Since early in 1973 our commission has been dealing with the real problems caused by the Federal Government when the Defense Department declared four major military bases in the Commonwealth of Massachusetts excess to its needs. The result was unemployment for thousands and severe additional economic dislocation for the communities adjacent to these bases.

Despite the fact that our commission believes it has been working effectively with volunteers from local communities to cope with the effects of this unilateral Federal action, we certainly find it ironic that in the time of the worst unemployment in decades we must re-state the obvious and make the argument that H.R. 2532 is valuable because it puts jobs on a par with parks in the priority system of uses for surplus national property.

We learned that buildings can be transferred without cost if they are to be used for educational or health purposes. And that is commendable and, indeed, helpful.

We learned that property to be used for streets and public highways can be transferred without cost, and that is a benefit of value.

We learned that land for parks or recreation purposes or, even, for historic preservation, can be transferred without cost. And that, too, is a significant form of Federal assistance.

The only thing the Federal Government cannot do is remedy the ill it caused in the first instance. It cannot transfer land or buildings or other property, even at reduced cost, in order to assist in economic redevelopment of the communities which it has abandoned as no longer useful in the Pentagon's planning.

I certainly don't want to arouse the passions of the educators or the medical fraternity or even, heaven forbid, the bird-watchers-by suggesting that the Federal Government revoke its support of these important activities. But surely, if we spend untold millions in unemployment compensation, if we spend even more millions in welfare benefits, if we provide program upon program of direct Federal aid to initiate small business or to open up opportunities for minority business enterprise, surely, we can also make a modest contribution to creating jobs through the expedient offered in the bill before your subcommittee. It is especially appropriate to provide this aid when the Federal Government itself has caused the unemployment by its own direct action in the first instance.

The bill doesn't even require the government to give the land away. It simply provides a mechanism for discounting the price in order to encourage economic development-a fancy phrase that means putting people to work and putting land into tax-paying, productive use again.

This is hardly a radical idea. One of the more recent examples of Federal action to accomplish the identical purpose was the enactment of urban renewal legislation in 1947. The principal trust of that statute was a Federal subsidy to write down the cost of land so that it might be redeveloped by enterprises providing jobs and taxes and other economic benefit which provide, in turn, enormous benefit to citizens as well as to their cities, their states and their Federal Government.

As others testifying today will have told you, Massachusetts and Rhode Island together suffered the loss of thousands of jobs in these closings. In both states, political leaders at the state and local level moved with remarkable speed, once it was clear that the closures were inevitable, to counteract the impact of these job losses. Immediate plans were developed to try to convert the former military installations to economic and civilian uses. We were all appalled to learn that the present requirements of Federal law make such conversion difficult, if not absolutely impossible.

The law now requires a market test for any re-use of a commercial or industrial nature. That test is a highest and best use appraisal. What is the highest and best use for a massive old dry dock? For a 380-acre nuclear weapons bunker farm? For a 90-acre hill squatting on top of an ancient unitary utility system, in a city so poor that it hasn't been able to build a new school since the early 1900's? Shall Chelsea, Mass., simply watch helplessly as the top of that 90-acre hill gets carted away for fill, and a petroleum tank farm rises up to shut Chelsea residents off permanently from the Boston harbor? Is that rational economic development?

The simple fact is that "as is," an old military base is not a good investment for a private developer in most instances-although it might be all right for a land speculator or warehouse or storage user. For any serious job intensive reuse, the bases have too many expensive but now useless "improvements" which

must either be replaced or removed. This means that constructive redevelopment, if it happens at all, must be undertaken by the public sector. To the extent that this is the case, requiring a public entity to pay a "highest and best use" value makes no sense at all.

I can assure you, out of the experience of our commission-all of them very practical men and women (indeed, half of the commission is made up of members of the State legislature) from every walk of life in the Commonwealth of Massachusetts-that no single action by the federal government is more desperately needed to provide successful re-use of these properties than the economic redevelopment discount provided in H.R. 2532. Let me cite just one example from our own situation.

The South Boston naval annex is a magnificent piece of property in terms of its location and in terms of its potential for industrial re-use in an intermediate period which looks to development related to the oil industry, and, hopefully, to restoration of New England's fishing industry. Magnificient as the property is, it requires major investment to bring it to a point of utility and compliance with environmental standards which the Federal Government as a user was never required to meet. The Navy, since it had long sought to close the base, did little or no maintenance during the last 10 years of its use of the property. Major repair is required. Major demolition is required if the yard is to be used for other than Navy purposes. Major new facilities must be created-either by private sector investors who expect to make a profit after such investment-or by the public sector if it is to attract users who will provide long-term economic benefit. Renting a shell building as a temporary warehouse is little help in terms of jobs, nor in terms of repaying the cost of the property plus repair and reinvestment.

