November 2008

New Gold for Kentucky's Economy New Gold for Kentucky's Economy - The Lane Report - November 2008


Fort Knox area booms as Army brings in battalions of higher-paid personnel
By Shannon Leonard-Boone

An M1 Abrams tank sits atop the sign at Chaffee Gate, the main entrance into Fort Knox, in north Hardin County.

Located on 109,000 acres in parts of Bullitt, Hardin and Meade counties, Fort Knox is often shrouded in mystery for the high security surrounding the U.S. Bullion Depository, more commonly known as the ‘gold vault,’ and its other military operations there.

Perhaps an even bigger unknown, this one located outside its gates, is how Base Realignment and Closure (BRAC) activities there – as part of a nationwide government effort to streamline and realign the nation’s military operations – will ultimately change the surrounding communities with an influx of new, better-paid residents.

Some describe it as a golden opportunity for the area to grow and thrive. It also poses challenges for state and local governments to meet the education, infrastructure, health and housing needs of thousands of new residents in the north central Kentucky region who are already starting to arrive.

Changes on post
By BRAC’s end in 2011, Fort Knox will have transformed from a Training and Doctrine Command facility into a multipurpose forces command, military officials say, with higher-paying positions filled by workers who will have a lot of buying power in the surrounding community.
“We debunked the rumor that Fort Knox is going away,” said Maj. Gen. Donald M. Campbell Jr., commanding general at Fort Knox. “…We really believe this will be good for the local community.”
Campbell said his focus has been on ensuring that civilians, soldiers and their families are taken care of during the BRAC process, and hails area officials for their willingness to help ease the transitional stress.

“The response I get is very positive, and I mean that sincerely. They’ve always been good to Fort Knox,” the commander said.

On post, dirt is moving and heavy equipment roaring as new barracks, a dining facility and other structures spring up for the new missions locating there, all part of an estimated $800 million to $900 million in new construction at Fort Knox.

Groups of military personnel are already settling in at their new home base, including the 36-member F Company 3rd SARG, the 166-member 11th Theater Aviation Command Headquarters, and the 19th Engineer Battalion with its 670 members. The 3rd Expeditionary Sustainment Command, with an estimated 260 members, arrived last year.

Much larger groups are on the way, including up to 3,100 people with the Human Resource Command slated to begin arriving in 2010; another 3,400 assigned to the 3rd Brigade; the 1st Infantry Division, which will arrive in late 2009; and 550 personnel with the 9th Engineer Battalion in 2012. The U.S. Army Accessions Command and U.S. Army Cadet Command start arriving next year with 380 people.

Other personnel reductions will play a part in BRAC’s changes at Fort Knox. One that will be most acutely felt is the Armor Center and School’s move to Fort Benning, Ga. The post has trained Army and Marine armored personnel at Fort Knox in growing and evolving incarnations since 1940, and will now relocate sometime between 2010 and 2011 with 3,750 people affected.

Also departing with smaller numbers is the Regional Correction Facility and Army Research Institute, following the Unit of Action Maneuver Battle Lab, which left last year, and the Blood Bank, which is currently departing.
All told from 2005 to 2011, the net change in permanent position workers on post for both military and civilians will be 3,723 additional workers, with an expected regional population increase, including workers’ families, of nearly 11,500.

New jobs created
Preliminary results are in for an economic impact study commissioned by the Lincoln Trail Area Development District for the nine-county area most affected by BRAC and it’s positive. Employment at Fort Knox will jump from 16,086 in fiscal 2007 (Oct. 1, 2006 to Sept. 30, 2007) to 20,826 in fiscal 2010. It’s expected to remain beyond the 20,000 employee mark through 2012.

Study data reveals a peak military payroll of $455 million in fiscal 2010, up from $250.5 million in the most recent fiscal year. Additionally, civilian and contractor payrolls are expected to climb to similar peaks in about two years, when the Human Resource Command relocation to Fort Knox is in full swing.
The number of part-time and full-time jobs created directly or indirectly by BRAC activities at Fort Knox in the surrounding nine-county region is also noteworthy, with nearly 27,000 new construction and operational jobs created each year in fiscal 2008 and ’09, with a peak of 33,176 new jobs in fiscal 2010, according to the study.

The bulk of those are directly created military and civilian positions on post. And that activity already is indirectly generating off-base civilian jobs, such as those arising from the spate of new banking centers cropping up across Hardin County.

