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Shock & Awe!

The Imminent Shutdown Of Naval Station Roosevelt Roads Will Wreak Economic Havoc Throughout Eastern Puerto Rico


July 17, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Shipping out: After years of downplaying the warnings that the Navy’s exit from Vieques would bring about the closure of Roosevelt Roads, the Calderon administration is now caught without an immediate action plan to face its toughest economic challenge yet.

The writing has been on the wall for some time now, but many in Puerto Rico were in denial or chose to ignore it. Now Congress is about to put a huge "For Sale" sign on U.S. Naval Station Roosevelt Roads (NSRR).

The Navy’s imminent closure of the NSRR within the next six or seven months, following the shutdown of the target range on Vieques in May—will wreak economic havoc throughout the nine municipalities in the eastern part of Puerto Rico, from Rio Grande to Yabucoa, and beyond.

Thousands will be left without jobs, hundreds of businesses will feel the pinch and many will no doubt go under, real-estate values will plummet, and the municipal governments will be strapped for cash as the already dim economic picture for the region worsens.

When Chief of Naval Operations Vern Clark warned at a congressional hearing in June 2001 that the Navy would probably close Roosevelt Roads without the use of the Vieques target range, many in Puerto Rico accused the Navy of using economic blackmail to muscle the local government out of its resolve to kick the Navy out of Vieques. They didn’t want to accept that without naval maneuvers in Vieques, there probably wouldn’t be any need for the NSRR, whose main purpose was to support and to be the base of operations for the exercises that took place in the island municipality several times each year.

"It is clear to me that if we aren’t using Vieques, there will be elements of Roosevelt Roads that will no longer be required," Clark told the U.S. House Armed Services Committee. "I can tell you that we invest $250 million to $300 million a year down there to make that operation go, and if we don’t need it because we aren’t utilizing the facility, I have got other places to use [the money]."

When CARIBBEAN BUSINESS first reported in October 2002 on the likely shutdown of the base, Resident Commissioner Anibal Acevedo Vila said he wasn’t convinced the NSRR would be closed. "The base plays an unequalled strategic role for the U.S.," he said then. When the NSRR opened under President Franklin D. Roosevelt, it was indeed important in guarding the approach to the Panama Canal. Since the U.S. transferred control over the canal to Panama, however, the base has been relegated primarily to providing training support.

Now the House has approved a Department of Defense appropriations bill, H.R. 2658, ordering the shutdown of Roosevelt Roads within six months after it becomes law. Although the Senate version of the bill didn’t contain such language when reported out of committee, at press time Monday, it was widely expected a provision calling for the NSRR’s closure would be included in the bill to be considered by a Conference Committee of both houses—and that it would pass. If the House and Senate approve the bill before their August recess, President Bush could sign it into law as early as mid-August.

The base’s closing will have a devastating economic impact on Puerto Rico, particularly for the municipalities in the eastern region, which are already afflicted with the highest average unemployment rate on the island.

The Calderon administration has vowed to fight in Washington to keep the base open. The consensus among congressional sources interviewed, however, is that the chances of that are close to nil. First, because the base is no longer strategically important to the U.S. military. Second, because without a delegation of seven congressmen and two senators, Puerto Rico simply doesn’t have the political clout to fight for it, particularly when other members of Congress are fighting to keep military facilities open in their districts.

Last week Economic Development & Commerce Secretary Milton Segarra told CARIBBEAN BUSINESS he has already begun working on a Request for Proposal for the economic development of the NSRR, "if and when" it closes after 2005. When pressed that many families in northeastern Puerto Rico might be facing a bleak Christmas 2003, he didn’t have much to say.

Economic impact of Roosevelt Roads

Until recently, the 8,612-acre (almost 9,000 cuerdas) Naval Station Roosevelt Roads—the largest Navy base in the world in landmass—was home to more than 2,400 military personnel and more than 2,500 civilian employees. Another 2,400 dependents (family members) also lived on the base.

The NSRR’s population peaked at 13,000 military and civilian personnel in 2000. The NSRR was one of the biggest employers in Puerto Rico, after the local government. Today approximately 2,100 military staff and their dependents remain, most from the U.S. Navy, said NSRR Public Affairs Officer Oscar Seara.

According to Seara, there are still about 1,500 people working under local contracts, whether in grounds-keeping, maintenance, or other services needed at the base. The officer maintains base commands have been transferred to U.S. mainland states such as Texas, Georgia, and Florida and to other countries, but orders to close the NSRR haven’t come through yet.

The Navy estimates the NSRR’s total economic impact on Puerto Rico surpasses $300 million annually. However, based on a dollar-for-dollar comparison with expenditures by other armed services at other installations, such as the Army’s at Fort Buchanan, CARIBBEAN BUSINESS estimates this figure could be significantly higher.

The annual payroll for the NSRR’s 2,500 civilian employees exceeded $60 million, while its payroll for military personnel living in Puerto Rico stood at $90 million. Additionally, the Navy has indicated it spends $46 million a year on base operations & maintenance. During fiscal year 2002 alone, the base had an $11.5 million Puerto Rico Electric Power Authority (Prepa) bill.