Yet, when we seek to negotiate price with the General Services Administration, we are told that the statute requires an appraiser to set a fair market value on the property-valuing it at its so-called "highest and best use"-in excess of $5 million. We know, just from cursory inspection, that bulkhead repair alone adds $5 million to that cost. Even at public borrowing costs (which are usurious in today's unstable municipal finance market), it is at best a gamble to purchase the property. And, if the gamble is lost, the taxpayers of Boston, or of Massachusetts, must pay the consequences of an action taken by the Pentagon in the name of all the taxpayers of the United States.

How much more practical it would be to arrange for a purchase at a discount of up to 75% from fair market value so the people of Boston can get jobs, so the property can go back on the local tax rolls and provide revenue for city services without additional Federal funds being required, and indeed, provide Federal revenue through the taxes paid by employed working people.

In Massachusetts, in order to support local communities which are committed to converting former military property to economic re-uses, our legislature this year passed-and Governor Dukakis signed-a bill creating a new state land bank, authorized to, borrow up to $40 million on the full faith and credit of the Commonwealth, to purchase and hold these properties. Even with this assistance, large additional local subsidies are likely to be required before these sites are fully marketable for job-and tax-producing re-uses.

The discount provision of H.R. 2532 would ease the local public financing burden on these properties even further. Moreover, it would do so at no real cost to the nation at large. In fact, the revenues from the land sale are not used either to reduce the current year's Federal deficit or the accumulated federal debt. They are put into the land and water conservation fund where they are used for-among other purposes-acquiring more federal land.

To re-state this point, because it is an important one, the bill has only a relatively small impact on U.S. taxpayers as a whole since no federal appropriation is required to implement H.R. 2532, except in its retroactivity provision. Indeed, if a local community such as Watertown, Mass., or if a state such as Massachusetts must borrow to purchase federal property, the Federal treasury loses in two ways: the subsidy built into the federal tax laws to support tax-exempt public borrowing, and the additional deduction from Federal taxes taken by citizens for their increased state and local taxes to cover the cost of the borrowings by the state or municipality involved.

Although this point does not apply equally to the retroactive discount provisions of the bill, it is still a minor cost to cover a major public benefit. Take the case of Watertown, which purchased 57 acres of the old arsenal property for $5.5 million some eight years ago for planned industrial re-use. Watertown found. soon after this purchase, that there was no market for such re-use for much of

the site. Citizens of Watertown, paying Federal taxes and living in this small community have been paying this debt off ever since through local property taxes, and the money was not even used to reduce their portion of the federal debt.

Watertown now sees an opportunity to put a portion of this site to valuable public use. Were it acquiring the site now, that use would be subject to a discount. Suppose that the Federal taxpayer at large must now experience the impact of a small appropriation to reimburse Watertown?

Surely that was originally intended when Congress provided public use discounts for surplus land. Is Watertown to be punished now because it tried-and failed because of the tremendous handicaps which H.R. 2532 would rectify-to create economic opportunity? No one can seriously assert that the Constitution requires Congress to take vengeance in such circumstance.

Let me thank you for allowing me to testify today, and let me urge you to report this bill favorably. It will be an enormous help to suffering local economics, and it will rectify a terrible imbalance of priorities in the present Federal property statutes.

Mr. RANDALL. I hope you will forgive me. I referred to the city of Albany as being in New York. I just noted it is in Georgia. Please pardon me.

I believe you are next, Mr. Roos, yes, sir.

Mr. Roos is the city manager of Albany, Ga., and Mr. Clifton represents the chamber of commerce. Mr. Clifton is accompanied by Mr. Roos, or is it the other way around?

STATEMENT OF LAMAR CLIFTON, EXECUTIVE VICE PRESIDENT, ALBANY CHAMBER OF COMMERCE, AND S. A. ROOS, CITY MANAGER, ALBANY, GA.

Mr. Roos. Mr. Chairman, we are grateful for the opportunity to present the position of our local governments, looking more from one local government's viewpoint than from the broad spectrum that you have heard from the Federal agencies or even from the State agencies with regard to H.R. 2532.

We are speaking on behalf of the chamber of commerce of our community and the county commission. We are the sole municipality within that area.

We have supported the general principle that is expressed in this bill from the very beginning. Of course, we have presented some small amount of written testimony with some statistical information. Rather than presuming anything about the quality of our text, especially against the people who have spoken before, I think we should possibly just highlight, if we might, the notes and stand ready, from the local government's position, to answer questions, if that would be in order. Mr. RANDALL. I think so.

Mr. Roos, I will have one or two questions. We have had an enumeration of the closures in Massachusetts. Are you down on the gulf or on the Atlantic? Where are you? Did you have a naval base closed or what was it?

Mr. Roos. Yes, sir. We had one of the very few inland naval bases. We are actually in the center of the southwest quadrant of the State. We have only Flint River, which leads about 100 miles away to the gulf.

Mr. HICKS. IS Dawson Mathis your Congressman?

