WASHINGTOG -- Peace is hell. At least that is the way some local officials may come to view the economic and credit impact of the U.S. military's base closures and down-sizings slated to go into effect over the next six years.

But officials in other communities could gain economically as the military shifts more resources to the bases that remain open. And officials in towns with closed bases could find economically enriching alternative uses for the facilities, a Standard & Poor's Corp. analyst says in a recent article.

The military's reorganization "could have a material impact on the local economies of the base sites, and eventually could alter outstanding bond ratings for affected local governments," the Aug. 5 edition of Standard & Poor's Corp.'s Credit Week notes.

The article, written by Robert F. Durante, a Standard & Poor's assistant vice president, says the loss of 1,647 civilian and military jobs as the result of the expected closing of Chase Field Air Station was a factor in the rating agency's decision to change the outlook on Beeville, Tex., debt from stable to negative.

Beeville's general obligation bonds already are rated BBB-plus, so a downgrade to BBB-minus could place them perilously close to speculative-grade debt.

Closings of military facilities can make an already bad situation even worse. Philadelphia, which has a Standard & Poor's bond rating of CCC, is slated to lose about 36,474 civilian and military jobs with the closing of two naval facilities.

One of those facilities is the Philadelphia Shipyard, which is being "mothballed" -- naval jargon for closing the facility but preserving it for possible future use. As a consequence, the shipyard cannot be converted to civilian use, so Philadelphia officials will not even be able to recoup some of the job loss by attracting a replacement industry to the site.

Robert W. Chamberlain, writing in the Aug. 5 edition of Dean Witter Reynolds Inc.'s Institutional Newsletter, notes that the loss of 26,500 jobs as the result of closing the second naval facility, Philadelphia Station, represents 1.2% of all the people employed in the city.

"Losses of this magnitude are major and clearly will have srong negative impact on local communities," he writes.

For other communities, however, the prognosis of gloom and doom is way off base, according to Standard & Poor's, which notes that some localities may actually gain from the military shuffle because bases there will expand as they assume some of the responsibilities of closed facilities.

Fort Hood in Killeen, Tex., for example, is expected to pick up about 13,540 jobs. Mr. Durante says in his article the job increase "was a factor in the revision of the city's outlook from stable to positive -- indicating a high probability of a rating upgrade in the next one to three years."

Base closings can help municipalities in other ways, too. Officials in Austin, Tex., are considering converting Bergstrom Air Force Base into a commercial airport, while officials in Kitsap County, Wash., are looking into using the Sand Point Naval Station to expand its park facilities.

In general, the conversion of military installations into commercial enterprises has proved beneficial. The Board of Economic Adjustment, a Defense Department unit that provides assistance to local governments faced with base closings, found that the reuse of military bases for commercial purposes has actually improved the economies of some areas.

For example, the board found that between 1961 and 1990, 158,104 jobs were created at former bases, more than replacing the 93,424 Defense Department jobs lost when the bases were closed. Moreover, 75 former bases have been converted to industrial and office parks, while 42 former military facilities are now being used as municipal airports.

But Mr. Durante warns that "reuse potential varies greatly, usually determined by geographic location." In urban areas, for example, surplus federal property often is the biggest chunk of real estate available for commercial development.

As a case in point, Mr. Durante cities the former Raritan Arsenal in Edison, N.J., the closing of which resulted in the loss of 2,610 military and civilian jobs. But the facility was successfully converted into an industrial and office park that now employs about 13,100 people.

By contrast, base closings in rural or geographically isolated areas may require heavy state involvement to make a conversion work, Mr. Durante says. Following the 1977 closure of Kincheloe Air Force Base in Sault Ste. Marie, Mich., and the subsequent loss of 3,811 military and civilian jobs, the state built five correctional facilities on the site. Coupled with employment at several industrial firms, local jobs now total 2,144.

"But in rural areas that lack local and state initiatives, economic dislocation and financial hardships could eventually result in lower bond ratings," Mr. Durante writes. Other factors that could impede the conversion of former bases to civilian use include a lack of funds and delays caused by the need for toxic waste cleanup.

According to Mr. Durante, Standard & Poor's "will continue to assess the transition process to measure the timeliness and quality" of localities' redevelopment efforts -- an assessment that could bring either ratings upgrades or downgrades to affected communities.

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