Still waiting for takeoff
Economy is latest challenge for LNR in quest to develop former air base in Weymouth
Transforming an old military base into a thriving new community would be a daunting task at the best of times. However, these are anything but the best of times.
At the former South Weymouth Naval Air Station,
The company is now juggling these mammoth projects in the midst of a serious economic downturn.
"All of them are a challenge," said Curt Stephenson, national president of LNR's land group. "That is why there's only a handful of companies that do this. I don't mean to be flip here, but it's not like opening a
Redeveloping military bases is, indeed, no easy task. Paved runways built three feet deep into the ground can't be torn up overnight. Areas where fuel, weapons, and other hazardous materials were stored must be cleaned up. Some military bases have areas that are so contaminated that the EPA classifies them as Superfund sites. Timelines on these projects can stretch over 10 years or more. And the state of today's economy and slumping housing market is a nightmare for many real estate developers.
Progress has been slow at Weymouth and most of the other LNR sites, but Stephenson said LNR is well positioned to tackle such complicated, long-range projects.
The privately held company, based in Miami Beach, Fla., has roots that go back to 1969. It originally started as the commercial arm of
LNR recently pulled out of a joint effort with Lennar to redevelop Hunters Point Naval Shipyard in San Francisco. As the site and plans grew, LNR opted out. Stephenson said the plan had "doubled in size and changed in scope" and wasn't what they envisioned. LNR had been involved in the project since 1999 and transferred its stake in August.
Nothing has been built yet at the El Toro Marine Corps Air Station, near Irvine, Calif., which closed in 1999. LNR and its partners acquired the 3,700-acre property for approximately $650 million in a federal auction in 2005. As part of the deal, LNR and its partners agreed to pay $401 million in development fees and the city of Irvine took 1,347 acres for a public park. The rest of the property is slated to become the Great Park Neighborhoods, a community of housing, retail, educational, and research institutions.
The Los Angeles Times originally reported that home construction was to begin as early as 2007, with the first houses ready by 2008. Runways and taxiways have been torn up, and site prep work is underway, but there has been no construction.
"The project has slowed down due to the economy," said Stephenson, who estimated the site preparation work will take another a year and a half to complete.
Nothing has been developed so far at Fort Gillem, either. LNR Property Corp. and Weeks Robinson Properties LLC were selected in December 2007 as the master development team for this military base in suburban Atlanta. "We're in the early planning stages right now," said Stephenson.
In redeveloping the Mare Island Naval Shipyard in California, closed since 1996, LNR ran into some serious environmental and economic obstacles.
"It was a very, very contaminated site," Stephenson said of the former shipyard, 25 miles northeast of San Francisco.
In 1997, the city of Vallejo selected Lennar Mare Island LLC - a joint venture that included LNR Property Corp. and Lennar Corp. - to lead the project as the master developer.
LMI acquired the land in 2002, and construction on new residential neighborhoods started in 2004. The original plan called for 1,400 homes. Approximately 500 homes were built and sold between 2004 and 2006, according to Stephenson. There are 7 million square feet of buildings, and approximately 3 million square feet has been leased to businesses, he said.
"It's slowed down because of the overall economy," said Stephenson. "The biggest issue with that base isn't the development itself, it's that the city [of Vallejo] is in bankruptcy."
In June 2008, Lennar Mare Island LLC filed for bankruptcy. A restructuring plan is being hammered out in court to determine how and when the project will proceed, Stephenson said.
A bright spot for LNR is the former March Air Force Base. The Riverside, Calif., facility has been successfully transformed into a business park called Meridian.
LNR got involved in that project in 2001, and unlike the other base projects in California and Georgia, LNR had no partners to deal with - it is the sole developer. So far, 800 of its 2,000 acres have been redeveloped, according to Stephenson, who says: "It has done fabulously well."
As in the Meridian project, LNR is the sole developer of South Weymouth's SouthField project, and is in charge of "horizontal development" of the master-planned community. In essence, that means creating infrastructure (i.e., roads, street lights, sewers) and dividing the base into buildable lots that can be sold to developers.
LNR is waiting on the South Shore TriTown Development Corp. - the quasi-public agency that acts as the municipality of the base - to float bonds to cover costs of infrastructure work, and also to gain full control over the property. LNR currently owns 540 acres; if all goes according to plan, the US Navy will transfer the remaining portion of the 1,400-acre base to LNR next month.
Despite the gloomy economic forecasts, developers still have their eyes on SouthField, according to LNR officials.
"The macroeconomic climate is a disaster. . . . Boston is a bright spot," said Kevin Chase, vice president of LNR's northeast region. "We're 100 percent committed to see this thing through."
LNR was selected as the master developer for the Weymouth base in October 2002. Plans include 2,855 homes, 2 million square feet of commercial space, a recreation complex, and an 18-hole golf course by 2017. Home construction was originally scheduled to begin last year, with the first residents moving in this spring. To date, only the marketing center is up and running.
The plan to build movie studios at SouthField is moving forward, according to Chase, and the first sound stages could be built as early as this year.
Four local home builders have expressed interest in SouthField, and LNR is in the process of hammering out purchase-and-sale agreements with them, according to Chase. The firms include a developer of senior housing, a Boston-based apartment developer, and two South Shore builders who got financing from local banks, Chase said.
John R. Ward, a board member of the South Shore Tri-Town Development Corp., said the SouthField project is moving forward, slowly but surely.
"People want to know what's going on, especially the tradespeople who are out of work," said Ward. "This is going to create thousands of jobs."
He added that the Tri-Town board has full confidence in LNR's ability to make SouthField a reality. "They've got a lot invested in this project," said Ward.
Weymouth Town Councilor Kenneth J. DiFazio, though, has concerns about the SouthField project, especially since the base is not connected to the Massachusetts Water Resources Authority yet and the promised waste-water treatment plant has not been built. He worries that those could end up being the town's problems.
DiFazio said he believes the scope of the project - and the viability of an 18-hole golf course that will need to be watered regularly - should be reviewed carefully.
"We're in a different environment than we were in 2003 and 2005," said DiFazio. "I think they should reevaluate the project monthly, or quarterly. Time doesn't stand still. I don't think the project should stand still, either."
Emily Sweeney can be reached at email@example.com.