FORT LEONARD WOOD TECHNOLOGY PARK
By Ron Selfors
This article describes the pioneer development of a commercial technology park on an active military installation. This is a unique initiative in many ways that may have great potential at other active military installations across the country. Described are the expected benefits, the procedures followed, the challenges met and the results to date. A comparison is made to other enhanced use lease projects.
In May 2001, a ceremony was held to mark the historic signing of a partnership agreement between the State of Missouri and the University of Missouri System (Figure 1). The agreement put in place the policies and procedures that enabled state participation the University of Missouri Technology Park at Fort Leonard Wood. In May 2002 another ceremony was held when the first building in the park was opened.
This rapidly developing project has immense potential for the university, the region and the Army. The initial, one-story, multi-tenant building (Figure 2) with 18,000 square feet of office, laboratory and classroom space is aimed at technology-based companies that will do business with the schools and laboratories at the fort. The university plans to develop over 100,000 square feet for multi-tenant lease, and lease land for tenant development of another 300,000 square feet (Figure 3). The development is on 62 acres of Fort Leonard Wood, a 61,000-acre Army post in Missouri’s Ozark Mountains.
Regional Economic Development Stimulus
This initial project is a solid start towards a 250-acre park envisioned by proponents. As the park grows, local proponents expect the park will support the Fort’s training and research missions, provide more jobs for military spouses and area residents; encourage investment in the region; and promote more efficient use of the installation’s currently underutilized utilities. Eventually, the new lease rental stream will allow for upgrading of the Fort’s infrastructure. It is not just Army officials who have these high hopes; the state of Missouri and the University of Missouri System have signed on as enthusiastic partners.
The concept is somewhat similar to that at Brooks City-Base in San Antonio, where the Air Force is transferring Brooks Air Force Base in total to the city. The city will then develop the property for several different uses, including a 150-acre technology park. The Air Force will continue operations at Brooks, leasing back from the city just what is needed for military operations.
There are some key differences, however. The Department of Defense is only long-term leasing a small portion of land at Fort Leonard Wood - no structures and not the entire installation. Brooks needed special federal legislation to make it happen; Fort Leonard Wood’s effort is under 10 USC 2667, a leasing provision any installation can use. Moreover, Brooks is in the heart of a major city, and its developers are hoping the City-Base project will catalyze revitalization of a major swath of south San Antonio, which has long needed an economic boost. The property has substantially more value per square foot than the land today at Fort Leonard Wood.
Although Fort Leonard Wood sits in the middle of a region of over 200,000 people, the region is rural (Figure 4). The closest city of substantial size to Fort Leonard Wood is Springfield, MO., roughly 75 miles away. Nonetheless, Missouri leaders expect the technology park will boost statewide efforts to become a magnet for life sciences-related business.
New Creative Army Facility Outlook
From the Army garrison’s leadership perspective, “we are kind of in the right place at the right time.” The Fort, which had served largely as a training post since opening in 1941, saw an influx of new activity as a result of the 1995 Base Realignment and Closure decisions. The Army’s Engineering School was joined by the Chemical Defense and Military Police schools to form what is now known as the Maneuver Support Center (Figure 5). The Marine Corps, Air Force and Navy send personnel there for training as well, making the Fort home to the U.S. military’s largest joint service training mission.
In addition to training, the installation has important science and technology development missions as combat developer and battle laboratory for chemical defense (includes nuclear, biological and chemical), engineering (includes civil, geospatial and environmental) and military police functions across the Army.
The Army embraces the fact that the park enables its corporate and academic partners to collocate with the military at Fort Leonard Wood. The resulting synergy is improving the Army’s ability to address the critical science and technology challenges it faces today as it transforms into the objective force of tomorrow and addresses the urgent needs of protection and security today (Figure 6).
Despite the recent mission growth, the installation’s water, sewer and other utilities are operating only at about half their capacity. Allowing civilian business and research activity on the post would increase the number of entities paying to use the utilities and helps the base’s bottom line.
