Conversion from military installation to commercial, historical center shows best of what government can do — but controversy lingers

ON JUNE 24, 2014, THE CALIFORNIA DEPARTMENT OF TOXIC SUBSTANCES CONTROL sent cleanup orders to four parties in Benicia, including the city and the U.S. Army Corps of Engineers. To the surprise of local environmental activists and city representatives and staff, AMPORTS was not included in the orders.

According to city officials and representatives who spoke on condition of anonymity, environmental activists who originated the process leading to the order, as well as many in government, expected that AMPORTS would have the insurance and deep pockets to pay for any cleanup that might be necessary. However, contrary to widely held local belief, AMPORTS’s predecessor, Benicia Industries, never owned the properties cited in the DTSC’s 2014 Remedial Action Orders. Nevertheless, city officials continue to scour the leases and other documents pertaining to the conversion of the Arsenal from an Army facility to a commercial one, looking for a clause that might draw AMPORTS into the process.

In an afternoon at the Solano County Registrar of Voters office in Fairfield, I found documents showing that the city purchased the Arsenal directly from the U.S. government in 1965 and sold properties in the district to the current owners. The city sold off those Arsenal properties, including the Guardhouse, independent of Benicia Industries before and after the land swap of 1974.

Cobbled together from interviews, newspaper accounts and documents obtained from the Army Corps of Engineers, the city of Benicia, the U.S. General Services Administration, the Solano County courts, the Benicia Historical Museum, the state capital and The Benicia Herald, the true story of the conversion is one of civic service and dedication, goal setting and the best of what government can do.

The Arsenal closes

On March 30, 1961 the Benicia Arsenal received a teletype message from the U.S. Army Chief of Ordnance, relayed from the Deputy Chief of Staff for Logistics, which stunned the installation personnel and the Benicia community. The message read: “Benicia Arsenal, Benicia, California will be inactivated by closeout and/or transfer of mission to Tooele Ordnance Depot, Tooele, Utah. After inactivation, Benicia will be declared excess.” The date of the inactivation was set for March 30, 1964.

The news that the Arsenal was closing came as a thunderbolt to the Arsenal workers and residents of Benicia when it was announced at a hurriedly convened press conference at 8:15 Friday morning March 31, 1961. Col. Albert C. Wells, Jr. the commanding officer, released the telegram and explained that the closing was part of a realignment of Army facilities that included Mt. Rainier Arsenal in Washington, Raritan Arsenal in New Jersey, and the Rossford Arsenal in Ohio. The Sierra Ordnance Depot would become a reserve facility.

Col. Wells explained that the Arsenal would be inactivated over three years with the transfer of its basic mission to Tooele. The equipment and surplus supplies would be used, scrapped, sold, or transported to other worldwide installations or governments, or sent to Tooele for re-use, storage, or scrapping. The military personnel, by then fewer than one hundred members, would be transferred to other Ordnance Department facilities and the civilian employees offered jobs at Tooele.

The Arsenal management proceeded with the process of reassigning personnel, selling or shipping equipment, and other steps to close the base. Many skilled workers transferred to nearby Travis Air Force Base, Mare Island Naval Shipyard and other installations throughout the West. Many employees elected to take retirement and others sought employment in the private sector.

The procedure at the time for base closure was to turn the property over to the General Services Administration once it was declared surplus. In turn, the GSA planned to apply its usual three options of property disposal to the Arsenal: 1. Transfer of the property to another Federal agency, 2. Sale of the property to another governmental entity such as a state university, or 3. Divide the property into small lots and sell them to private entities by auction.

The situation facing Benicia in 1961 was unique. While many bases constructed during World War II had been closed following demobilization, they had been temporary and never intended to last past the end of the war. Some received a reprieve for use in the Korean War, but most of these temporary bases had been rapidly closed. The Benicia Arsenal, on the other hand, was part of the first wave of over 600 permanent base closures and part of the Kennedy administration’s effort to modernize the Armed Forces. The military could no longer keep bases open to maintain turf. Every decision and every purchase had to be justified. The US was engaged in a costly Cold War that demanded sophisticated nuclear delivery systems and not antiquated Arsenals. In addition, the Army had been on a decade-long program to modernize its procurement and management systems. Being the first round of permanent base closings following World War II, the Department of Defense and the GSA were entering uncharted territory.

Benicia responds

While the Army had already initiated a reduction of force at the Arsenal, the impact of the closing was immediately apparent to the residents of Benicia. The City and the Arsenal had grown together, joined at the hip for 117 years. The city businesses, churches, bars, markets, stores, and governments were dependent on the military and civilian workers who lived, played, and shopped in the town.

The response was immediate. John Baldwin, the congressman for the district where Benicia was located, issued a press release questioning the closing and urging the retention of the Arsenal. Mayor James Lemos called an emergency meeting of organizations and citizens of Benicia the evening of the announcement. At the meeting a “Save the Arsenal” movement was launched and a committee organized. Michael FitzGerald, local hardware dealer and postmaster, was head of the city military committee and became involved. John Berry, retired deputy of supply operations at the Arsenal, joined the enlarging committee. Other members included city attorney John Bohn and businessmen from Benicia and Vallejo.