Mr. Roos. Yes. I understand the Congressman will enter testimony into the record in behalf of this bill.

Mr. RANDALL. Let me assure you of the efficiency of your Congressman. He has already spoken to me as persuasively as he could under the circumstances. He said, Bill, you have just got to do something for those folks.

Can you summarize your statement for us with a little more detail? Go ahead, sir.

Mr. Roos. Yes, sir.

Mr. RANDALL. You have a lot of attachments here.

Mr. Roos. Our community, up until the time of the closing of the naval air station, over the last 40 years, has shown steady and consecutive growth. This was the first setback our community has had, when the naval air station pulled out.

Specifically, the 1970 census attributed 5,300 people to the base and more particularly in the community so far as productive jobs there were 3,200 military jobs and about 300 civilian jobs at the time of the announcement. Both of these numbers tapered, of course, in the process toward the actual closing some 16 months later.

Mr. HICKS. I venture to say that this is the first time that Georgia. has ever been affected adversely by any military decision since 1913. Mr. RANDALL. The judge will know because we both serve on a committee known as the House Armed Services Committee.

What did they call Mr. Vinson? The fox? The swamp fox?
Mr. HICKS. I don't know.

Mr. RANDALL. The place was about to sink down there. It was just literally about to sink. You were saved by that dear brother's retirement from Congress.

Go ahead.

Mr. Roos. Our situation by the loss of this base affected the local economy very perceptibly. There were statistics that we enclosed showing everything from school attendance on down.

The community built over 30 years on the basis of a base. The school population estimated daily attendance dropped by 1,959 students when the base was actually closed. That is just one measure.

Retail sales in the community, even noting the last major unit leaving, dropped very perceptibly. That is in the statistics also. We had a situation wherein we had a change from the first quarter of 1974 when the unit was still there to the first quarter of 1975 of 11 percent decrease, whereas the State as a whole experienced a 1.4 percent decrease. In our trade area, that is a massive effect.

Everything in the community was affected. Main telephone lines in the community decreased and only now are starting to increase back to the level they were at the time of the announcement.

In the public hospital, which is one of two in the community, we have not gotten back to the level. Incidentally, our public hospital did support the Navy beyond the extent that it was able to handle cases.. among other things handling all major surgeries and particularly all

obstetrical considerations.

Our community grew to fit the base in some regard. For instance,. a very large apartment complex in consideration for a relatively small southwest Georgia town. As of the date of the closing of the base, there were 1,160 housing vacancies and at this time there are 1,188.

The unemployment in the local county has taken very dramatic steps, step by step, as the occurrences took place. This shows the rela

tionship of those people from the community, both the base workers employed at the base and the military personnel, and also in the census loss.

All this reflects in the step-by-step changes in our employment situation.

The site is now partially in use and would remain so if that 194 acres of the 2,871 acres will be retained by the U.S. Marine Corps and housing for their facility.

Of the remaining 2,677 acres, a large part was originally donated by the community, first by lease and then by deed and in 1951 by deed removing reversions.

Mr. RANDALL. I want to ask you about that a little later on. That is important. You are in a very different category. You have actually given this land to the Government at no cost. Then you did have a reversion. Now you have turned around and knocked out the reversion so you gave it to them lock, stock, and barrel, haven't you.

Mr. Roos. Yes, sir.

Mr. RANDALL. That is something that I suspect is not true of many other cases around.

Mr. Roos. Mr. O'Neill's bill, as we see it, is not necessarily a cure-all. In the wisdom of Congress, it certainly may have various corrections. But it is the first one that speaks, as we see it frankly, to our situation.

There is a lot of language about transition of ex-Defense property to productive civilian use, but we feel that this bill is the first one that really allows us to get into economic reuse at a practical level.

We have looked at the land extensively. We have done some estimating on the cost of development of some 867 acres of would-be economically reusable land and in this we find that we face a cost in the realm of $2 to $2.5 million.

If, on those same 800 and some acres, a fair market value were placed on land that we have already bought once but cast our title aside for the good, we felt, of the country, the buying of that would add no telling how much, possibly three-fourths again of the cost to proceed into economic reuse, for the community.

We have proceeded in the areas of no cost acquisition in recreation. We are working toward that end in airport transportation. We have negotiated for two of the utilities on the base. We are applying for the water and sewer.

The school system has gotten into it.

We are, of course, not in the position of really considering the retroactive features of this bill because we are fairly fresh into the game, but have to note that in our discussions with GSA, if we were to acquire properties that certainly we would only make a downpayment and then we would have a period to be jointly determined, possibly up to 20 years, to pay.

Certainly, if there were a retroactive situation, maybe the remainder could be excused. We understand a great many bases were done that way according to the GSA spokesmen who have discussed this with us.

Mr. RANDALL. You are leaving that open, that x figure, the undetermined amount up to 20 years to pay in and some forgiven. You do not know what the sum is. You are not saying it would be 25 percent yet.