The Impact of the Recommendation to Close Ellsworth AFB
For the nearly 60,000 residents of Rapid City, S.D., life is good. Residents enjoy mountain-clean air and steady economic growth.

"It's a great place to live. It's kind of a well-kept secret," said Rick Kahlor, a local realtor, appraiser and financial planner.

But for the city voted the sixth best small metro area to live in by Forbes, Ellsworth Air Force Base's proposed closure under the 2005 Base Realignment and Close (BRAC) round is cause for worry.

Located seven miles east of Rapid City, Ellsworth is home to a fleet of 29 B-1 bombers, which under the Pentagon's BRAC proposal would be transferred to Dyess Air Force Base in Texas.

As the state's second largest employer, Ellsworth provides approximately 5,500 military and civilian jobs and an additional 1,700 indirect local jobs. The base is a pillar for Rapid City, pumping $278 million into the local economy, according to the Air Force's 2004 Economic Impact Analysis.

"That's significant to our community because of our ruralness. It's about 9 percent of the Rapid City economy. It's not like some place in the middle of a high population," said Jim McKeon, president of the Rapid City Area Chamber of Commerce and Ellsworth Task Force member.

According to a study by South Dakota School of Mines and Technology professor Sidney Goss, if Ellsworth closes, the Rapid City statistical area totaling 116,000 residents would lose 9 percent of its population, or 10,000 people. The loss would bring the area's population back to its 1988 level, sending its remaining residents scrambling to regain footing in a shrunken local economy. As many as 3,000 Rapid City area residents could be left looking for jobs following the base's closure.

"Take any small business, which Rapid City is basically comprised of, take off 8-10 percent of their gross sales and look at the bottom line. Any business is going to feel it. There's no question we're going to feel it," Kahlor said.

Ellsworth is also one of the few local employers providing a large number of middle-income and middle-management jobs. The base provides stability, good pay and benefits to its 1,000 civilian employees, including 114 disabled workers from the Black Hills Workshop.

Rapid City officials worry that the sudden loss of middle-income jobs would cripple the local economy, which would be unable to absorb the surge of skilled workers seeking jobs.

A plummeting population also threatens the livelihood of small business owners.

Bruce Meister and his wife opened BJ Grinder King, a restaurant serving sandwiches and pizza, nearly 23 years ago. He estimates that about 20 percent of his business comes from Ellsworth Air Force personnel and is certain that Ellsworth closing would hurt his business. But he remains defiant about closing his operation.

"I've got the attitude that I'm not going to quit. I'm going to keep on going. If Ellsworth goes away, nothing's going to happen to me. It will affect my business, but I'm staying here," Meister said. "I would've closed the doors years ago if I had any sense."

Local public schools also stand to lose a significant portion of their students. Douglas School District, located in a town just outside Rapid City and adjacent to the base, would lose nearly half of its 2,500 students and most likely close one of its four elementary schools. Douglas School District Superintendent Joe Schmitz said in a Rapid City Journal article that the school district would employ fewer staff and experience a cut in its $23.7 million annual education spending.

Superintendent Peter Wharton estimated that Rapid City School District would lose approximately 400 students, the children of military and civilian base personnel, according to the Rapid City Journal.

For Rapid City Regional Hospital, the loss of patients would be significant. In the past five years, military personnel and their dependents have generated $50 million in hospital bills. A dramatic decrease in inpatient care demand threatens the jobs of Rapid City's doctors, nurses, and hospital administrative and maintenance staff, McKeon said.

The 2,739 military retirees and their families who use Ellsworth's clinic for medical treatment would also have to find another source of health care.

According to United Way of the Black Hills executive director Renee Parker, in the past year, Ellsworth personnel contributed $23,000 and countless volunteer hours to local nonprofit organizations. Big Brothers and Big Sisters of Black Hills would lose 20 percent of its volunteers, all of whom are military personnel. The Box Elder Volunteer Fire Department would lose half of its firefighters.

And while shutting down Ellsworth may hurt small businesses, schools, nonprofits and the hospital, its affect on the real estate market is difficult to predict.

The Air Force estimates that nearly 1,800 active duty personnel live off base. Of the 25,000 housing units in Rapid City, about 3-4 percent are vacant. Kahlor estimates that the vacancy rate will increase between 5-10 percent and that the rental supply will decrease in the next few years as more people choose not to purchase homes.

Historically, sudden increases in housing supply have not caused a drop in prices, but houses could spend more time on the market.

But on the day the Pentagon released its 2005 BRAC list, Kahlor said his brother, another realtor, lost five deals.

Like the real estate market, Rapid City's future is murky.

In recent years, large retailers such as Kohl's, Lowe's, Borders and Wal-Mart have moved into town, making Rapid City the only retail center in a 200-mile radius and adding fuel to its economic engine.

Some speculate that the future of the Rapid City economy lies in the hi-tech sector. Two years ago, area developers introduced the Black Hills Vision, a campaign to expand the local economy. The initiative recently reached its $3 million fundraising goal, which it plans to put toward a number of development projects, including a business incubator on the campus of the South Dakota School of Mines and Technology and the conversion of a gold mine to a national underground laboratory. Black Hills Vision also aims to establish a technology corridor in Rapid City using Oak Ridge, Tenn., home to over 1,000 technology companies, as a model.

One of the area's assets is its base infrastructure into which the federal government has channeled $139 million for construction and improvements since 1995. Ellsworth's 5,400 acres house $500 million's worth of assets, according to Air Force estimates, including a 13,500-foot concrete runway and 4.4 million square feet of office, warehouse and residential space.

How Rapid City would use Ellsworth's resources is uncertain, but rumors point to aircraft delivery services such as Federal Express and United Parcel Service as well as the motorcycle manufacturer Harley Davidson. Chamber of Commerce President McKeon insists these companies are not viable options.

"There are no businesses or organizations that are knocking on Ellsworth's door to move in. There are plenty of rumors floating around but they have no substance," he said.

But area officials believe that the key to Rapid City's recovery is a diverse economy, and its recent economic momentum will be a buffer against the loss of Ellsworth.

According to state Sen. Stan Adelstein, R-Rapid City, despite losing 7,000 jobs over the last five to six years, Rapid City's economy has continued to expand.

Kahlor, however, is not as optimistic, estimating that the city will take about five to 10 years to recover and that Rapid City residents face a difficult road ahead.

But the Ellsworth Task Force, a coalition of local government and businesses, is in full force to save the base -- lobbying officials and building a case for Ellsworth's economic and security value.

"The best use for Ellsworth is Ellsworth, for South Dakota and the country," McKeon said.

-- By Monica Villavicencio, Online NewsHour