John Berry traveled to Washington in early April to meet with Army officials. He returned to Benicia and gave a report to about 300 Arsenal employees and interested Benicia citizens. Officially, he said, he was only given the original justification by the Army: “The Benicia Arsenal lacks the prerequisite safety area for storage of ammunition and missiles, and thus cannot fulfill multiple purpose ordnance storage and maintenance missions efficiently and economically.”

Lemos and Berry, accompanied by state Sen. Luther Gibson, met with Gov. Edmund G. (Pat) Brown at the Capitol in Sacramento. Brown agreed to travel to Washington to get first-hand information on the closure. He did so, but his trip made no impact on the Army’s decision. While the attempts at keeping the Arsenal open were progressing, the Army sent memos to its employees about transfer plans to Tooele and started the process of closure.

Desperation sets in

The Benicia City Council debated in open session whether there was enough money to spend three thousand dollars for a new police car. With people leaving the City its tax base was collapsing. Benicia had never been wealthy. With a budget of less than $100,000 a year, it had financed its fire trucks, police cars, and its first swimming pool by shaking down the local brothel and bar owners for “donations.” Now, with the brothels closed due to public pressure, the bars closing due to lack of business, and people leaving town for Utah, the City was already feeling the pinch of decreased revenue.

To mollify local opposition to Arsenal closure, Assistant Secretary of Defense Thomas D. Morris and a corps of assistants were sent from Washington in May 1961 to visit the Arsenal, accompanied by the US Senators from California Thomas Kuchel and Clair Engle. They met with FitzGerald, Lemos, Berry, Vallejo Mayor G. Wilfred Hewitt, and Arthur H. Kenny Again, there was no success.

Morris returned to Washington and released an announcement that there would be no change in the current plans.

The “Civic Committee to Save the Arsenal” wasn’t happy with the recommendations of Secretary Morris. They addressed the following letter to Congressman Baldwin.

“This committee, composed of civic and government leaders of Solano County, believe that the ‘inspection tour’ of the Assistant Secretary of Defense Thomas Morris and his party was a face saving gesture to ease public pressure on the Defense Department rather than an honest attempt to evaluate the many points raised by the Benicia delegation at the hearing held recently in the Pentagon. …

“Every indication points to the fact that the people of California solidly subscribe to the belief that you gentlemen, as our representatives in Congress, are entitled to know the reasons supporting the Defense Department’s action in this matter and receive an honest evaluation of the costs required to make Tooele a ‘multipurpose depot.’

“In consideration of the foregoing, we respectfully request that appropriate steps be taken by you to insure a full and complete hearing on this entire matter before an appropriate congressional committee.”

There was a ray of hope when the Kennedy administration announced in August that the Boston Shipyard and Hunters Point Naval Shipyard in San Francisco, which had also been scheduled for closure, had been spared from closure. But by October 1961 the Army was moving forward with plans to quit the Arsenal. Col John P. Sherden, the base commander, announced that 200 civilian employees had already left the regular staff of the Arsenal. Of that number, 29 were retirements, 17 left to take positions in non-federal jobs, 18 took federal jobs outside the Defense Department and the remainder transferred to other positions within the Army.

As 1961 came to a close, the citizenry of Benicia had resigned itself to the closure of the Arsenal, but at the same time was looking forward to the opening of the Martinez-Benicia Bridge and the connecting highway. There was also another plan in the works to rescue the town. John Bohn and James Lemos were preparing to travel to Washington.

An idea germinates

The conversion of the Benicia Arsenal into the Benicia Industrial Park was the brainchild of two men: John Bohn, the city attorney who provided the legal expertise and guidance, and James Lemos, the mayor who provided the political leadership.

Bohn was born in Oakland in the first decade of the 20th century. He held an undergraduate degree from Stanford and a law degree from Boalt Hall at UC-Berkeley. His law career started with teaching real estate law at Boalt Hall before entering into practice in Walnut Creek. During World War II, Bohn ran the cafeteria systems that fed civilian and military workers at Mare Island. After the war he became general counsel to the Vallejo Times, where me met publisher and state Sen. Luther Gibson. He then became general counsel to the Senate Judiciary Committee, chaired by Gibson.

The California Legislature met part-time until 1964, so Bohn had time away from his tasks as general counsel. In 1951 he wrote the first legal code for Guam, which at that time was breaking away from U.S. Navy domination. He remained counsel to the Guam legislature for years afterward and initiated a lawsuit against the Navy to recover compensation for Guam residents who lost land to the Navy. Later, Bohn co-wrote the first legal code for Alaska and wrote the first Uniform Commercial Code for California.

James “Jimmy” Lemos served Benicia for 35 years as mayor and as a member of the City Council. He was involved in many important decisions that made Benicia the place it is today. City Councilman Mike FitzGerald, part-time postmaster of Benicia and full-time hardware store owner, and Lemos hired Bohn to be Benicia city attorney in the early 1950s.

It was Jimmy Lemos and John Bohn who dreamed up the Benicia Plan.

The Benicia Plan

In Benicia the question of how the government could best close a military base was answered. The solution, called the Benicia Plan, is still in use today; its main component is the Surplus Property Authority.

In late 1961, Bohn and Lemos flew to Washington. According to Bohn’s son it was the first time either had been on a jet aircraft, and they paid for the trip with their own money. It was a last-ditch effort.

They met with Sen. Clair Engel and with representatives of the GSA, the National Parks Service and the Pentagon agencies concerned with base closures.