The NSRR spent another $107 million a year with local contractors. In the past 10 months, however, that expenditure has been significantly reduced, along with cutbacks in many other areas. Last fall, the NSRR contractors were already feeling the pinch.

"Contracts at the bases have diminished a lot," engineer Ignacio Reynoso of Construcciones JFM told CARIBBEAN BUSINESS in October 2002. A year-and-a-half ago, the firm had 15 employees working on NSRR projects; last October the number was down to four. Many other small contractors have felt the pinch.

Fermin Gonzalez, Construcciones JFM, Bared Co. of Puerto Rico, and Dick Corp. of Puerto Rico were among the major contractors that still had multimillion-dollar projects at the base. Now, it’s down to a trickle. A Department of Defense report on procurement spending showed that while more than $137.1 million in DOD contracts were spent in the municipality of Ceiba alone in 2001, during the first nine months of 2002 only $11.4 million in new contracts had been spent in that municipality.

With some five miles of fence line, the NSRR spans the municipalities of Ceiba and Naguabo.

The effect of Roosevelt Roads’ downsizing and almost certain closure on other contractors and suppliers will be equally devastating, according to what some of these told CARIBBEAN BUSINESS. "For the construction industry, this will be a huge blow," said an employee from a major local construction firm under contract with the U.S. Navy.

The construction firm, which the employee (who wished to remain anonymous) said had been doing projects at Roosevelt Roads for 15 years, completed its last project in March.

"The Navy allowed us to finish the project, but as soon as it was completed, it informed us there would be no more projects," said the employee. "We were the last construction contractors to leave the base. Other contractors weren’t as lucky, as the Navy asked them to leave without finishing their projects." Many projects, including brand-new military buildings and housing facilities, were halted in various stages of development.

In the past four years, the construction firm had completed two housing projects with the Navy, one in Sabana Seca and the other in Ceiba. "We had 400 employees working at those projects at one time, 200 of them Ceiba residents," said the employee. "Unfortunately, we couldn’t relocate these workers to other projects because there were no more projects. It’s very sad."

Most construction contractors at the base, said the employee, didn’t take other projects when working for the Navy in order to avoid delays and concentrate on quality control, something required in contracts with the military.

"The federal government is strict, requiring the best products. It liked local products and suppliers because they were of good quality and easily accessible," the source said. "Plus the federal government always pays on time, which allowed us to pay our subcontractors in a timely fashion."

According to the source, some architects and engineers who used to work on projects at Roosevelt Roads have gone to the U.S. mainland in search of work because they were paid extremely well by the military, and local firms pay much less. "What is happening at the base is affecting the construction industry tremendously," said the employee.

Among the other smaller, service-related NSRR contractors were Fajardo-based Casa Suarez (industrial gas), Fajardo-based water distributor Erica International Corp., Santurce-based Dueñas Trailers, Carolina-based industrial carpet cleaner Cuadrado Alfombras, and Santurce-based Valines Industrial Laundry. These contractors and suppliers used to provide the Navy with services essential to operating the 1,340 buildings on the base, including a 1,300-student school system, a 100-room hotel, and the Navy Hospital.

No chance to push back shutdown to 2005

The overwhelming consensus among the congressional aides in Washington interviewed by CARIBBEAN BUSINESS is that Congress won’t wait for the next round of base closings in 2005, but will shut down the NSRR before the end of the year. The staffers, all with considerable knowledge of Puerto Rico and the future of the NSRR, agreed to talk to CARIBBEAN BUSINESS on background for this story.

Jerry Lewis (R-Calif.), chairman of the House Appropriations Defense Subcommittee, introduced H.R. 2658 on July 2. It was then amended to provide for the closure of Roosevelt Roads by year’s end.

"Notwithstanding any other provision of law, the Secretary of the Navy shall close Naval Station Roosevelt Roads, Puerto Rico, no later than six months after enactment of this Act," reads the bill. "The Secretary of the Navy shall…dispose of the real property and associated personal property at the former Naval Station by public sale."

While most aides think action won’t come before Congress recesses in August, it is certain to occur after both houses return to Washington in September. Since the bill is an appropriations bill and the federal fiscal year ends Sept. 30, Congress is required to act before then.

"This base no longer has a mission," said an aide. "It costs a lot of money to keep that place open, and we’re not only talking about maintenance but about personnel who can be utilized more economically elsewhere."

Sources estimate the monthly cost to maintain the base without it being operational at $5.8 million. Just running security along 42 miles of coastline and five miles of fence line would cost a pretty penny, which the Navy would rather save.

Another congressional aide to a powerful senator questioned the likelihood that Roosevelt Roads could survive until the next round of base closings in 2005. "That wouldn’t make any sense because it has lost its importance to the Navy since training in Vieques no longer takes place," he said.

