THE NEWS THAT THE BENICIA ARSENAL WOULD CLOSE came as a thunderbolt to the workers there — and to the people of Benicia — when it was announced at a hurriedly convened news conference at 8:15 Friday morning, March 31, 1961.

Col. Albert C. Wells Jr., the Arsenal’s commanding officer, released the telegram and explained that the closing of was part of a realignment of Army facilities that included Mount Rainier Arsenal in Tacoma, Wash., Raritan Arsenal in New Jersey, and the Rossford Arsenal in Toledo, Ohio. The Sierra Ordnance Depot in Lassen County would become a reserve depot.

Col. Wells explained that the Arsenal would be inactivated over three years, with the transfer of its basic mission to Tooele, Utah. The equipment and surplus supplies would be used, scrapped, sold, 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 2,400 civilian employees offered jobs at Tooele Depot.

While the Army had already initiated a reduction of force at the Arsenal, the impact of the closing was immediately apparent to the population of Benicia. Benicia and the Arsenal had grown together — joined at the hip, so to speak — for 108 years. The city’s businesses, churches, bars, brothels, markets, stores and governments were dependent on the uniformed military and civilian workers who lived, played and shopped in the town.

The response was swift. John Baldwin, Benicia’s congressman, issued a press release questioning the closing and urging the retention of the Arsenal. The very evening of the announcement, Mayor James Lemos called an emergency meeting of city organizations and citizens. A “Save the Arsenal” movement was launched and a committee organized. Michael FitzGerald, local hardware dealer and appointed postmaster, was head of the city military committee and became involved with Lemos. John Berry, retired deputy of supply operations at the Arsenal, joined the growing committee; other members included City Attorney John Bohn and businessmen from Benicia and Vallejo.

Berry traveled to Washington in early April but had no luck convincing Army officials of the Arsenal’s importance. He returned to Benicia to give a report to about 300 Arsenal employees and interested Benicia citizens: Officially, he said, he was only given the original justification by the Army that was given at the time of the original announcement of closing:

“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 (former publisher of this newspaper), 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 had no impact on the Army’s decision.

To mollify local opponents to the Arsenal closure, Assistant Secretary of Defense Thomas D. Morris and a corps of assistants were sent west to visit the Mount Rainier Depot and Benicia Arsenal. They met in early May with a Benicia city delegation that included Lemos, FitzGerald and Berry. Morris returned to Washington and released an announcement that there would be no change in the current plans.

While attempts to keep the Arsenal in place continued, the Army sent memos to its employees about transfers to Tooele and started the process of closure.

The procedure in place at the time was for the Army to vacate the premises and turn the property over to the Government Services Administration. The GSA, in turn, would query state and federal agencies to see if they wanted the property. If no agency wanted it, the property would be broken into pieces and auctioned.

Benicia’s City Council was in no position to step in and make a bid for the property. With people leaving the city, its tax base was collapsing. The Council was at that moment debating whether the city had enough money to spend $3,000 for a new police car.

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 closing because of public pressure, the bars closing because of lack of business, and people leaving town for Utah, the city was already feeling the pinch of decreased revenue.

So it was that, with almost a sense of desperation, the effort to save the Arsenal continued. In May 1961 a contingent of officials including FitzGerald, Lemos, Berry, Vallejo Mayor G. Wilfred Hewitt and Arthur H. Kenny accompanied U.S. senators Thomas Kuchel and Clair Engle at a meeting with Department of Defense officials.

But again, they had no success.

* * *

THE COMMITTEE FORMED TO SAVE THE ARSENAL wasn’t happy. Its members addressed the following letter to Congressman Baldwin:

“The Steering Committee to Save the Benicia Arsenal was surprised and shocked at the decision of the Defense Department to reaffirm its order transferring the missions now being performed at the Benicia Arsenal to the Tooele Ordnance Depot.

“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.

“Gov. Edmund G. Brown and Sen. Luther E. Gibson have both strongly indicated that they share our belief that there exists complete justification for further investigation of the reasons behind and the costs involved in the Defense Department order.

“As a participant at the recent hearing, in company with our two senators Thomas Kuchel and Clair Engle, we are assured you will agree that the testimony overwhelming supported our contentions that the plan adopted by the Defense Department not only entailed the needless expenditure of substantial sums of money, but may seriously affect the national security with particular reference to the defense of the West Coast.

“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.