Bohn and Lemos had done their homework before the Washington trip. Once Bohn received the portfolio of the city of Benicia to negotiate with governments and private companies, he and Lemos had multiple meetings and telephone conversations with multiple parties.

The goals of the conversion of the Arsenal into the Benicia Industrial Park were clearly set in 1961 by both the Arsenal Committee and the City Council: 1. The 2,000- to 3,000-person permanent workforce at the Arsenal would be replaced by a number of equal size in the Industrial Park; and 2. The Industrial Park was to become an ongoing source of property tax income. It was not the intent of the Council or the Arsenal Committee to see the rent or sale of the land become a money maker for the city. Nevertheless, the rental and property sales income over the years did pay for all legal expenses and the purchase of the properties.

It was a complicated landscape. The Dominican Order wanted a slice of the Arsenal to expand the Catholic cemetery, the Maritime Commission wanted use of the wharf, the state and national parks services were interested, and the State Lands Commission was involved in the marsh and submerged lands. The California National Guard required a plot of land for a new armory to replace the one located in the Clocktower warehouse and needed funding for new construction. The Pacific Telephone Company, the Pacific Gas and Electric Company, the state of California, Solano County, the Southern Pacific Railroad and the city of Benicia had easements on Arsenal land that needed to be negotiated. The Department of Health, Education and Welfare owned the water system and Pine Lake.

As early as December 1961 it appeared that Benicia Industries and Bechtel Industries were interested in a land deal. There were also active discussions with the city of Vallejo and Solano County to join in the conversion project, and there were discussions with state agencies concerning sources of funding. Each agency and company wanted its own survey and appraisal.

There was another problem facing Bohn and Lemos as they made the rounds of Washington. Being a “city of the sixth class,” Benicia was restricted by the California Constitution from going into debt except through secured bond sales. This meant that the city had to find a way of either coming up with the full sale price of the Arsenal property or a way to circumnavigate the constitutional restriction against assuming debt. The problem was complicated by the fact that the city had lost most of its tax base with the Arsenal closure and couldn’t make payroll or purchase new city vehicles.

The last stop for Bohn and Lemos was an interview in the Pentagon with Secretary of Defense Robert McNamara. McNamara and Bohn had known each other as teenagers growing up in Piedmont. They had been in Boy Scouts together, so there was a connection that could be exploited. McNamara was gracious as Bohn and Lemos made their case for the future of the Arsenal and Benicia, but McNamara was firm in his opinion that the Arsenal should close. He told the two men that he had discussed the matter the previous day with President John F. Kennedy and the president was adamant that the time had come to start closing bases. McNamara did offer to help with funding for the new Armory and by interceding with the GSA to make the transition smooth.

On the flight back to San Francisco, Bohn and Lemos decided to use the legal principle behind the redevelopment district and create a new agency called the Surplus Property Authority. The idea was for the city, and any other government agency that may want to take the risk, to purchase the Arsenal on an installment plan from the GSA and lease it to a private investor. The lease fees would, in turn, pay off the mortgage with the federal government. The problem was that the GSA had never before sold a property on “the installment plan.”

Removing a long, yellow legal pad from his briefcase, Bohn sketched out a master lease and a proposal for the SPA. It would take the cooperation of the federal government, the city and the company or companies who leased the property. There would have to be enabling legislation from the California Legislature, and Gov. Edmund Brown would have to sign it. Bohn and Lemos took the lease through several drafts and presented it to the Arsenal Committee and the City Council, whose members liked the idea.

The Master Lease

The Master Lease was the critical document of the conversion of the Benicia Arsenal into the Benicia Industrial Park. There has been a lot said and written about it, and the lease remains a contentious issue even to this day.

The initial draft of the Master Lease was mimeographed and disseminated. The copy that most people in Benicia still refer to is this draft. Bohn sent about 300 copies and cover letters to development companies across the U.S., Canada, Europe and Asia. Several companies responded, including Benicia Industries, Bechtel Engineering and Cabot, Cabot and Lodge. Bechtel did a sophisticated engineering study that envisioned a development much as it is today. Cabot was interested in a large company to take over the facility, such as an aluminum processing plant, a foundry or an oil refinery. In the end, the final appearance of the Industrial Park seems to be an amalgam of both plans. Cabot was instrumental in working with Benicia Industries to recruit Humble Oil after the refinery was denied access to the Monterey Peninsula.

BI appears to have become involved in the Arsenal conversion to protect its interest on the waterfront between First and East Fifth streets. The company had developed sophisticated plans that called for warehouses, port facilities, lumbar handling facilities and a coke storage facility on the property that is now the First Street Park and the yacht harbor. It stepped into the conversion project when the other companies withdrew because of what they saw as unworkable requirements of the Master Lease, i.e. that the City would purchase the property and rent it to Benicia Industries. All the other companies wanted to own the property outright and develop it as to maximize their profits. Only BI was interested in working with the city of Benicia as a lessee.

The final draft of the lease was signed by James Lemos for the city and J.J. Coney for BI in 1964 and it became effective in March 1965. The Master Lease lasted until 1974, when it was eliminated by the land swap agreement.

The Surplus Property Authority is organized

The SPA was proposed to the City Council by City Attorney Bohn and Mayor Lemos as a means of coordinating all the various entities interested in the Arsenal, and as a means of assuming debt. It would be an independent government entity authorized to do only one thing: manage the city’s interest in the Arsenal. The Arsenal committee and the City Council bought the idea with no reservations.