Every two new jobs on post will create one job off post in the nine-county area surrounding Fort Knox, the study estimates.

Civilian benefits
Area retail, health and social services, hospitality and construction sectors stand to benefit most from the population spike BRAC is bringing, the study said, though more jobs and output are expected across nearly all industries from utilities to wholesale trade and transportation/warehousing.

The financial impact also reverberates with on-post construction. It rose from $85 million in fiscal 2007 to $185.7 million in fiscal 2008, which concluded at September’s end. On-base building remains at around $100 million now through fiscal 2011, then will fall back to earth at $2.5 million in 2012.

Private real estate and rental business in the off-base areas surrounding Fort Knox is expected to increase by $4 million between fiscal 2007 and 2012, the study shows. With 2,900 to 3,000 sets of living quarters on post, obviously some soldiers and civilians must seek housing in the counties nearest to Fort Knox.

It’s still a bit early to assess the impact of BRAC on private-sector housing, said Erika Gudenkauf, president of the 400-member Heart of Kentucky Association of Realtors which represents Hardin, Meade, Hart, Bullitt, Grayson and parts of Nelson counties, but there’s been a marked increase in the number of inquiries from people considering moving to the area for jobs on post.

“It’s always supply and demand, and right now we have an ample supply,” she said.

One subdivision in northern Hardin County under construction about 6.5 miles from Fort Knox is Cowley Crossing, an upscale development offering an 18-hole golf course with a lake and planned “villages” of homes in the $300,000 range. Future plans also include a gated village and another with estate homes.

“That’s very exciting, and obviously you don’t invest millions of dollars without thinking there’s going to be a need for it,” Gudenkauf said.
State and local tax coffers will also experience a BRAC boost, with Kentucky state tax receipts up from $48 million in 2007 to $87 million by 2010.
County and other local tax receipts in the nine-county region also will benefit, jumping 83 percent from $3.5 million in 2007 to a peak of $6.4 million in 2010. Overall, the study projects a sustained 40 percent increase over current tax money generated by Knox for state, county and other local entities. There will be $96.2 million in new state tax revenue and $7.1 million in new local tax revenues in the nine-county region from 2007 to 2012.

Education keeping pace with growth
Schools will have to make room for an unknown number of children from new BRAC families entering the area. Since civilian workers and soldiers living off post can live wherever they choose, it’s not clear which school districts will experience the largest gains in student populations.

Hardin County Schools Director of Public Relations Richard Thornton said the district has handled a high volume of e-mailed questions from those now on bases in Virginia, Indiana and Missouri about the school system.

And, he said, school facilities are being readied for the growth spurt. Newly built Heartland Elementary School in Elizabethtown opened this fall and North Middle School is under construction near just-renovated North Hardin High School. Another existing middle school will be redesigned to handle any overflow, Thornton noted.

Hardin County Schools Superintendent Nannette Johnston traveled with a contingent of local officials to BRAC “road shows” as part of a concerted sales pitch of sorts the past two years to attract those working in places like Alexandria, Va., and Fort Leonard Wood, Mo., to relocate to Fort Knox with their jobs.

“We are doing everything possible to prepare for the arrival of families with the BRAC move, from working with Fort Knox officials to personally briefing visiting families to designing a BRAC-friendly section on our Web page,” said Johnston. “With the influx of between 1,500 and 2,000 new students in the next two years, we know this will be an expensive endeavor for the school district.”

Dollars are needed from the state and national levels, Johnston said, but logistically the district remains ready to address the needs of the community.
“Funding the new families’ needs is a priority now to adequately prepare for their transition to Hardin County Schools,” she said.

And in terms of postsecondary education, last spring Western Kentucky University, which has offered classes at Fort Knox for 35 years, opened a new Radcliff facility called the Center for Regional Development to help meet the local workforce education needs stemming from BRAC changes.

State, local leaders planning ahead
Meade County Judge Executive Harry Craycroft said he’s told that of those moving to the area with BRAC, 12 percent will settle in his county, which currently has about 29,000 residents. He hasn’t seen a lot of new housing starts so far, but expects the full impact to be realized in late 2009 through 2010 when most of the newcomers will arrive with the Human Resource Command.

“We feel that once they see Meade County, it’s going to be very attractive,” Craycroft said. “We feel like we have a lot of natural beauty and friendliness to offer to the people coming in.”