“We feel certain that you will have the complete support of our two United States Senators in arranging such a hearing.

“Very truly yours, The Steering Committee to Save the Benicia Arsenal.”

* * *

IN JUNE, THE ARMY RELEASED A DOCUMENT titled “Office, Chief of Engineers, Real Estate Disposal Report No. 41,” which stated that the Arsenal real estate and buildings would be turned over to the GSA for disposal.

The initial plan was to subdivide the Arsenal into sections and sell off each individually. A large book of facilities available on the property was produced and $52 million fixed as the purchase price of all Army buildings and properties. (That price would later be misinterpreted by city “activists.”)

The congressional hearing was not productive. Interestingly, in its investigation of the closing of the Arsenal the subcommittee of the House Armed Forces Committee found that “(o)n the evidence, the case is neither convincing nor reassuring,” even though 10 military experts were present to defend the Department of Defense’s actions.

There was another 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. James Lemos sent a telegram to Baldwin, Engle and Kuchel to petition President Kennedy to keep the Arsenal open.

The Senators and Congressman did just that in late August, but Robert McNamara and the Kennedy administration remained steadfast that the base closures would proceed. Lawrence O’Brien, special assistant to Kennedy, told Baldwin in a letter:

“Although it may appear these two situations are similar, they are, in fact, distinctly different.

“The naval shipyards can be utilized effectively for the prompt overhaul and repair of the active and reserve fleet.

“Department of Defense studies of the ordnance depot system, however, revealed that a large and costly over-capacity exists under any foreseeable circumstance. In fact, only half of the ordnance depot capacity in the seven Western states is now in use, and within the next four years only one-third of such capacity will be needed with full consideration given to total mobilization needs.

“Concerning your comment that Benicia is a major shipping point, the Department of Defense advises that Benicia has not been used for water shipment purposes for several years. It stated the facilities at the Naval Supply Center, Oakland, and the Oakland Army Terminal are fully adequate for such purposes.

“For rail and truck shipments, the ordnance depots at Tooele and Sierra, California, have sufficient capacity for all peacetime and mobilization requirements, in addition to having ample capacity for the storage, maintenance, and distribution of supplies.”

John Berry responded to O’Brien’s letter with scathing comments for The Benician, one of two city newspapers of the day:

“The loss of the Arsenal should leave a most unfortunate impact on the West Coast and Far East, the real danger zone. Its loss and the probable inability to afford logistical support represents another major military accomplishment for Nikita K.

“I know of no other means presently available to combat this unfortunate but reckless decision.”

By October of 1961 the Army was moving forward with plans to quit the Arsenal. Col John P. Sherden, the base commander, announced that 200 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 citizens of Benicia had resigned themselves to the closure of the Arsenal. But at the same time, many looked forward to the opening of the Martinez-Benicia Bridge and connecting highway.

And there was another plan in the works to rescue the town, for which John Bohn and James Lemos prepared to visit Washington.

PART TWO: MODERNIZING BENICIA

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 were never intended to last past the end of the war, anyway. Some received a reprieve for use in the Korean Conflict, but most had been rapidly closed.

The Benicia Arsenal, on the other hand, was in the first wave of more than 600 permanent base closures that came as part of a Kennedy administration effort to modernize the U.S. Armed Forces.

With a Department of Defense and its civilian apparatus outranking the military establishment, the military could no longer keep bases open just to keep them “in the ready,” or to maintain turf. Every decision and every purchase had to be justified, and at that time the United States was engaged in an extremely costly and complicated Cold War that demanded sophisticated nuclear delivery systems — not antiquated arsenals.

In addition, the Army was in the midst of 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 General Services Administration were entering uncharted territory.

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 City Mayor, who provided the political leadership.

* * *

JOHN BOHN WAS BORN IN OAKLAND, CALIFORNIA, in the first decades 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 before entering into practice in Walnut Creek with Sam Wagner.

During World War II, Bohn ran the cafeteria systems in Vallejo that fed civilian and military workers at Mare Island. After the war he became general counsel to the Vallejo Times, where he met the publisher, state Sen. Luther Gibson, who also was publisher of The Benicia Herald. Bohn soon became general counsel to the State Judiciary Committee, chaired at the time by Gibson.

The California Legislature met part-time until 1964, so Bohn had time away from his legislative tasks. In 1951 he was asked to write 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. His tasks as legislative counsel and as a consultant gave him broad connections in state and federal government.