In April 1963, state Sen. Gibson introduced the Surplus United States Property bill in the Legislature. Drafted by Bohn, the proposed SPA was given broad authority to act as any other government entity, including the ability to assume debt. It went through multiple revisions to assure financial accountability and was signed by Governor Edmund Brown in July.

The SPA was authorized by an act of the Benicia City Council in early November 1963 and had its first meeting on Nov. 19. Members of the Council became the members of the SPA, and Anna G. Pine was named the clerk, Marie Silva the treasurer and Lawrence Fones the engineer.

The GSA wasn’t impressed. In a 1963 letter to Lemos, Fred H. Johnson, GSA agent in charge of the Arsenal project, said the federal government had no alternative but to proceed with parallel plans to break the Arsenal into lots to be sold to the highest bidder at auction in case the Benicia Plan failed. The current parcel map of the Arsenal, containing multiple small plots, reflects the GSA’s survey made with the intent that the property would be broken into small pieces.

The appraisal

In 1961, when it was time to determine the costs of improvements to the Arsenal, the Army provided the GSA with a 4-inch-thick volume that featured a photograph of each building along with its use, the year it was constructed, and the cost. Costs of improvements such as roads, electrical, telephone and water systems were included.

This raw information went to the Real Estate Research Corporation of San Francisco for the GSA appraisal, and to Alfred L. Wanger of Vallejo, who completed the appraisal for the city. Both appraisers physically assessed the property, listed comparable land and building values, and computed values by cost and income.

During the 117-year history of the Arsenal, the installation had been involved in 15 military campaigns and was heavily used. Now, of the hundreds of buildings on the property only 27 were thought by the appraisers to be usable. Of those, only 11 were usable without repairs. The wharf had been through two wars and was badly damaged, to the point that its sale value was assessed at a fifth of the construction costs. Many of the buildings were of no value and several had to be destroyed before the Army left.

All of the buildings associated with chemical and nuclear warfare weapons had already been destroyed by the Army in 1954.

It was reasoned by the GSA that the munitions igloos and powder magazines had no civilian use, so the cost of their demolition and the destruction of other useless structures was subtracted from the overall value of the property. Ironically, it later turned out that most of those structures were used by Benicia Industries (BI) and Humble Oil for storage, and that any destruction that needed to be done was relatively simple.

There were also problems with the land. In addition to property lost by the easements of the Benicia-Cordelia Road, the Southern Pacific Railroad right-of-way and Highways 680 and 780, the State Land Commission claimed a 150-foot strip of land along the shoreline; a 5-acre slice was reserved to be sold separately for the National Guard Armory; a 1.33-acre parcel was kept by the Army for the military cemetery; and a small piece was transferred for an addition to the Dominican cemetery. The electrical, telephone and water systems were sold separately to the respective utilities. The water system belonged to the Department of Health, Education and Welfare. Including a pipeline to Contra Costa County, water rights and Pine Lake Reservoir, it was sold separately for $70,000.

When finally computed by the GSA, the $4.5 million market value of the Arsenal was considerably lower than most observers expected, including the congressional committee with oversight responsibility for the GSA. Committee members were upset with the low value placed on the property and wanted to delay the sale for four years. Intensive lobbying by California Sen. Claire Engle overcame the opposition.

The property was eventually sold by the GSA to the city of Benicia, with BI providing the entire sale price and fees through an escrow company as an advance on its leases. The city at that time had barely enough money to make payroll, so it was in no position to purchase anything, let alone an Army arsenal. It essentially obtained its equity in the Arsenal for free. Because escrow companies demanded a City Council resolution and the signatures of the mayor and clerk on any deed, the equity that the city had in the Arsenal property gave it uncontested control over how the property would be sold and used.

A review of recently opened GSA files revealed that the agency monitored every move the city and BI made, even to the point of assigning investigators to observe for fraud. None was found. (However, the relative costs of the Arsenal to the Army and the sale price to the city became a cause of anti-conversion forces, who saw BI getting a great deal on the back of the taxpayers.)

“The acquisition costs of the property and its improvements were $32,808,079, and the fair market value was $4,582,200,” Ken Paulson of the GSA said when interviewed at the Federal Building in San Francisco in 2008. The costs of the Arsenal to the U.S. government over its 117-year history were given to the GSA by the Army and the fair market value was determined by H. W. Thelander, the GSA regional appraiser. The determination of the market value was made after Thelander received two appraisals, one provided by the city of Benicia (paid for by the GSA) and one done on contract to the GSA. Neither the city nor BI had any input into the purchase price.

The Arsenal officially closed on Tuesday, March 31, 1964, in a formal ceremony where the post flag was lowered and retired. A commemorative dinner was held that evening at the Veterans Memorial Building.

The lawsuit

Benicia City Councilman John F. (Jack) Cody was vocal in his opposition to the conversion, and many of the things he said and his supporters wrote reverberate to this day.

In letters to President Lyndon Johnson and Sen. Engle, Cody called for an investigation into the disposition and sale of the Arsenal. He questioned how a $32 million piece of property could be sold to a private company like BI for $4.5 million. He added, “I feel that under the sale-lease provisions the transaction is detrimental to the community, where property is being taken by speculators whose background does not show that they were ever developers, at a price far below the market value.” In a responding letter the GSA confirmed that J.J. Coney of Benicia Industries had been involved in other successful developments, the property was being sold at fair market value, and the property was being sold to the city of Benicia and not to BI.