Moreover, much of the industrial side of the post, including its public works area, was built as World War II-era wood structures. The Army had made it clear that the inefficient infrastructure did not have a high priority for federal budget decision-makers. The resulting local response is: “If the Army Budget can’t handle the needed infrastructure improvements, the community and the local Fort will have do it ourselves.”
Fort Leonard Wood hired the Logistics Management Institute (LMI), a McLean, Virginia.-based consulting firm, to do a feasibility study and possible business plan for an industrial or technology park. Under the LMI approach, as the park builds out to about 250 acres, the income stream to the Army from the ground lease will support most or all of the cost for the Army to lease a new industrial operations facility within the park. The new facility would allow the post to demolish most of its remaining WWII wood buildings, significantly improve effectiveness of its logistics and public works operations and reduce by half the needed facility space.
The consultant determined that a business plan could be developed that would benefit the Army, a developer and tenants in the proposed park. The consultant also said the post’s rural location made finding a private-sector developer for the initial project unlikely.
Public entities, however, might take an interest. Their return of investment expectations would be less and they would share many of the non-financial objectives that the installation has (e.g., new jobs). Public entities, in fact, did take an interest – specifically, the University of Missouri System and the Missouri state government.
The university system has a major campus 25 miles away in Rolla. The University of Missouri–Rolla is home to a nationally-ranked engineering school and one of the state’s four Innovation Centers, which provide technical assistance and incubation services to new and expanding technology-based businesses. The installation itself was no stranger to educational pursuits, hosting education and training programs from seven different colleges and universities. Moreover, the state previously collaborated with the university system to establish the Missouri Research Park, which brought 15 companies and more than 1,700 jobs to St. Charles, roughly 30 miles northeast of St. Louis. Because of this success, state and university officials were quite willing to consider the concept of a technology park in a different part of the state.
The park at Fort Leonard Wood meshes nicely with the state’s goal of developing its life-science industry clusters (Figure 7). Officials had targeted St. Louis for development as a world-class animal and plant sciences center and Kansas City as a world-class health sciences center. The state decided the Fort Leonard Wood/Rolla region, with the Maneuver Support Center, the University of Missouri Rolla and a major element of the United States Geological Survey at Rolla, could become a new center for the environmental science industry.
The Rationale for the Technology Park
According to Rick Prugh, director of the Missouri Enterprise Innovation Center in Rolla, the university has abundant research and development expertise. In addition, the Fort itself had a good supply of subject matter experts. In effect, “The Fort personnel represent the field users of the technology,” Prugh pointed out.
In addition, the post already does business with numerous contractors in the region. An on-post technology park would promote easier interaction among the researchers, the businesses and their customers. “If I was the head of a business wanting to supply or research needs for the military in engineering, military police, bio-chemical defense, maneuver support or homeland security, I’d put a business development office in the tech park,” said Prugh.
The park also provides the Army with a surge infrastructure capability to support new or expanding missions. The traditional military construction program often takes five years or more to add infrastructure to an installation. The park provides the capability for the Army (or other federal agencies) to rapidly lease needed office, classroom or laboratory space and implement a new mission well before the military construction program can react. Once military construction program space becomes available, the space in the park can be used for other new missions or for commercial/academic use.
What about post-September 11 security concerns? Like most other U.S. military installations, Fort Leonard Wood no longer allows civilian visitors simply to come and go as they please. But, this change is a bonus for technology park tenants, who might have security needs of their own. Many civilian research parks and manufacturing centers have security provisions equal to or higher than that of the post.
Structure of the Technology Park Lease
The consultant study recommended setting aside 250 acres for the technology park. But when Fort Leonard Wood asked the Army for permission to lease that amount of land, Washington balked and suggested that it was too much too soon. At that time, the Army and the Department of Defense were working with Congress to get enhancements passed to the law that allows the services to lease non-excess land to non-federal entities (10 USC 2667). The Army did not want to jeopardize this effort. Instead, the Fort was permitted to lease 62 acres to the University of Missouri System for 33 years, with an option to extend the lease another 33 years.
Under the deal drawn up by the various players, the Army initially receives a base rent of $500 per acre per year, plus 7 percent of net revenues from subleasing, defined as gross revenue minus allowable expenses. The rental rate is to be reviewed every five years. As the park matures, the income stream is expected to become substantial. With the enhanced use leasing provisions now available under 10 USC 2667, the Fort intends eventually to expand the park to the full 250 acres and lease substantial warehouse and other space in lieu of cash payments.