Meanwhile, Bullitt County officials are touting their community’s merits. Bob Fouts is executive director of the Bullitt County Economic Development Authority in Shepherdsville, and said with 35,000 acres of Fort Knox within Bullitt’s boundaries, its convenience for new residents will be obvious as they prioritize and decide where to relocate.

With its close proximity to Louisville’s airport, amenities such as shopping, arts and entertainment, and more jobs to choose from for spouses, Bullitt County’s attraction is evident, Fouts said.

“(BRAC) definitely will have an impact,” he said. “I don’t know how we can measure it right now.”

Radcliff Mayor Sheila Enyart said Gov. Steve Beshear has recognized the urgency in funding for a variety of BRAC-related needs, along with his appointments to a Governor’s Task Force on Military Base Realignment in March 2008. The Ernie Fletcher administration created its own BRAC task force in 2005.

Over the next biennium, $100 million in state money has been appropriated for roads and other infrastructure improvements across the region to accommodate the first phase of BRAC growth.

In late October, Beshear’s office announced that the U.S. Department of Labor had awarded Kentucky $3 million, to be administered through the Education and Workforce Development Cabinet. These dollars will help individuals and businesses at Fort Knox and in surrounding counties to prepare for changes such as minimizing unemployment times for BRAC-impacted workers, helping with workforce skills upgrades and other outreach and marketing initiatives, according to a governor’s office press release. 

So far in Radcliff, Enyart reports there hasn’t been a boom in retail activity or new housing, but she’s pleased the community has rallied to ensure the area is ready for coming changes.

This cooperation among leaders across the area, she said, has led to the Fort Knox community being “light years ahead” in readiness for BRAC changes than other affected communities nationwide.

“This region has taken the BRAC process and backed it 100 percent,” she said.
Another member of the governor’s task force is One Knox Executive Director Brad Richardson. Since late 2005, OneKnox has served as a one-stop source of information about schools, housing, arts and entertainment, shopping and other areas of interest for new families moving to Fort Knox. With the Lincoln Trail Workforce Investment Board, it has held federal hiring symposiums and hosted community tours and other special events for newcomers.

As a community, “We’re doing the best as we can as fast as we can to get prepared,”  Richardson said.

Progress has been made in workforce development, with studies commissioned on various facets of the region from labor, transportation and housing to health and human services to help gauge BRAC-related needs, Richardson said.

Early next year a new initiative, Human Resource Command Forward, will begin hiring 300 to 400, mostly civilians, on local, regional and perhaps national levels, Richardson said. This entity will operate from a building near Fort Knox, he said, with the goal of helping the Human Resource Command transition in to meet the target occupation date of the command’s new on-post facility by June 2010.

A welcome luncheon was held in mid-September for about three dozen workers from Alexandria, Va., who are considering moving along with their Human Resource Command jobs to Fort Knox. Richardson said the workers were pleased with the housing prices, cost of living, lighter traffic and the beauty of the area.

Elizabethtown Mayor David Willmoth Jr. met with some of the Virginia residents during their visit, and said such events help them see for themselves that Kentucky and its residents don’t exemplify negative stereotypes they may have heard.

He found it amusing when one resident wondered aloud if the area had access to a grocery store.

“We still have that stigma, a perception that everybody is a little backward,” he said. “I think we’ve tried to change that mindset a little bit, and it’s working.”

Lane Report Cover November 2008 In This Issue
New Gold for Kentucky's Economy
Fort Knox area booms as Army brings in battalions of higher-paid personnel
Features
A Pep Rally for Boldness
Kentucky must encourage change to compete in today's economic environment

Commentary on U.S. Economy
Commentary on U.S. Economy

E-mail Fatigued?
Efficiency techniques tame the inbox and make it an invaluable tool rather than a productivity killer

University Research
Fischer-Tropsch Is Turning Kentucky's Coal and Biomass into Ultra Clean Fuels Discovered by two German scientists in the 1920s, the Fischer-Tropsch (FT) process uses a catalyst (a reaction accelerator) to convert syngas to hydrocarbons.

Departments
One-On-One
Home Builders Association executive Bob Weiss talks abouthow the current economic crisis is affecting Kentucky construction

Fast Lane

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Exploring Kentucky

Interstate Lane

Marketing

Passing Lane

Perspective

Spotlight on the Arts

The Lane List

Updates on business and economic news from across Kentucky compiled by the editors of the Lane Report.

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