The GSA and city appraisals were sealed under GSA rules until December 2008. Cody never had a chance to see the factors that went into the $32 million purchase price to the Army and the $4.5 million fair market value. In 1964, anti-conversion activists published a mimeographed broadsheet called “The Benicia Advocate.” It alleged that BI still hadn’t met its obligations to repay the city and construct an industrial park in the reclamation district. They also questioned how the sewer lines would be handled and if BI actually had the money to carry the deal through. At the time, the Army was dumping raw sewage into the Carquinez Strait and had been doing so for decades.

There was considerable finger pointing: In the March 23 issue of the Advocate, Cody reported that Mayor Lemos blamed him for a failed deal with Kaiser Aluminum. There was also a confrontation between Cody and John Bohn in Bohn’s First Street office (which today is marked with a bronze plaque commemorating Bohn’s service). Cody’s position was clear: If BI hadn’t after eight years completed its obligations under the reclamation district contract, what evidence was there that it would complete its obligations under the proposed Master Lease?

Cody retained the local legal firm of Winters, Winters and Golla and in March 1964 filed suit against the city, SPA and various individuals. The suit alleged:
1. The Master Lease was unconstitutional and infringed upon the powers and duties of a sixth class city;
2. BI was insolvent;
3. Negotiations with BI were improper in that Bohn acted simultaneously as the attorney for the company and the city; and
4. The SPA was unconstitutional and was used as a device to benefit individuals and corporations.

The city retained the San Mateo firm of Wilson, Harzfeld, Jones and Norton. The firm did what all law firms do in a similar situation: They papered the plaintiffs with motions, documents and cross-complaints. One particular document, preserved in the GSA archives, provides a succinct review of the conversion legal process: The defense argued that the SPA was based on a law passed by the Legislature and not the city and was therefore valid; that not only was BI solvent, but that it had already deposited $534,000 in an escrow account to cover the final payments on the reclamation district and the first payment on the Arsenal; that Bohn had not represented BI and the city simultaneously; and that the SPA was used only to benefit the city.

When the suit was initially filed, Bohn and then Mayor C. Carsten Johansen called the GSA to see if they could delay the closure of the Arsenal and a sale by public auction. If the SPA were ruled illegal, the city could not go into debt and the project would either have to go through a major revision or be abandoned. They were told that the Army had vacated the property and Benicia would have to pay $10,000 a month for maintenance and security. The city was close to bankruptcy, so Bohn and Johansen negotiated with BI to pay the fees to the GSA and the legal fees for the lawsuit through an escrow account. The amounts would be deducted from any future city profits from land sales and rents in the Arsenal, one of the reasons the city’s portion of the rental profits were so low in subsequent years. Eventually the lawsuit would cost the city about $120,000, all paid for by BI through an escrow account. Copies of the account reports still rest in the GSA archives.

BI was also working on a contingency plan. The company was negotiating with Northwestern Mutual Insurance Company for a loan to cover the entire purchase price of the property. If such an agreement with Northwestern could be negotiated, the need for a SPA would be obviated because the city would be able to purchase the property, through the escrow account, in one payment. Northwestern struck a hard bargain, demanding 6 percent interest and a seat on the BI board of directors.

The lawsuit was heard in Superior Court in Fairfield before a judge from Butte County. The city called Earl Bobbitt, Anna G. Pine, Bohn, Cody and William M. Earp. The plaintiff, Cody, only called James Lemos. Cody and Earp became defense witnesses. Earp was on the stand only long enough to say that he was a citizen of the city, important because Cody’s attorneys needed a citizen of Benicia to say that he had been damaged by the city’s actions.

The transcripts of Cody’s testimony were destroyed by the court in 1970. However, articles in The Herald, The Benician and the Vallejo Times describe what must have been a difficult two hours on the stand for Cody. The defense repeatedly pressed him for details and specifics of the allegations made in court papers and he was unable to provide any.

In court testimony it came out that all decisions on the Arsenal conversion were made in open meetings of the City Council after appropriate posting and were recorded in the usual manner. Mrs. Pine, the city clerk, testified there were no hastily called last-minute or late-night meetings to decide public matters, and everything was done according to state law in effect at the time. Attorneys for Cody could elicit no testimony to contradict this. Bohn testified that he had represented the city and not BI in all negotiations and that the company had its own attorneys. Cody entered no evidence to support his allegations that Bohn had acted unprofessionally. James Lemos testified that the Master Lease wasn’t a sales contract or a debt instrument and identified the document for the court. In reality, it was a performance contract.

J.J. Coney, Lemos testified, had extensive experience in large land acquisitions and development around California and Argentina. The company was solvent, had paid off the final reclamation funds through the escrow account, and was prepared to move forward.

The trial was over in two days.

In a tersely worded four-page decision filed Dec. 16, 1964, the judge ruled in favor of the city on every allegation. There was no evidence of unprofessional conduct on the part of Bohn, BI was not only solvent but had already placed the money in an escrow account, and the Master Lease was not a sales contract or a debt instrument. The SPA could only benefit the city because it was controlled by the Benicia City Council. It was a complete victory for the Bohn, Lemos and the city.