James Lemos served Benicia for 35 years as mayor and on the City Council. He was involved in many important decisions that made Benicia the success it is today, including the reclamation of the putrid, mosquito-infested swamp that would later become the yacht harbor.

In the early 1950s, City Councilmember Mike FitzGerald, part-time city postmaster and full-time hardware store owner, and Lemos hired Bohn to be Benicia’s city attorney. In that decade Lemos, FitzGerald and Bohn would become instrumental in two large projects: The State Capitol renovation and the reclamation of the city shoreline.

* * *

THE HISTORIC STATE CAPITOL BUILDING SAT CRUMBLING and badly in need of repair on First Street. Initially constructed in the 1850s as a city hall, it became the third Capitol before the California Legislature decamped 19 months later for Sacramento.

A century later, with the move of the city government into the former high school buildings, the Capitol was empty. Using Bohn’s connections in the Legislature and the political connections of Lemos and FitzGerald, a bill sponsored by Gibson made the Capitol a state park and paved the way for a mammoth restoration that, in turn, led to subsequent projects on historic buildings across the state.

The reclamation of the city’s shore was more complicated. The waterfront area between the First Street Pier and the Fifth Street Pier had become a fetid swamp of abandoned railroad rights-of-way, piers, buildings, and a large inland area that was submerged part of the year, which had been used for decades as a dumping ground by the tanneries. The remnants of a canal dug in 1852 by Benicia founder Robert Semple allowed water to seep from the Carquinez Strait into the dump. Sulfur-laden water seeped downstream from Pine Lake. A network of wooden walkways allowed residents to walk across the area between the piles of abandoned automobiles and tires.

With Bohn’s help, the City Council formed a reclamation district. The idea was that a city like Benicia didn’t have the money to obtain the properties, but it did have the power to obtain the title to the land. The district allowed the city to conduct a series of title actions to obtain the property, all but abandoned by this time, and resell the properties to a private company for development. In that way the private company would finance the reclamation and obtain the property for investment.

The plan worked. In 1955 two investors, Stanley Hiller Sr. and J.J. Coney, took a corporate shell named the Santa Cruz Oil Company — used in the 1930s to trade in herring and pilchard oil — and renamed it Benicia Industries. Now a real estate management company, BI became an investment vehicle for profits garnered by Hiller and Coney in maritime business ventures around the world.

Benicia Industries obtained the properties, drained them, tore down the shanties, and ripped up the abandoned railroad tracks. They prepared a prospectus to sell the property to investors as a maritime port complete with warehouses, a bulkhead that extended to the edge of the mud flats, and new piers.

Stanley Hiller Sr. is best known as the father of Stanley Hiller Jr., helicopter pioneer and founder of Hiller Aviation. But the senior Hiller was an inventor and entrepreneur, too. He teamed up with Coney, an aggressive real estate investor throughout the San Francisco Bay area and Argentina, and they formed the Hillcone Company, a large maritime shipping firm that owned a number of freighters and had several subsidiaries. Benicia Industries was not a subsidiary of Hillcone but owned by Hiller, Coney and a number of silent investors.

* * *

JIMMY LEMOS WAS ALSO AN ENTREPRENEUR. He owned the two theaters in town that in that day were the major sources of entertainment for residents. He also was part or silent owner in numerous other establishments throughout Benicia.

There are many stories about Lemos floating around Benicia to this day, but the unchallenged best involves the swimming pool. Documented from various sources, the story is not only true, but it demonstrates how the city was run before the conversion.

With a shoestring budget, Benicia was accustomed to purchasing new police cars and fire engines by shaking down the 20 to 30 brothels and bars populating First Street and the Benicia-Vallejo Road. Nearby Vallejo, Fairfield, Cordelia, and Vacaville were dry towns where liquor could not be sold. Benicia — a rip-roaring and wild seaport town that was well documented in Jack London’s books — allowed alcohol, gambling and prostitution. Unadvertised and hidden were also a few opium dens — at least before World War II.

First Street Benicia offered all kinds of entertainment for the legions of civilian workers, soldiers, sailors and airmen who streamed in from the Arsenal and nearby Mare Island, Travis Field, and other bases dotting the San Francisco Bay Area. It was also the evening destination for college and university men from Berkeley, Stanford and other institutions of higher learning. The entertainment included motion picture theaters, burlesque houses and even duck shooting out of the back doors of the Alamo Rooms at the foot of First Street.