A number of members of both the House and the Senate are familiar with previous rounds of base closings and the trauma they cause the communities involved, among them John P. Murtha (D-Penn.), ranking minority member of the House Appropriations Defense Subcommittee. A veteran congressman elected in 1974, Murtha has lived through the closing of the Philadelphia Naval Yards.

When the bill was discussed in the House subcommittee a couple of weeks ago, Chairman Lewis told Puerto Rico Resident Commissioner Anibal Acevedo he would work to ensure Puerto Rico maximizes the potential of this valuable property, should it be closed. Acevedo Vila wanted a provision to that effect in the final House bill, but the version reported out didn’t contain any such language.

"The next step will be to get such a provision inserted in the joint committee of the House and the Senate," said a long-time observer of the process. "That could happen before the August recess or, as will probably be the case, it could drag on till September. That gives Puerto Rico more time to mount a more effective campaign, but it also benefits the opponents of keeping it open. That includes a coalition of different people with different agendas whom such a goal would favor."

Asked to enumerate some of the types he was speaking about, the staffer conceded there are a number of U.S. communities opposed to military installations in their vicinities. "But in this period of war footing, patriotism, economic recession, and higher unemployment, their number is declining and, in fact, certain areas are actively courting more military activity. Look at Florida," he said. "Some people in Puerto Rico want the Navy out, but [people who oppose military installations] are hard to find in Florida."

Recalling the drawn-out controversy over the Navy in Vieques, the staffer for one senator who was deeply involved said, "He’s moved on to other things. We’re in the middle of a war and he doesn’t even mention Puerto Rico now because his focus is on the crisis facing us now in Iraq, Afghanistan, and elsewhere."

Some aides, well familiar with Puerto Rico’s agenda in Washington, describe the new scenario as "a whole new ballgame." Most of them feel that how Puerto Rico lobbies in the next four to six weeks will determine what will happen with Roosevelt Roads.

"Look, Puerto Rico has to decide how much it wants to fight for it," said one. "Given the increasingly tough stand of the military, it may just be better to get [the base’s closing] over with and start on another track to try and get [control over] it."

Another congressional aide familiar with the debacle between Gov. Sila Calderon and the Navy said, "the Navy is still bitter. She broke the agreement. The attitude of many of them is that you can’t make an agreement with Puerto Rico because then a new governor will come in and break it." The aide was referring to the agreement first negotiated under President Clinton, and later ratified by both the Congress and President Bush, to have military maneuvers in Vieques end in May 2003 if the people of Vieques so desired. Gov. Calderon reneged on the agreement and pushed hard for a much earlier withdrawal date, including suing the federal government, to no avail. The Navy exited Vieques on May 1, 2003, as originally agreed upon by both presidents.

The attitude of most of the people interviewed in Washington is that Roosevelt Roads is set to be closed by year’s end and that waiting for the next round of base closings is out of the question. A number believe provisions similar to those used in base closings will be enacted. They cautioned that a base’s closure doesn’t automatically mean it will be transferred to a local government to do whatever it pleases with it.

"Generally, when a base is declared surplus the Navy is required to make the facility available to the General Services Administration (a U.S. government agency that manages real estate), which then determines if there are other federal agencies interested in it," said a staffer familiar with the procedure.

"If no federal agency is interested in the facility, a local government entity may be declared eligible for it to be transferred to," he said. "But any local government receiving such a facility will find the uses for it rather restricted. There would be no question with schools or parks, but once you get into commercial development for profit, it gets very complicated. Some communities have failed in those efforts and are still looking at big white elephants."

Grim outlook for Mom & Pops

Perceptions regarding the likely impact of the NSRR’s closing on retail businesses in the area vary greatly depending on proximity to the base. Retailers interviewed in the municipalities of Rio Grande and Luquillo, for example, didn’t seem much worried about the closing, but those in Ceiba had a more dismal opinion. At least one, Wal-Mart in Fajardo, thinks the shutdown of the base’s PX (post exchange) will actually boost sales.

In Ceiba, they are already seeing the effects of Roosevelt Roads’ downsizing. "This used to be packed on Friday afternoons and, look, there’s nobody here," said an employee of Harbor Mini Market & Deli." She said she had always dreamt of working at the base, because wages were double and even triple what a job outside the base could provide. "I guess that dream is over," she sighed.

Luis Rodriguez, owner of El Donero Bakery in Ceiba, said base employees and military personnel still come to his business to have breakfast or lunch, and he hasn’t observed a sharp decline in traffic yet. He did express some worry, however, when asked what would happen to his business if the base shut down completely. "Many of the civilians who work at the base aren’t even from around here, so we’ll lose them as customers," he said.

Luis Ayala, owner of Ayala Barber Shop in Ceiba, said the base’s downsizing has hurt his business and others. "Small businesses all over Ceiba are being affected, especially restaurants and cafeterias," he said. "The people who lived and worked on the base always left the base to eat. All they had were fast-food places, so they had to leave the base to have good local food. I’ve also heard of mechanics who have lost contracts with the base."