On the issue of the constitutionality of the SPA, the judge invited Cody to appeal the decision, citing the conflict between the inability of the city under the state constitution to assume debt and the ability of the SPA to circumvent that restriction — but in a newspaper interview the following week, Cody announced that he would not be able to appeal because the cost was prohibitive. He had already spent thousands of dollars of his own money and was not inclined to spend more.

What Cody didn’t know, and what Bohn and Lemos probably didn’t know, either, was that Benicia Industries had already negotiated the “workaround” with Northwestern Mutual Insurance Company and that the issue of the SPA didn’t matter. The loan didn’t show up in any city documents or newspaper articles until reports were found in a file cabinet of documents belonging to a descendant of J.J. Coney.

Cody’s next action was to forge an agreement with the city that if BI would pick up the tab for the maintenance of the Arsenal for the time the lawsuit delayed the conversion, he would not appeal. Given the fact that the company had already committed to doing that and had already made payments to the federal government, the City Council readily agreed and the case ended.

Cody wasn’t finished. After the following election he was able to force the ouster of John Bohn as city attorney. But by then the idea of a state park in the Arsenal was dead as far as the State Department of Parks and Recreation was concerned. A lapse of political momentum, added expenses, and the rancor of the lawsuit had caused the department to lose interest in the project.

Another snag in the deal

In the spring of 1964 the purchase of the Arsenal hit another snag. The very minute the U.S. sold the Arsenal to the city, the ownership of the submerged and tidal lands would revert to the state of California. Submerged and tidal lands are owned by the people of California, held in trust by the State Lands Commission. In the late 19th century the state had allowed the Army to use the lands as long as it was a part of a military reservation. Consequently, the wharf was excluded from the sale and a political process was employed by Lemos and Bohn to resolve the problem. In an April 1964 letter, Lemos asked Gov. Brown for assistance. Sen. Gibson sponsored Senate Bill 28, written by Bohn, to correct the problem. It did.

In April 1964 the California Legislature passed an act to convey the tidal and submerged lands around the wharf to the city of Benicia. The act granted to Benicia all the rights, title and interest of the land as long as it was used as an international port. The lands could not be sold.

The city accepted the deed for the wharf from the GSA in September 1966, and the wharf became the property of the city. The city paid the GSA $65,000 for the wharf. According to GSA records, BI placed the money into an escrow account from which a check was written to the GSA.

The Arsenal sells — to the city

The deed for the Arsenal from the U.S. government to the city of Benicia was signed in February 1965. The U.S. sold the former Arsenal — minus the water system, the wharf, the land the Armory now sits on and the utility and rail easements — to the city for $4,582,200, of which $916,440 was paid at the time of signing; the remainder was due in nine equal payments. The money was paid by BI to the GSA through an escrow account. The wharf was not included in the sale because of the questions about the submerged lands. The separate plot of land to be used as the new National Guard Armory was sold to the city for $5,000, with BI again paying through an escrow account. The city, in turn, quitclaimed the property to the state of California.

BI paid in full the remainder of the money owed the U.S. government within two years. The money was considered an advance on the lease.

The city also paid $413,000 to the GSA for the utility easements, with BI paying through the escrow account. The GSA sold the trackage to the Southern Pacific Railroad in a separate deal.

However, while the federal government would deed the property to the SPA, the Southern Pacific Railroad would only accept easements from the city and would only deed property to the city. The title insurance and lending companies would not allow the SPA to sign deeds of city property. Each and every action of the SPA required a separate resolution of the City Council, essentially duplicating efforts. Meanwhile, attempts to entice Vallejo and Solano County into the deal failed and plans for a state park fizzled.

On the other hand, the major mission of the SPA worked as planned: it allowed the city to go into debt, something another government tool, such as a redevelopment agency, could not have done.

On Feb. 26, 1965, the SPA made the first payment to the GSA with money placed in an escrow account by BI and executed a promissory note to the United States for $3,665,760. According to GSA representatives, it was the first time the U.S. government sold land on the installment plan. The terms were nine equal payments with interest of 5 percent per annum. The note was paid in full in 1966 through the escrow account by BI, 18 months later and nine years early. BI also paid all legal costs and title fees, again through the escrow account. All the legal fees, including legal fees for John Bohn, were paid for by the SPA and reimbursed to the SPA by BI, again through the escrow account. The city didn’t pay a dime.

The minute the lease was signed, BI was on the hook to pay the equivalent of property taxes to the city, all costs of the purchase of the property, all legal fees through an escrow account, and other incidentals such as the purchase of the land for the Armory and water system. BI paid policing fees, too.

A careful review of documents in the city and GSA archives reveals that BI met each and every requirement of the lease. At the time in 1966 that inaccurate San Francisco newspaper articles critical of the sale were published, the city owned the Arsenal properties that were, in turn, leased to BI and other renters; BI had paid the entire $4.5 million through an escrow account; BI had paid off the remaining money owned on the redevelopment of the waterfront; and BI paid all other fees and legal expenses.

In 1964 the Arsenal property was officially made part of the city of Benicia. As properties were sold to Humble Oil and other companies, the city, county and school district became the beneficiary of the subsequently collected property tax income.

The Master Lease was discontinued by mutual agreement of the city and BI in 1974 as part of the land swap agreement validated by a vote of the residents of Benicia.

