Pelosi has her eye on Treasure Island

House Speaker Nancy Pelosi (D-Calif.) is eyeing treasure in a massive Pentagon bill that could benefit her district greatly.

Pelosi is among dozens of House lawmakers pressing for a little-known provision in the defense policy bill that would speed up the transfer of military bases to private developers.

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One of those shuttered bases has been the subject of years of failed negotiations between San Francisco, the city Pelosi represents, and the Navy.

The two parties have been at a stalemate over Treasure Island, a Navy base that closed in 1993 and sits atop a man-made island in the San Francisco Bay that has city planners seeing dollar signs.

They have squabbled over the price. The Navy estimates it is worth $240 million; the city offered a tenth of that value.

Pelosi has personally fought and negotiated with the Navy over the land transfer, but those negotiations broke down.

Now, under the provision in the House bill, lawmakers could force the Navy to wave a white flag and accept a sweetheart deal for the city that involves no immediate payment for the land.

Instead of negotiating the value and paying the Pentagon upfront, the military services would transfer the land at no cost to local authorities for economic development. Cities and other local authorities can put off paying for that land until it is developed and the value will be determined at that point.

The House provision likely will face stiff opposition from the Senate as the two chambers start conference negotiations on the final 2010 defense authorization bill. The Senate version of the bill does not include a similar provision and contains a “sense of the Senate” provision challenging the House language.

Senate critics fear the Pentagon will ultimately receive a lot less money — if any at all — for the property and that payment will come at an uncertain time more than five years after the real estate transfer.

Pelosi’s office points out that the Speaker is not directly involved in the fate of the provision. It was drafted by Rep. Sam Farr (D-Calif.) with bipartisan support and would benefit about 24 districts from Maine to California. But the Speaker is closely monitoring it, a spokesman said.

“The Speaker did not request the language, but supports it and hopes that it is maintained in conference,” said Drew Hammill, Pelosi’s spokesman.

Pelosi failed to get a provision in the defense policy bill last year that would have forced the Navy to sell the property at a price the city offered.

This year the Speaker engaged the White House on the issue of conveying military land for no cost, particularly after Sen. Dianne Feinstein (D-Calif.) urged the Obama administration to support such an approach, according to a Pelosi aide. The Speaker has also recently engaged the new secretary of the Navy, Ray Mabus, on the matter.

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The city of San Francisco submitted a request to buy the Treasure Island property for an economic development project, and has been negotiating with the Navy over a fair market price for the last six years.

The Navy has appraised the cost at $240 million, while San Francisco appraised it at $14 million. The city recently commissioned an independent appraisal by auditor KPMG that concluded the value at $22 million, which the city offered to pay to the Navy. The Navy had consistently argued that the city is not offering a fair market price for the land.

It is yet unclear where the Obama administration and the new deputy undersecretary of Defense for installations, Dorothy Robyn, stand on this issue. Robyn was a senior economic adviser to the Clinton administration.

The Clinton administration pushed for the legislative authority to allow the military to have the option to do no-cost conveyances in order to spur economic redevelopment and job creation at closing military installations. The current law allows the Pentagon to choose a no-cost option.

Robyn’s predecessor, Wayne Arny, a Bush appointee, made his opposition to the House provision very clear last month. Arny told a Senate Armed Services Committee last month that transferring land at no cost would reduce funding used to accelerate base closure cleanup and would be unfair to the taxpayer. Arny said that mandating no-cost transfer would only advantage some locations and effectively take money away from taxpayers.

The provision “would essentially be giving a particular community that normally wouldn’t qualify for it a windfall profit that would divert money from the taxpayers,” Arny said in his testimony.

The Navy has particularly relied on the use of land sales for cleaning up for its bases slated for closure.

The Pentagon last month also sent official opposition to the House provision, but that opposition was not included in the White House statements of administration policy it issues for bills under consideration. The Pentagon opposition states that the provision would “fundamentally change the existing base closure property economic development conveyance authority by requiring no-cost conveyance for redevelopment that may not produce any long-term job generation.”

A Pentagon spokeswoman said on Wednesday that the Pentagon and Robyn’s office will not comment on pending legislation.

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When the House included the provision in its version of the 2010 defense authorization bill, Pelosi released a statement hailing it.

“Once transfer of the land is complete, the city can quickly move forward with substantial redevelopment plans that include essential infrastructure, open space, affordable housing and extensive commercial activities, including retail, restaurants and entertainment,” she said. “In total, more than $5 billion in public and private investments will create more than 2,500 permanent jobs, five times the number of civilian jobs that were lost with the closure of the base. Another 2,000 jobs will be created annually during construction.”

Pelosi also praised the chairman of the House Armed Services Committee, Rep. Ike Skelton (D-Mo.), for including the provision in the bill.  Farr says the provision is necessary.

“Taxpayers have already forfeited these lands so bases could be built,” Farr said in a statement when he introduced his legislation earlier this year. “Then, they subsidized the construction of the installations. Today, we’re paying even more to have bases scrubbed of toxic and hazardous waste. But rather than offering these lands to communities that desperately need economic development, the Department of Defense wants to squeeze more money by demanding communities pay once more for the land.”