Ayala noted one customer who worked as a painter at the NSRR is now earning less than half as much. "This client of mine used to make $12 an hour painting the facilities, then he was let go. He found another job outside the base, but he is only paid the minimum wage. That’s only slightly more than $5 an hour."

The barber added, "You see all the expensive houses being built around here? Nobody’s going to buy them. I mean, who would want to come live here when there are no jobs? Many of the people who do live here are already selling their homes."

Farther away from Roosevelt Roads, employees of Tropicale Restaurant in Rio Grande said they have noted a drop in business, but not because of the downsizing at the base. "The problem here is tourism. We used to have tourists flock here because they always like to eat local dishes, but not many are coming here any more," said one employee. When asked if the military or civilians working at Roosevelt Roads came to the restaurant for lunch or dinner, she responded, "Only a few used to come, but not any more, so we don’t think the base’s closing will affect us."

Angel Amaury, owner of Radical Art Tattoo Shop in Rio Grande, agreed. "My clientele is local, from right here in Rio Grande. Yes, I may have had a few military clients, but most of my clients are from around here," he said.

Blanca and Luis, owners of the Mi Favorito kiosk in Luquillo, also said their business would be unharmed if Roosevelt Roads were to shut down. "Our business is from tourists and locals; rarely do military or civilian employees come here. Why would people buy a beer from us at $1.25 when they can get it much cheaper at the PX?" asked Luis. He also noted most civilian employees at Roosevelt Roads come from municipalities outside the eastern region. "From what I’ve seen, most who work there are from Carolina, Ponce, and Caguas," he said.

Retailers interviewed in Fajardo see the base’s closing as an opportunity, though they are cautious. "When Vieques closed we didn’t feel much of a pinch, and most of our customers come from Vieques and Culebra," said Virgilio Cruz, assistant manager of male apparel store Donato in Fajardo. He added that although he fears for all the people who will lose their jobs at the base, he sees an opportunity to do more business if the base should close entirely. "That would give us a chance to become an apparel option for shoppers who used to have access to the stores at the base, which offered lower prices."

Awilda Piñero, assistant manager at Wal-Mart in Fajardo, said, "Wal-Mart offers the lowest prices around here, so if the base closes people who used to shop there will come to shop here." However, she does predict many people will move from Puerto Rico in search of employment.

Still, even businesses that depend on local customers are likely to suffer if the base closes because the money it injected into the area’s economy will simply disappear.

Tourism woes

The early shutdown of the NSRR is already causing a negative ripple effect on the smaller tourism-related business in the eastern part of the island.

"Puerto Rico’s tourism industry has been negatively affected by the controversy over military exercises in Vieques," said Rolando Feria, general manager of the 25-room Hotel La Familia in Fajardo. "However, the closing of Roosevelt Roads will severely impact business because a lot of military personnel used our services when there was training on the base."

Javier Cordova Diaz, head golf pro at Berwind Country Club in Rio Grande, said the shutdown of Roosevelt Roads is the worst thing that has ever happened to Puerto Rico. "Imagine how much money local businesses will lose when the military leaves," he said. Even though Berwind is a members-only club, on two days of the week it is open to the public and most of these customers were military staff. "Our revenue for those two days is already decreasing, and our exchange activities with the base are over."

Another golf executive who claims his business will be affected by the early closure of the NSRR is Craig Swiderski, general manager of Bahia Beach Plantation in Rio Grande. He said he regrets seeing the military personnel move on because they were also part of the community.

"The closing of Roosevelt Roads is definitely going to affect our business," said Swiderski, who claims the military accounts for at least 4,000 rounds of golf annually. "We offer reduced rates for the military because of the work they do for our nation."

Some businesses such as tour operators and excursion and charter-boat companies said the base’s closing would have a minimal impact on revenue. Large hotel chains, such as the Wyndham El Conquistador Resort & Golden Door Spa in Fajardo and Westin Rio Mar Beach Resort & Golf Club in Rio Grande certainly won’t feel any pain since most of their business comes from visitors from the northeastern coast of the U.S. during the winter "high tourism" season.

"We don’t get a huge number of customers from Roosevelt Roads," said Bill Henry, captain & owner of Erin Go Bragh Charters at Fajardo’s Puerto del Rey Marina. He estimates military personnel represent some 10% of his business.

Josefa Rodriguez of Ventajero Sailing Charters at Puerto del Rey Marina said her son’s company gets some business from the military, but most is from local contractors and suppliers who work on the base.

"Once in a while we get short-term business from military reservists, but not often because of the distance," said Marianne Kavanaugh, owner of Casa Cubuy Ecolodge in Naguabo.

CARIBBEAN BUSINESS Associate Editors Jose L. Carmona, Evelyn Guadalupe-Fajardo, and Marialba Martinez; Contributing Editor John Collins; Staff Reporter Taina Rosa; Staff Writers Felipe Cardenas and Viviana Juarbe; PuertoRicoWOW News Reporter Joanisabel Gonzalez-Velazquez; and CB Researcher Blane McLane contributed to this story. 