The town benefited from an extensive tunnel system under the streets and secret “Mayor’s Rooms” where customers could hide when the local constabulary or military police made one of their infrequent visits. The tunnels — a holdover from Prohibition, when they were used to transfer loads of liquor away from the prying eyes of Federal Revenue Agents — were especially helpful in providing discreet access to some of the city’s better establishments such as the Lido, Alamo Rooms, and Golden Horseshoe. Many bars, brothels and motion picture theaters bragged they never closed and provided 24-hour entertainment during World War II. Children were warned by their parents never to venture down First Street beyond the Capitol, which at the time was used as City Hall.

In this environment, the city fathers made the rounds of the “establishments” to collect money if a new police car or fire engine was needed. And that is what Lemos did when he decided to building a swimming pool for the city.

Lemos didn’t actually collect the money; he used the police department for that. Officers started at one side of First Street and visited every establishment. At the end of the street, they crossed and repeated the process, hitting up every bar owner and madam for their share of the pool donation. Then they went to the Benicia-Vallejo Road and collected money from every bar and brothel on that street. Money in hand, Lemos proceeded to hire workers to build the city’s first swimming pool — in the shape of a whisky bottle. The cap end of the bottle was the deep end of the pool, where a diving board was located.

It was Lemos, along with John Bohn, who dreamed up the “Benicia Plan” for the Arsenal.

PART THREE: TRANSFER, AND TRANSFORMATION, OF THE ARSENAL

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, and one of its main components is the Surplus Property Authority.

The SPA was the brainchild of City Attorney John Bohn. It was designed in 1961 as a vehicle for the conversion of the Benicia Arsenal into the Industrial Park. A study of federal, city, and museum archives and contemporary newspaper articles in The Benician and The Benicia Herald tells the complicated story of this brilliant stratagem.

* * *

IN LATE 1961, WHEN IT BECAME increasingly clear the Arsenal — which had been a U.S. Army ammunition depot for more than 100 years — would likely close, Bohn and Benicia Mayor James Lemos flew to Washington. According to Bohn’s son, it was the first time either had been on a jet aircraft. They paid for the trip with their own money.

U.S. Sen. Clair Engel paved their way with important appointments. Bohn and Lemos met with Engel and with representatives of the General Services Administration, the National Parks Service and the Pentagon agencies concerned with base closures. And — in a last-ditch effort to preserve what many considered Benicia’s raison d’etre — they made their case.

The Benicia Arsenal was to be the first closure of a permanent military installation after the end of World War II. The procedure at the time was to turn the property over to the GSA once it was declared surplus. In turn, the GSA planned to apply one of its usual three options of property disposal: 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.

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

With the writing on the wall regarding the base’s closure, the goals of the conversion of the Arsenal into the Benicia Industrial Park were set in 1961 by both the Arsenal Committee, composed of businessmen, and the City Council. Two goals are outlined in several memoranda preserved in newspaper articles and city files: 1. The 2,000-3,000-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 City 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 did over the years pay for all legal expenses, and for other activities.

It was a complicated landscape. The Dominican Catholic 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, Pacific Gas and Electric Company, state government, Solano County government, 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.

As early as December 1961, it appeared that Benicia Industries and Bechtel Industries were both 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 in Washington. Being a “city of the sixth class,” Benicia was restricted by the California Constitution from going into debt. This meant that the city had to find a way of either coming up with the full sale price of the Arsenal property or find a way to circumvent 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 Washington stop for Bohn and Lemos was an interview in the Pentagon with Robert McNamara, then secretary of defense. McNamara and Bohn had known each other as teenagers growing up in Piedmont, California. They had been in Boy Scouts together. It was a connection Bohn and Lemos could exploit.

McNamara was gracious as Bohn and Lemos virtually begged for the future of the Arsenal and Benicia, but he was firm in his opinion that the Arsenal should close. It was the final nail. McNamara told the two men from Benicia 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.

Saying he felt uncomfortable about the fate of Benicia, McNamara offered to help in any way he could. Bohn later called in the offer and arranged for the federal government to pay for the construction of a new Armory building.

* * *

ON THE FLIGHT BACK TO SAN FRANCISCO, Bohn and Lemos decided to use the legal precedent 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 might want to take the risk, to purchase the property on an installment plan from the GSA and lease it to a private investor. The lease fees would, in turn, pay off the federal government. The problem was that the federal government had never before sold a property on an “installment plan.”

