North Country weighs the impact of Fort Drum drawdown

WATERTOWN — On Feb. 24, Defense Secretary Chuck Hagel proposed substantial cuts in U.S. military spending, which included reductions in troop strength. The new U.S. Army budget called for a drop from the current level of 520,000 active-duty soldiers to a level as low as 440,000 troops. 

Fort Drum, which was already scheduled to lose 1,500 soldiers by 2015 based on a prior year’s downsizing, now faces the possibility of a much larger troop drawdown that could add thousands to the number already scheduled. If federal-budget sequestration is not resolved by 2016, the number of soldiers lost could be even higher. At this time, the Fort Drum Regional Liaison Office (FDRLO) does not know the total number of troop reductions, but any loss of current soldier strength will have serious economic consequences.

The anxiety level among North Country businesses and residents is understandable. Fort Drum, located about 10 miles northeast of Watertown, is the 800-pound gorilla that drives a tri-county economy.

The importance of Fort Drum on the North Country is a fairly recent phenomenon in the history of this military installation. Back in the summer of 1907, Col. Philip Reade, the regimental commander at the Madison Barracks in Sackets Harbor, encouraged North Country leaders and the Watertown Chamber of Commerce to establish a new and larger military training site in the area. The next year, Ulysses S. Grant’s eldest son, Brigadier General Frederick Dent Grant, led 10,000 soldiers on maneuvers at Pine Plains north of the Black River and declared the location ideal for training. Funding to purchase property quickly followed, and Pine Camp opened on June 11, 1908.

With the outbreak of World War II, Pine Camp added another 75,000 acres, displacing five villages, 24 schools, six churches, and eight cemeteries in Jefferson and Lewis Counties. Pine Camp changed its name to Camp Drum in 1951 and Fort Drum in 1974, when a permanent garrison was assigned. 

10th Mountain Division formed
Everything changed on Sept. 11, 1984, when the Pentagon announced that Fort Drum would be the home of the new 10th Mountain Division, a light-infantry unit created for rapid deployment.

“We had three years to prepare for the addition of an estimated 29,000 people, including 11,000 soldiers, who would work and live on or near Fort Drum,” says Michelle L. Capone, director of regional development at the Development Authority of the North Country. The Development Authority employs 70 and is headquartered in Watertown. “That meant creating infrastructure to include water, sewers, solid waste, and housing. The answer was a regional authority to … [encompass] Jefferson, Lewis, and St. Lawrence Counties … Wisely, the authors of the legislation creating the Authority decided to use the expansion at Fort Drum as a vehicle to solve the area’s chronic economic problems.”

The Development Authority wasted no time. In 1986, it began work to site, build, and operate a regional landfill; the solid-waste management facility located in the town of Rodman started operating in 1992. The next year, the Authority began connecting a 12-mile sewer line between Fort Drum and the city of Watertown wastewater-treatment facility and four town sewer districts. The same year, the Development Authority established the Housing Loan Revolving Fund, and in 1988 created the Affordable Rental Housing Program to entice builders to construct both market-rate and affordable housing units. In 1991, the City of Watertown, Fort Drum, and the Development Authority commissioned an 11-mile water line. As early as 1997, the Authority established a relationship with the U.S. Small Business Administration to package its Pre-Qualification and 504 Loan Program (providing financing to small businesses for purchase of major, fixed assets such as equipment and real estate) applications. And in 2000, it began work on developing an open-access telecommunications network and broadband infrastructure to serve businesses and institutions in the region.

A second expansion
On May 11, 2004, the U.S. Army announced the assignment of the 3rd Brigade Combat Team to Fort Drum. “The community was faced again with having to meet tight time constraints to expand our infrastructure in order to accommodate an additional 5,000 soldiers and their families,” says Dave Zembiec, the deputy CEO of the Jefferson County Local Development Corp. headquartered in Watertown. “FDRLO commissioned an analysis of the housing market, which identified a need for 1,400 more units. Even with our success of the past 20 years, we still had to induce developers and lenders to support our efforts to create low- and moderate-income housing projects. In 2006, the Development Authority created the Community Rental Housing Program with $9 million in state and local funds to offer low-interest, long-term loans to developers.”

“While housing was a top priority with the second expansion, the Authority also focused on channeling resources to promoting workforce growth,” adds Capone. “The Authority partnered with FDRLO, the Jefferson County IDA, the St. Lawrence County IDA, and the Lewis County Office of Economic Development and Planning to create ‘Drum Country Business,’ an economic-development task force. The task force targets certain industries, such as food processors, back-office operations, renewable-energy firms, and manufacturers, and promotes a regional marketing prospectus to attract industry to the area.”

Economic powerhouse
So how big is this 800-pound gorilla? According to the “Fort Drum Fiscal Year 2013 Economic Report,” more than 37,000 soldiers and family members live and work in the area. Add to this another 3,895 civilians who work on the base and 2,615 military retirees who stayed in the area after their service. Not included in this report is an estimated 7,500 jobs off-base located primarily in health services, retail, wholesale, education, and accommodation and food services dependent on troop levels at Fort Drum. The total annual payroll was $1.17 billion and the Corps of Engineers awarded construction contracts valued at nearly $87 million. The Army spent an additional $29.22 million on medical services, $5.42 million on dental services, $34 million on residential construction located on the base, and distributed $48.61 million to local school districts to support the additional cost of military dependent children. The total direct impact was $1.42 billion. Not included in the report is an estimated $350 million to $400 million of additional economic impact created by the re-circulating of the Fort Drum payroll and base spending. Over the past 26 years, the cumulative financial impact is $19.76 billion.

The more than quarter-century of investments has generated a long list of assets at the military installation, which today is New York state’s largest single-site employer: 432 miles of roads; 1.8 million square yards of runways, taxiways, and aprons; 4.1 million square yards of parking; 460 miles of electric lines; 77 miles of gas lines; 116 miles of sewer lines; 124 miles of fencing; and 475 miles of communications lines. To this, add 17.77 million square feet of space which includes on-post housing, maintenance buildings, warehouses, training facilities, administrative offices, dining rooms, and commissary.

Capone and Zembiec both express concern over the economic impact of further troop draw downs, citing the loss of jobs and related payroll, diminished sales-tax revenue to communities, decreased construction, reduced payments to area public schools and lower enrollment at Jefferson Community College, and the effect of increased vacancies on the housing market. Both are optimistic, however, that Drum Country is now well-positioned to attract and grow business. “Our region has a deep labor pool with a higher percentage of young adults than either the state or the nation … [of whom] more than 87 percent have at least a high-school diploma” notes Capone. “Drum Country also … [boasts] a relatively low cost of living. We have access to national and international markets plus high-speed telecommunications … Recently, the North Country was included in a national project to test drones for commercial use. Much of the test-flight data will come from activity at Fort Drum. [And don’t forget] … the huge investment in infrastructure: The Authority alone has invested millions ($191 million) in assets to build up the area’s infrastructure in order to accommodate both past and future growth.” 

The 2013 financial statements for the Development Authority show net assets of $153 million, an operating surplus of $13.9 million, and net cash flow of $5.9 million.

Every economic retrenchment is painful. Fortunately for Drum Country, those who oversaw the expansion of Fort Drum in the 1980s had the foresight to also focus on long-term, economic development. The 800-pound gorilla may slim down, but Drum Country is relatively well-positioned to offset further troop reductions at Fort Drum.

Contact Poltenson at npoltenson@cnybj.com