Base’s closure already having damaging effect on area’s real-estate market


For Tammy Davila of real-estate & property-management firm T&L Realty in Fajardo, the prospect of the closing of Naval Station Roosevelt Roads in Ceiba is already wreaking havoc on the area’s real-estate market. An unusually large number of properties inhabited by military personnel and civilians at the base are being put up for sale or rent, saturating the market and bringing property values to historic lows.

"We have more than 25 properties listed that will be empty and available by August, in a market where we used to rent 75 properties a year," Davila told CARIBBEAN BUSINESS. "By September, we will have only 12 properties rented to the military. The situation is drastic."

People who bought condos and walk-up apartments in the area to rent to the military are having a hard time finding tenants. Since they can’t continue making mortgage payments on empty properties, they’ll be forced to put the units up for sale.

"With their higher salaries, military personnel paid monthly rents of $1,500 to $2,000. Locals can’t afford to pay these rents, so owners are asking for rents as low as $900 a month or putting the properties up for sale at a significant loss," said Davila, who runs the company with her mother, Lillian Mercado. "It is hard to rent a property right now with so many on the market. This ultimately brings down property values."

Davila said she noticed an increase in the number of properties available for rent in March, when she began receiving military orders to cancel many of the rental contracts containing a military clause. She explained the clause allows the contract to be nullified if the military member renting the property is transferred or relocated, as is the case for most of the military population at Roosevelt Roads. The clause also requires a full refund of the renter’s deposit.

"I just got the listing of the properties we have available for personnel at the base, and there are 61," said Davila. "Other real-estate agents have other listings." She noted that in the past 10 years, the company had an average of only five to 10 properties to show to military personnel.

With so many properties available for the declining number of base personnel, Davila decided not to accept any more properties for listing. The only personnel to whom Davila isn’t having trouble renting are involved with the base’s security and hospital.

"Rumor has it, though, that the hospital will be transferred to the Veterans Administration, which means hospital and security employees will have priority if the base closes," Davila said.

Properties with an ocean view or on the oceanfront (such as Dos Marinas and Playa Azul), as well as commercial and business properties, haven’t yet been affected by the military downsizing because these are in high demand from locals. Military personnel usually prefer to live away from the coast, said Davila.

She noted the value of properties near Wyndham El Conquistador Resort & Golden Door Spa and Isleta Marina has increased significantly in the past six months. Although owners won’t have problems selling these properties, they will have an uphill battle renting them, she said.

"Costa Esmeralda, an apartment complex in front of the base, is full of for-sale and for-rent signs," said Davila. "Owners who bought these apartments as an investment and rented them to military personnel now have empty apartments."

Jose Ortiz, owner of three-year-old real-estate firm Property Outlet in Fajardo, said the area’s real-estate market has practically collapsed because of the many income (for rent) properties. "Nearly 40% of the subdivisions and condominiums near the base were purchased as income property," said Ortiz. "They will have to sell at 15% to 20% below market value if the base closes, or they won’t sell. Renting is out of the question right now."

Ortiz said he used to sell two properties to the military each week, but now he’s lucky to sell one every two months. "The closing of Roosevelt Roads could have a devastating effect on the area’s real-estate agents," he said. "Many real-estate offices are looking to shut down or move to another region. That’s how bad things are."

Ortiz has already noticed an increase in the number of properties in the Fajardo area that have been foreclosed on or repossessed by banking institutions. He believes the number will rise precipitously if the base closes.

"If we don’t do something to keep the base open, the government must act quickly to inject a considerable amount of money into the base. Otherwise, we can expect the worst," said Ortiz. "Knowing the time it will take the government to spur the economy inside the base, we can expect more than 40% of the area’s population to go bankrupt. The most seriously affected will be those in Fajardo, Ceiba, and Luquillo."

Gisela VanMegen, owner of BV Real Estate in Fajardo, said there is no other major generator of income and jobs in the eastern region. Even the area’s hotels and resorts are no match for Roosevelt Roads.

"That’s because hotels don’t pay as much, and hotel employees won’t be able to pay what the military personnel paid for a property," she said. "We’ve been feeling the slump in the area’s real-estate market for the past two years, and will feel it even more with the base’s closing. This is going to be bad."

VanMegen said she hopes the government acts quickly to save the area’s economy. "If the government plans to do the same thing it did with military bases in Culebra and Aguadilla, which have been in total abandonment for years and years, then we can expect things to get really, really bad."

Mayors concerned base’s closing will harm economy, security, relationship with U.S.


The mayors of several municipalities around Naval Station Roosevelt Roads (NSRR) say the military installation’s closure will be an economic disaster, forcing local civilian workers to wander the island or leave it to find jobs.

