A four-leaf clover?
Fort Lee's expansion is good news for Petersburg

by Donna C. Gregory
for Virginia Business
February 2007

Call it a stroke of good luck. While other cities worry about military base closings, the army base next door to Petersburg will double in population over the next few years, bringing growth to a city that needs an economic jolt.

When an additional 8,200 military workers, civilians, contractors and students start arriving at Fort Lee's logistics center during the next four years, the 5,500-acre complex in Prince George County will become the country's second largest training installation. That means more houses, more schools and more retail will be needed to accommodate the influx.

Petersburg is gearing up for the growth - an unexpected pot of gold for a city ranked as the fifth most fiscally distressed in 2005, based on a state report that looked at comparative revenues from 1998-2003. While Petersburg's Old Towne area has experienced a renaissance - with new artsy businesses and restaurants moving in - high property tax rates and poor performance by city schools on the state's Standards of Learning (SOL) tests are challenges for corporate recruitment.

In fact, Fort Lee's expansion is expected to boost the entire Gateway Region, an area with a population of 433,000 that, besides Petersburg, includes the cities of Hopewell and Colonial Heights and the counties of Surry, Sussex, Prince George, Dinwiddie and southern Chesterfield.

The expansion in facility space - from 7.5 million square feet to 13 million square feet by 2011 (within the base's current boundaries) - is part of a military realignment recommended by the Defense Department's Base Realignment and Closure Commission (BRAC) that won Congressional approval in 2005. As the base adds labs, a simulation center, and more teaching and administrative space, the project is expected to generate $1.3 billion in construction on Fort Lee alone.

The expansion is already generating interest among private contractors, says Renee Wyatt-Chapline, executive director of Virginia's Gateway Region, an economic development organization. "You're going to have many suppliers and vendors find that logistically they need to be close to the base," says Wyatt-Chapline. "We're actually hosting meetings for many of the contractors that are interested in locating to the area as a result of BRAC." So far, she's heard from engineering and food- service firms as well as service industries.

Meanwhile, local real estate agents are seeing increased interest. "We've had a lot of activity already," says John Powell, supervising broker and vice president of Long & Foster Realtors' Southpark office in Colonial Heights. "There are some people who are buying houses as investments for rentals. There are some people who have been speculating on land, and there's a lot of commercial growth," notes Powell. "I think we're going to see more restaurants, more shops. We're going to have a full spectrum of growth all around."

Growth brings challenges
The growth will challenge existing resources. A bigger population at Fort Lee is expected to strain local school systems - some of which are already crowded - and cause a demand for affordable housing that doesn't presently exist. "We will be getting involved at a detailed level with our surrounding school systems and also with the development community on the school and housing issues," says Denny Morris, executive director of the Crater Planning District Commission.

Fort Lee is the region's major economic engine, pumping about $900 million into the regional economy and generating $60 million in state and local tax revenues, says Morris. "[With the expansion,] it will certainly jump up significantly in terms of its economic impact" - with some estimates doubling the economic impact.

When completed in 2011, what will be known as the Sustainment Center of Excellence at Fort Lee will merge several training facilities into one location, including the U.S. Army Ordnance Mechanical Maintenance School from Aberdeen, Md., the Transportation Center & School from Fort Eustis, Va., and the Air Force Transportation Training and Air Force Culinary Training from Lackland Air Force Base in Texas.

The result will bump Fort Lee's average daily population from about 16,273 to 31,373. Most of the new faces will be students, based at Fort Lee temporarily as they receive training. But permanent military and civilian personnel and outside contractors will be needed to operate the center, with the first wave of new personnel coming in 2009.

That gives the region just two years to put in place the services and infrastructure needed to support the newcomers and their families. "We've been working very closely with the communities to identify the impact and at the same time, we're working to expand our facilities here," says Esther Lee, Fort Lee's deputy garrison commander.

In the meantime, a local team of consultants is studying housing, transportation, child care, schools, employment and other crucial areas in an effort to predict what will be needed to successfully absorb the incoming Fort Lee personnel. On the school front, places will need to be found for an estimated additional 3,600 pupils.

Tentative predictions on regional impact are based on the lifestyles of current Fort Lee personnel. A recent survey revealed that 26.5 percent of the base's personnel reside in Chesterfield County with another 17 percent living on base and 15.2 percent making their home in Prince George County.

That trend is expected to continue. Jim Adkins, president of the Home Builders Association of Southside Virginia, points out that the counties surrounding Petersburg have many more lots. "Colonial Heights and Petersburg just don't have much developable land," he says.

Affordable housing
However, when it comes to prices, Petersburg's housing should appeal to buyers in search of affordable homes. The area's average home prices are lower than what can be found 30 minutes away in metropolitan Richmond. "We have a lot more affordable homes available than a lot of our surrounding areas, which makes it good for Fort Lee," says Powell.

The average price for a home in the Gateway Region in November was $208,174 - up from $172,950 during that same month in 2005 - but more than $80,000 less than the state average of $288,716.

But Petersburg's low-performing schools could put off families in search of housing. "Petersburg won't be impacted as much as Chesterfield, Prince George, Hopewell, Colonial Heights and even Dinwiddie," predicts Brian Glass, senior vice president of retail brokerage with Grubb & Ellis|Harrison & Bates in Richmond.

Petersburg is working to improve its public schools, says Vandy Jones, manager of Petersburg's office of economic development. Last October, the Virginia Department of Education tapped former Prince George County Superintendent Dorothea M. Shannon to help the city meet state accreditation standards. Currently, only one of the city's nine public schools is fully accredited. Four have been denied accreditation due to low SOL scores.

On the brighter side, a new hospital - Southside Regional Medical Center - is going up. Plus, Boehringer Ingelheim Chemicals, one of Petersburg's largest employers, continues to expand its chemical manufacturing plant. In October, it broke ground on new production and laboratory facilities that will increase its manufacturing capacity by 50 percent and create more than 100 new jobs.

School placements won't be an issue for people relocating to Fort Lee without children. This group, which includes empty-nesters and young professionals, may gravitate to Petersburg's growing downtown arts community.

Robin Miller, of Monroe Properties, hopes so. When the Shockoe Bottom Arts Center, now known as the Petersburg Regional Art Center, relocated to downtown Petersburg in 2003, developers began looking at downtown Petersburg's empty storefronts with artists' eyes and saw potential.

Miller, one of the first developers there, is working on the second phase of High Street Lofts in the former Seward Luggage Building. When complete, the project will offer 68 condominiums featuring the exposed brick, timbers and pressed tin ceilings from the original building.

Condominium projects by other developers are under way on South and Bank streets, creating a blossoming residential community that's feeding the opening of café-style restaurants and small niche shops.

"If you have people living in downtown, it creates demand for retail and services. And if you have retail, services and activities, it will draw more people downtown. You hope they will continue to build on each other," says Jones.

Miller is optimistic - especially now that Fort Lee is expanding. "I believe the [Fort Lee] expansion will result in a huge demand for housing in the area," he says. "The wealth of historic architecture at low prices is very appealing, especially to the 'baby boomer' generation. People are finally discovering Petersburg."