Structures in the technology park must follow Fort Leonard Wood design guidelines and covenants. Permitted uses include office, education, R&D, light assembly and light warehouse/distribution. Heavy manufacturing and polluting industries are banned.
The university system and the state each committed $2 million toward the deal. The university is the managing partner, entitled to 55 percent of any returns on investment. The other 45 percent goes to the Missouri Technology Corp., a governor-appointed quasi-governmental organization created to manage the state’s investment in economic development initiatives like the technology park.
The university maintains the park’s common areas and public infrastructure. Tenants leasing land for their own buildings are responsible for all taxes, insurance and ground maintenance of their sites. These costs are included in the rent paid by those leasing space in buildings constructed by the university.
Tenants are moving into the park’s first building. Features include broadband network access, close proximity to interstate highways, rail transport and a regional airport, great educational opportunities, and — not to mention — quality life in the country. Fourteen tenants are currently in the first building and more are lining up..
Because the first building is filling up fast, plans are underway for the second building. Since the first building has proved the market exists for tech park space at Fort Leonard Wood, this second building provides an opportunity to begin the transition to private investment. The first building is totally owned by the university and the state. There is no debt to service. Since it is now an operating facility, the university is seeking to sell the building to a private owner-operator. The proceeds from the sale will be used to finance the second building in whole or in part. Private parties will be given an opportunity to invest in the second building as well. Over time, it is envisioned that the park will fully transition to private ownership.
Job Creation Goal
Another important feature is the available workforce. In fact, one of the reasons post officials have been keen on developing the technology park is the area’s current shortage of jobs for the spouses of installation personnel. For instance, a 1997 study by the Families & Work Institute showed that about 78 percent of all U.S. married couples have dual incomes. For military families alone, the Bureau of Labor Statistics indicates that in the military the percentage of working spouses is much lower, at 58 percent.
But, at Fort Leonard Wood only 45 percent of families have two incomes. To meet just the military average, more than 330 jobs would need to be created. To meet the national average, more than 850 jobs will be needed. Since the technology park obviously cannot limit hiring strictly to military spouses, the number of new jobs will eventually need to be higher still.
Many employers nationwide have come to appreciate the benefits of locating near a military base. The spouses tend to have good skills and work habits. They already have access to health care and childcare services through their spouses’ military benefits. Plus, the region around the Fort tends to appeal to military retirees who also have benefits and may be looking for second careers, thereby increasing the available workforce further.
In the past, some in the business world balked at dealing with the military, state government and university systems – three types of entities all infamous for their bureaucracies. “Starting the park was like trying to turn around three Titanics,” Prugh joked. “But the good news is, now that the master lease is signed, it’s very easy for actual tenants to rent space or land from the university at Fort Leonard Wood.”
Fort Leonard Wood provides a good model for those installations that are not located in urban areas and that do not have a lot of underutilized, but high-demand facilities available for leasing. Keys to their success have been a willingness to partner with their state and its university system and to have a shared vision.
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Ron Selfors is a project director for Missouri Enterprise, a business and economic development, not-for-profit corporation headquartered in Rolla, Missouri. Ron previously served for nine years as the deputy garrison commander at Fort Leonard Wood. He can be reached at (573) 329-8522 or at rselfors@mebac.umr.edu.
Figure 1. Missouri Governor Bob Holden (seated left), University of Missouri System President Emanuel Pacheco (standing center), and Fort Leonard Wood Commander, Major General Andy Aadland (seated right) sign and witness the historical agreement between the State and the University that enables the technology park initiative at Fort Leonard Wood.
Figure 2. The first building in the Technology Park.
Figure 3. Park Master Plan
Figure 4. The Fort Leonard Wood Region.
Figure 5. Large DOD installation with
major financial impact in State
Figure 6. Major Science and Technology areas
at Fort Leonard Wood.
Figure 7. Fort Leonard Wood is the Environmental
Sciences Center for Missouri.