Last week, CARIBBEAN BUSINESS interviewed the mayors of Ceiba, Naguabo, Fajardo, Rio Grande, and Humacao to discuss the impact of the NSRR’s closing on their towns. While some are hopeful that new opportunities will arise eventually, they all agree the short-term outlook is grim in terms of finding venues for job creation and economic development.


In accordance with the Calderon administration’s policy to continue lobbying to keep the NSRR open, Ceiba Mayor Gerardo Cruz Maldonado has visited Washington on several occasions.

The mayor told CB in a previous interview that he would do everything possible to keep Roosevelt Roads from being one of the military installations earmarked for closure by the Base Realignment & Closure (BRAC) Commission, which is scheduled to make the next round of base announcements in 2005. Cruz Maldonado has enlisted the aid of Puerto Rico Chief of Staff Cesar Miranda, Resident Commissioner Anibal Acevedo Vila, and U.S. Representatives Jose Serrano and Nydia Velazquez in bringing the issue before the U.S. Congress.

Cruz Maldonado returned from Washington last week after the U.S. House of Representatives approved House Bill No. 2658, a defense-spending bill that includes a provision ordering the U.S. Navy secretary to shut down Roosevelt Roads. The mayor told PuertoRicoWOW News, a subsidiary of Casiano Communications, that although the bill orders the NSRR’s closure through a public sale, "the bill can be understood to relay Congress’ intent to transfer part of the base’s territory to the central and municipal governments, which gives the people of Ceiba a real opportunity for development."

To that end, the Ceiba mayor has met with Economic Development & Commerce Secretary Milton Segarra to submit a proposal for the management of the 8,600-acre site. A meeting at La Fortaleza last Friday included Cruz Maldonado, Segarra, and representatives from the Ports Authority, Economic Development Bank, Housing Department, and Transportation & Public Works Department. Future meetings will also include the Puerto Rico Planning Board.

After the orders to abandon the NSRR began coming in, Cruz Maldonado still held out hope that some components of the base as well as some commands would remain in Puerto Rico. He even sought support from other unit commanders whose operations could benefit from staying at the base.

Now he talks about the possibilities for the NSRR if it should close. "I have always seen the base as a hub for tourism in Ceiba," said Cruz Maldonado. "Having recently witnessed the deterioration of the former U.S. base in Panama after its transfer to the government, I support opportunities for the NSRR that don’t limit our access to the base.

"The U.S. Forest Service [USFS] could develop portions of the land," he continued. "This agency has experience managing areas like Roosevelt Roads. I would rather see our oceanfront, beaches, forest, even the base’s hotel under USFS management than let it go to waste because of poor administration."

Ceiba provided the materials for the Navy’s Seabee Battalion to build beachfront facilities at Playa Los Machos, an area now open to civilian use. Since 1998, Cruz Maldonado had been lobbying for the Navy to transfer 165 acres in front of the NSRR’s Gate 1 for tourism development.

"We have already discussed some of the projects for this area, including a small hotel, a fishing village, a boardwalk that crosses Ceiba’s state park, kiosks like those in Luquillo, and summer housing," he said.

Cruz Maldonado doesn’t see much potential for a transshipment port in the area. "The harbor isn’t deep enough. From what I have heard, ships would have to come from the south to enter the harbor, even after dredging the bay," he said. "A regional port would be a more reasonable idea, given that the base has a long runway three minutes away that could link the U.S. mainland, the U.S. Virgin Islands, and the rest of Puerto Rico. It would also benefit transportation from Vieques and Culebra to the island."

Ceiba’s $6.5 million municipal budget depends on economic activity from the NSRR. In 2002, some 127 businesses in Ceiba supported a work force of 3,386, nearly 20% of the municipality’s population of 18,000.

According to the Ceiba mayor, of the $300 million entering Puerto Rico’s economy from the NSRR, approximately $1.5 million goes into the municipal government’s coffers. When the NSRR’s contractors were forced in 2000 to pay municipal taxes (<I>patentes</I>) and construction excise taxes, the municipal government’s budget increased 50%.


"When the NSRR closes and unemployed civilians come to me looking for jobs, it will create a lot of anxiety in this town," said Naguabo Mayor Robert Baez Gonzalez. "There are no jobs in this town or in this region, and they will become what I call workplace wanderers. While the base is open, people who retire or move away create jobs. The NSRR’s closing will be a disaster for Naguabo’s economy."

Most people in Puerto Rico don’t know the NSRR sprawls across two municipalities: Ceiba and Naguabo. Baez Gonzalez said, "Everyone mentions Ceiba [where the main gates to the base are located], but what happens with the portion of land in Naguabo?"

The mayor said the NSRR’s golf course, commander’s office, and several recreational facilities are in Naguabo. He has been working with Ceiba Mayor Gerardo Cruz Maldonado to determine precisely how many acres belong to Naguabo.

"Whatever land belongs to us could be used to develop our tourism industry. With a 17% unemployment rate, we are the only municipality along the eastern coast that lacks a tourism industry," said Baez Gonzalez. "We are striving to generate the most jobs possible in this industry, with projects such as a new theater, improvements to our <I>malecon</I> [boardwalk], and promoting the tourism development of Punta Lima."