The U.S. government came out ahead in the deal

While the $4.5 million price to the city was a take-it-or-leave-it proposition as far as the GSA was concerned, it may have produced better profits in the long run for the U.S. government. The alternative to selling the Arsenal intact to the city and BI was to subdivide the property and sell it piecemeal at auction. According to Mr. Paulson at the GSA, an auction would have been extremely expensive because of increased administrative expenses and may well have resulted in less income to the GSA.

In the end, the GSA expressed satisfaction with the sale.

More than 600 U.S. military bases throughout the world were closed in the subsequent 10 years, and the Benicia Plan, as it came to be called, was used extensively in the closings. The plan, using a local surplus property authority, has been used repeatedly since, most recently at Fort Ord.

In 1965, Bohn received an award from President Lyndon Johnson and Defense Secretary Robert McNamara for his efforts. Fred Johnson, writing for the GSA on March 22, 1967, said the property sold for the full market price and that, while the sale was incredibly complicated, the office was pleased with the outcome. The SPA continued until 1998, when it was eliminated by the City Council.

In all, there were five sales of Arsenal property to the city:
1. The wharf: $65,000.
2. The property the National Guard Armory now sits on: $5,000.
3. The water system, from the Department of Health, Education and Welfare: $70,000.
4. The bulk of the property: $4,582,200.
5. Utility easements: $413,000.

The tidal and submerged lands create a special problem

The wharf and the tidal and submerged lands created a special problem for the city, GSA and the state. The lands belonging to the people of California required a special process that is outlined in the following paragraphs.

Oct. 28, 1963: A meeting is held in the offices of the California State Lands Commission in Sacramento regarding the tideland boundary of the Arsenal. Representatives of the State Lands Commission, the Army Corps of Engineers, the GSA and the city are present; so is state Sen. Luther Gibson. Everyone agrees to reset the tide-line boundary because of the infill from soil washed down from the Sierra Nevada mountains caused by hydraulic mining during the Gold Rush and by installations the Army extended into the submerged lands.

Dec. 4, 1963: The State Lands Commission proposes a new boundary agreement. This agreement sets the new boundary about 150 yards into the Carquinez Strait from the old one.

April 7, 1964: In a letter from Benicia Mayor James Lemos to Gov. Edmund G. Brown, the city says it is having a problem purchasing the wharf because the title of the tidelands reverted to the state.

April 16, 1964: The California Legislature passes “An act to convey certain tide and submerged lands, situated in Solano County, to the city of Benicia, in furtherance of navigation, commerce, and fisheries upon certain trusts and conditions, and providing for the government, management, use and control thereof.” The act grants to Benicia “… all the right, title and interest of the State of California, held by said state …” The land has to be used as an international port and cannot be sold.

Feb. 23, 1965: The SPA signs “A resolution authorizing execution of deed of trust and promissory note, on Benicia Arsenal property with escrow instructions and accepting the quit claim deed.”

Feb. 25, 1965: The SPA authorizes the execution of an addendum to the Master Lease to clean up problems caused by the delays stemming from the lawsuit and inconsistencies with the survey.

Feb. 26, 1965: A “Lease of Tide and Submerged Lands” is executed between the city and Benicia Industries. This lease states that the city acquires the lands that lie beneath the wharf from the state. This lease is for 66 years and includes charges to BI of $1,000 to cover legal costs and a new survey.

Dec. 7, 1965: A service agreement between the city and the State Lands Commission is signed. The agreement restates what was mandated by the legislation passed by the state Legislature in April 1964.

April 1966: The “Lease of Tide and Submerged Lands” is signed. The city leases the tide and submerged lands that are now in the Port of Benicia to BI for 66 years commencing Feb. 26, 1965. This is specifically for lands owned by the state and made available to the city to lease. BI pays $5,500 through an escrow fund to cover legal costs. The date of April 26, 1965 becomes the base date for the lease of the submerged properties; that lease will expire on April 26, 2031.

May 21, 1966: In a letter to the GSA the city attorney requests a quitclaim on the wharf because the State Lands Commission does not consider the wharf as part of the reversion of the tide and submerged lands back to the state.

Aug. 16, 1966: The SPA accepts a supplementary quitclaim deed from the GSA for the wharf. Now that the title to the submerged lands has been settled, the U.S. government deeds the wharf to the city.

Sept. 14, 1966: The city pays the GSA $65,000 for the wharf. According to GSA records, BI places the money into an escrow account from which a check is written to the GSA. The city gains title.

Oct. 13, 1966: In a quitclaim deed from the GSA to the city of Benicia, grantee is executed for “… said area being 300 yards wide measured off short from the low water mark, as ceded to the United States of America by the State of California by statutes approved March 9, 1897 and by an act approved July 15th, 1935.” This quitclaim is intended to include the wharf and not the actual land.

June 16, 1967: California Legislature passes “An act … relating to the conveyance of certain tide and submerged lands of the state to the city of Benicia.” This act allows Benicia to use the tide and submerged lands of the former Arsenal for “… the establishment, improvement and conduct of a harbor …” Other uses are also authorized. The state reserves fishing and mineral rights and stipulates that if the city doesn’t use the property, ownership reverts to the state.

