plan for the Arsenal

Editorial: Promising plan for the Arsenal

Lease plan idea will increase use, revenue

Since the end of the Cold War, when the Defense Department’s cannon orders fell like the financial markets have today, the Watervliet Arsenal has been a shadow of its former self. Despite a federal program designed to reindustrialize the Arsenal by bringing in private businesses as tenants, most of its massive space remains underutilized. That could change with a promising new lease program about to be introduced there.

A big problem in recent years is that buildings have fallen into disrepair as the Defense Department’s maintenance and infrastructure budgets have been cut to pay for the wars in Iraq and Afghanistan. And lease revenues aren’t sufficient to pay for the work because they go first to Washington, where some is siphoned off for other uses, with the rest going to the Army and only about half of that coming back to the Arsenal — a process that takes about two years.

Another problem is that the Arsenal Business & Technology Partnership, a nonprofit organization that manages the private portion, can offer only short-term leases. This prevents businesses from borrowing money to fix up buildings.

The new program, which already is in place at 10 other Army installations around the country, is called “Enhanced Use Leasing.” It offers developers long-term leases on the land (25 to 50 years) in return for in-kind considerations — i.e. renovating or constructing buildings and maintaining them. The longer leases make it possible for developers to borrow money for these costly projects. They can then turn around and lease the buildings to private businesses, keeping the rents.

The Army has roughly 57 acres that it will break into various parcels and seek bids for them. It hopes to get great deals as developers compete to do business in this special, historic facility with its own fire department, security force and wastewater treatment plant.

One of those would-be developers is the Arsenal Business & Technology Partnership, which plans to submit a proposal. The Partnership has done a good job since it was created in 2001. It deserves serious consideration as one of the developers, if not the developer. Let’s just hope that after the Army makes its decision and the program is ready to get under way, a credit market still exists where a developer can go to borrow money.

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