Naguabo has always had a good relationship with the NSRR’s commands. "The NSRR was a big supporter when hurricanes Hugo and Georges hit in 1989 and 1998, respectively," said Baez Gonzalez. "Military personnel provided power plants for shelters, schools, and hospitals; picked up debris from roads; and cleaned up rivers to prevent flooding. During Christmas, the base donated toys for the town’s children. Whenever we have asked for help on community affairs, NSRR has responded."

In 2002, Naguabo reportedly had 1,924 jobs for a population of 25,000 and barely 161 businesses.

Most of the employment comes from manufacturing, agriculture, fishing, government, and small and midsize businesses. Economic development projects for Naguabo have come and gone in the past few years, such as a 2002 plan for a microbrewery that would have created 100 jobs. But the recession has scared many economic ventures away.

Baez Gonzalez estimates there could be some 250 people from Naguabo employed at the Navy base, people who will lose their jobs and go to City Hall looking for work.


Fajardo Mayor Anibal Melendez Rivera is closely following what happens to NSRR. Last year, 508 businesses provided 6,325 jobs in the northeastern-most municipality.

In his 16 years as Fajardo mayor, he has led the town’s growth by concentrating on providing the services needed by the local population (which numbers 40,700) and on the constant presence of tourists and the military in the area.

"Fajardo’s commercial businesses, particularly those providing food & entertainment, will be most affected by the base’s closure," said Melendez Rivera. "The transfer of NSRR commands to the U.S. mainland has already created a glut of residences, both houses and apartments, that are empty and have no short-term possibilities for being leased. It will be a blow for Fajardo and the towns surrounding the base."

Melendez Rivera has already been to Washington in attempts to convince the federal government to change its plans, if not for Puerto Rico for the good of the whole country. "My motivation is how the nation will be affected by NSRR’s closure," said Melendez Rivera. "I spoke with a White House aide about the important role NSRR played during the Dominican Republic’s revolution in 1965 and the Grenada conflict in 1983.

"It is obvious NSRR’s airport and runway have incalculable value for the Navy in any conflict in the Caribbean or Central America," the mayor continued. "In addition, there is the fight against drugs, illegal immigrants, and, most of all, terrorism. NSRR’s military facilities have no peer worldwide."

Melendez Rivera supports keeping NSRR in Ceiba and Naguabo to protect the jobs of hundreds of Fajardo residents. If the base does close, the mayor recommends implementing projects to attract tourism to the area.

"There has been a lot of speculation about private interests for the base’s 8,600 acres. A Walt Disney World-type project that could create thousands of jobs has been mentioned," said Melendez Rivera. "The construction of several hotels in the area would support the bay’s dredging for large cruise ships. Another use for the port would be as a transshipment port, given the bay’s many miles of seafront. The airport would make a great international facility that would be sustained by travelers from the eastern and southeastern towns of Puerto Rico."

So far, the towns in the Northeast Consortium have committed $1 million to provide training and retraining courses in tourism to 300 area residents under an agreement with the InterContinental Cayo Largo Resort, under construction in Fajardo. Melendez Rivera also supports the development of more and better transportation alternatives in the east.

"We have to create more employment and count on it to create secondary jobs. The more jobs people have, the more need there is for housing and services, and this is where true economic development comes from," said Melendez Rivera.

Rio Grande

"Puerto Ricans can’t simply sit back and await the negative repercussions of the closing of Roosevelt Roads," said Rio Grande Mayor Emilio Rosa Pacheco. He believes it will severely compromise the nation’s security. "Let’s not forget we enjoy peace thanks to Roosevelt Roads."

Emotionally charged and adamant about keeping Roosevelt Roads open, Rosa Pacheco said he is increasingly concerned about the town’s 52,000 residents, the stagnant economy, and the possibility of massive job losses. In 2002, the town had 4,094 jobs from 287 healthcare, manufacturing, agricultural, government, and small and midsize retail businesses.

"We’ll soon have hundreds of children with unemployed parents struggling to pay the rent and find new jobs in an area where employment opportunities are already very limited," said Rosa Pacheco. "The closing of Roosevelt Roads will be an economic and emotional blow to the people of Rio Grande."

The mayor said Rio Grande’s citizens have already been voicing their fear of mass unemployment. "Waiting to see what the federal government does with the base would be a grave error," said Rosa Pacheco. "Of course, the land could be used for an airport or as a transshipment port, creating new jobs. On the other hand, the federal government could sell the land to several private companies; what would we do then?"


While Humacao stands to feel some ill effects from NSRR’s closing, Mayor Marcelo Trujillo believes neighboring Ceiba is the biggest cause for concern. "[Ceiba’s] a small town with little or no industrial capabilities or resources, and the base is the town’s biggest employer," said Trujillo.