Aug. 11, 1967: The California Legislature passes “An act to convey certain salt marsh, tide and submerged lands to the city of Benicia, in furtherance of navigation commerce and fisheries upon certain trusts and conditions, and providing for the government, management, use and control thereof, and declaring the urgency thereof, to take effect immediately.” There is a long list of activities that the city can use these lands for, including international commerce. However, if the city does nothing after the current lease runs out, the lands revert to state control. This act, and one enacted prior to it in July 1965, reserve about 30 acres of tidelands for use by the city for wharves for Humble Oil and Benicia Industries. The city wants 130 acres but receives only 30 from the state after objections are made by anglers that the wharves will harm the fisheries.

The arrangement was that the submerged land would be conveyed to the city, which in turn would include it in the lands leased to Benicia Industries. In turn, BI included a submerged lands lease transfer in the $3.2 million sale price to Humble Oil for 404 acres of former Arsenal lands. Humble Oil sold the refinery to the Exxon Oil Company, and when the Valero Oil Company of Texas purchased the refinery in 2000, the fueling wharf became its property. The state reserved fishing and mineral rights for the submerged land and stipulated that if the city doesn’t use the property, ownership reverts to the state.

The city secures the properties

Over the next two years, Bohn, Lemos and Council member Mike FitzGerald hammered out agreements with all the involved agencies, companies and individuals. Quitclaims and leases were signed and the Benicia Industrial Park became operational. It took four more years to correct the surveys, complete the property transactions and approve the easements.

The 1975 land swap

During the years following the initiation of the Industrial Park, the refinery became operational, rentals increased, real estate was sold by the city and hundreds of companies moved in to set up operations. But there were still some unresolved questions. Benicia Industries still owned the land along the Carquinez Strait between First and East Fifth streets. Development of that land into an industrial facility was becoming increasingly difficult as Benicia evolved into a bedroom community. Under the leadership of a citizen’s committee, a push for a yacht harbor began. However, ownership of the Arsenal properties by the city and the joint management with BI became a hindrance to land sales and financing. The city ownership of the wharf made it difficult for BI to obtain funding to improve the wharf. Importantly, the City Council wanted to protect some of the city’s historic properties.

A land swap was negotiated by representatives of BI and the city and was proposed to the public in 1974. The yacht harbor committee found state funds to develop a harbor in Benicia, but needed the land. The city would obtain the land between First and East Fifth streets, the Clocktower, the Commanding Officers’ Quarters, the land for Francesca Park, the so-called Camel Barns — they were never camel barns but the name stuck — the old Arsenal pumphouse, magazine No. 10 and the old hospital — if it could be moved. The city also kept a piece of land for use as a future fire station site (later sold to BI) and a rectangle of land where Sulphur Springs Creek empties into the strait.

BI received ownership of the remaining unsold 350 acres and the wharf. The acreage included the surface land surrounding the wharf, except for the streets.

The land exchange was challenged by a group of citizens who forced it to a vote, but in the spring of 1975 Benicia voters overwhelmingly approved it. In the summer of 1975 the City Council authorized the property exchange.

Later that month, Title Insurance and Trust company filed deeds with the Solano County recorder and issued two sets of title policies: one to the city for the properties it gained in the exchange, and a second to BI for the wharf and about 350 acres of land.

But even though the city was on the way to building a yacht harbor and BI was planning improvements to the wharf, the controversy was not over.

Argument over the wharf

The following April, Dale Stringfellow, president of Benicia Industries, wrote to the Benicia city manager: “Initially, title to these improvements will pass to BI for use by it during the time that it occupies the tidelands under its tidelands lease with the city. Paragraph 11 of the tidelands lease provides that upon expiration or termination of the lease, tenant will surrender to the city possession of the land and all improvements thereon. We interpret this provision as clearly stating that title to all leasehold improvements will then pass to the city.”

Benicia City Attorney Charles J. Williams, in an April 1975 letter to Vice Mayor Warren O’Blennis, claimed that there was a conflict between the sublease of the tidelands and the exchange agreement.

The city obtained a legal opinion. A May 1975 letter from W. Martin Tellegen of the law firm of Hall, Henry, Oliver and McReavy to Williams said, “To summarize: In my opinion title to Pier 95 can be legally conveyed to Benicia Industries; that conveyance is necessary to fully accomplish the purposes of the exchange agreement; and title to those improvements will pass to the city upon the termination of the tidelands lease.”

Letters from Benicia citizens to the State Lands Commission prompted a reply in July 1975 from Roy H. Minnick of the commission to the Benicia city manager. Referring to the statute of 1964, it said: “The wharf is a fixture on granted lands. The statute provides that the city shall not at any time convey or alienate any part of the lands to any individual, firm or corporation for any purpose other than leasing for limited periods. Under the tidelands trust, proceeds from the tidelands cannot be applied to local or private purposes but must be for the benefit of commerce, navigation and fishing in the state.”

Campaign of disinformation

Beginning in 1964, articles in Contra Costa County and San Francisco newspapers parroted activists’ allegations and quoted directly from letters and broadsheets produced by anti-conversion activists. These inaccurate articles then became a source of information on the conversion, misleading local historians and activists for decades. Ironically, the two local newspapers, The Benician and The Benicia Herald, ran their own articles presenting a far different story, one that was consistent with GSA reports to the president and members of Congress.

Editor’s note: Dr. Lessenger wrote this article as a freelance reporter for The Herald. It is in no way connected with the Benicia Historical Museum or any of the other organizations for which Dr. Lessenger volunteers.