"The land should be placed in the hands of the people of Puerto Rico to ensure future urban development and ecological projects, as well as the area’s tourism industry. The surrounding beaches are among the most beautiful Puerto Rico has to offer, and it would be a shame to see them abandoned," said Trujillo. The mayor said he has consistently been impressed with NSRR’s well-maintained and well-organized facilities, which he believes should be preserved.

Humacao is one of the fastest-growing towns in the eastern region of Puerto Rico. In 2002, 810 businesses supported 8,853 jobs for a population of 59,000.

CB Writer Felipe Cardenas, PuertoRicoWOW News Reporter Joanisabel Gonzalez-Velazquez, and CB Researcher Blane McLane contributed to this story.

Service contractors & suppliers hurt by base’s downsizing, imminent closure


"This is terrible!" Ask any contractor or supplier to Naval Station Roosevelt Roads in Ceiba, and that’s what he or she will tell you about the base’s downsizing over the past few months and all-but-certain closure in 2004.

"We have always appreciated the Roosevelt Roads base and the U.S. Navy," said Wayne Valines, owner of Valines Industrial Laundry Inc., the island’s third-largest industrial dry-cleaning company. "We have been their supplier for 15 years and they have been excellent payers. They’re not like the local government, which takes up to six months to pay. The Navy pays in 30 days or the bill accrues interest."

Valines provides linen and laundry services to the base’s hospital and three hotels. It also served entire military fleets from various countries that participated in joint exercises off Puerto Rico and Vieques. All joint military exercises ended after the Navy’s shooting range on Vieques closed on May 1.

"Our business with Roosevelt Roads has declined 50% since the Navy ceased military exercises in Vieques. With no military exercises, there are no soldiers to soil linen and fewer clothes to wash," Valines said. "In the past, we served entire fleets from Germany, Canada, France, England, Brazil, and other countries. We are very sad because any business loss is significant during these economic times."

Valines was unable to provide details on the amount of business he gets from Roosevelt Roads, though he did say it represents at least 10% of the company’s annual sales.

"We’ve already experienced a significant economic impact from the Navy ceasing operations in Vieques. If they leave Roosevelt Roads, the impact to us and our employees will be even greater," said Valines. "If the base closes, it wouldn’t be cost-effective to send a truck to Ceiba to pick up the small amount of linen remaining."

Although he hasn’t had to lay off any employees despite the significant decline in business, Valines said the base’s closure would mean reducing work-hours from 40 a week to some 37. The company, with headquarters in Santurce’s Barrio Obrero sector, has 42 full-time employees from one of the poorest communities in the San Juan metro area.

"The effect of Roosevelt Roads’ closure will be felt for years to come. People don’t know what’s at stake," said Valines. "Even if the Army takes over the base, as some people hope will happen to avoid the base’s closure, it will never be the same. The Army uses a minimum of civilians for their operations, whereas civilians perform most of the jobs at Navy and Air Force facilities."

Even the future opening of several major hotels under construction in the island’s eastern region, among them Cayo Largo, Sol Melia, and Four Seasons, won’t offset the business lost from the closure of Roosevelt Roads, said Valines.

The story is much the same for a local supplier of portable offices and containers. In his case, though, business with Roosevelt Roads has declined 90% in only two years.

"Two years ago, the Navy rented 20 portable offices and containers from us each year, specially during military exercises in Vieques or when they had an excess of military officials at the base," Jose Dueñas, owner of Dueñas Trailers, told CARIBBEAN BUSINESS. "Since then, they have returned practically all of them [the offices and containers], and now call us only every once in a while for a container to ship sailors’ belongings to their new stateside stations."

Dueñas said Roosevelt Roads represented about 10% of his company’s sales. Although the loss isn’t great, it is still a blow, said Dueñas, who added that no employee has been affected so far by the decline in business with the military base in Ceiba.

"The Navy always pays on time and without a single problem. They were and are good clients," said Dueñas.

When more military and civilian personnel than the hotel facilities could accommodate arrived at Roosevelt Roads, they would be referred to Paloma Guest House in Ceiba. "I opened this guesthouse a year-and-a-half ago to provide service to the base," said Nilda Arocho, owner of Paloma Guest House. "The hotels at the base would send me the reservists they couldn’t handle. Now the business is very, very slow."

In the past, said Arocho, reservists would stay in the six-room guesthouse for two or three weeks at a time. They loved the place because it is situated on a mountaintop, where they could breathe fresh air.

"Now the guesthouse is empty because reservists no longer stay at the base. Most of my earnings depended on the military personnel coming to Roosevelt Roads," said Arocho. "Fortunately, local residents are engaging in internal tourism, and that has helped me to stay open. I still get one or two guests from the military, but they stay only for a few days."

Arocho recently launched a website to promote her guesthouse, and plans to join the Tourism Co.’s program to foster internal tourism.

She said the base’s closing would also affect some neighbors who rent their homes to the military. In fact, she said, many nearby homes are already empty as military personnel have kept moving off the base.

This Caribbean Business article appears courtesy of Casiano Communications.
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