Removing a long, yellow legal pad from his briefcase, Bohn sketched out a lease and a proposal for the SPA. It would take the cooperation of the federal government, the city and the company — or companies — that leased the property. There would have to be enabling legislation from the California Legislature, and Gov. Edmund Brown would have to sign it.

Upon their return to Benicia, Bohn and Lemos took the lease through several drafts and presented it to the Arsenal Committee and the City Council.

* * *

THE MASTER LEASE WAS THE CRITICAL DOCUMENT of the conversion of the Arsenal into the Industrial Park. There has been a lot said and written about it, and it remains a contentious issue to this day.

One of the factors making it so hard to research the Arsenal conversion is a series of erroneous 1966 San Francisco newspaper articles. They are similar to — and in some places direct copies of — anti-conversion broadsheets and newsletters produced in the same period. An evaluation of the GSA files in the fall of 2008 revealed that what really happened was substantially different than what the articles contained.

The final draft of the Master Lease produced by Bohn was mimeographed and disseminated. The copy to which most people in Benicia still refer is this draft. Bohn and Lemos sent about 300 copies and cover letters to development companies across the U.S., Canada, Europe and Asia. Several companies responded, including Bechtel Engineering and Cabot, Cabot, and Lodge. Bechtel did a sophisticated engineering study that envisioned developing the Arsenal 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 in recruiting Humble Oil, after the refinery was denied access to the Monterey Peninsula.

* * *

BENICIA INDUSTRIES 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, lumber-handling facilities and a coke facility on the property that is now the First Street Park and the yacht harbor. Benicia Industries stepped into the conversion project when the other companies withdrew because of what those companies saw as unworkable requirements of the Master Lease.

They wanted to own the property outright and develop it to maximize their profits. Only Benicia Industries was interested in working with the city of Benicia as a lessee and a partner.

The final draft of the lease was signed by James Lemos for the city and J.J. Coney for Benicia Industries in 1964. It became effective in early 1965. The finalization was delayed for nine months by a lawsuit that was eventually adjudicated in the city’s favor. The Master Lease lasted until 1974, when it was eliminated by the land swap agreement.

* * *

PART FOUR: THE WRANGLING BEGINS

THE ARSENAL COMMITTEE CONTINUED TO MEET THROUGHOUT 1962, with Mike FitzGerald as chairman. The Surplus Property Authority was proposed by Benicia City Attorney John Bohn and Mayor James 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 one thing, and one thing only: 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. Luther Gibson introduced the “Surplus United States Property” bill in the California Legislature. Drafted by Bohn, who had previously worked for Gibson writing legislation, 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 Gov. Edmund Brown that July.

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

But even as the city took these steps, the General Services Administration wasn’t impressed.

GSA sets a price many consider too low

In a 1963 letter to Lemos, Fred H. Johnson, the GSA agent in charge of the Arsenal project, said the 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 modern-day plat map of the Arsenal, containing multiple small plots, reflects the first GSA survey with the idea that the property would be broken into small pieces.

In 1961, when it was time to determine the costs of the improvements, 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 and telephone wiring, and water systems were included. The acquisition price to the Army of the land, buildings and improvements was set at about $52 million.

To compute the fair market value of the property, the raw information was sent 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 Benicia. Both appraisers physically assessed the property, listed comparable land and building values, and computed values by cost and income.

The GSA didn’t just accept the opinions of the two appraisers. It peppered them with letters questioning their assumptions until satisfied that the appraised price was appropriate. In the end the GSA — not the appraisers — set the total sale price at $4.5 million.

The difference between the $52 million cost of the property and improvements to the Army and the $4.5 million sale price was a source of misunderstanding and contention to many “activists” in Benicia. Many then and later questioned how Benicia Industries was able to obtain a $52 million property for such a low price. The GSA patiently answered their letters by explaining that the city of Benicia was purchasing the property, not Benicia Industries, and that the $4.5 million figure represented the true value of the property.

Of the hundreds of buildings on the property, only 27 were thought to be usable. Of those, 11 were usable without repairs. The wharf had been heavily used in two wars and badly damaged to the point that its sale value was one-fifth of the construction costs.

Many of the buildings were of no use and several had to be destroyed before the Army left. All of the buildings associated with chemical or nuclear warfare weapons had already been destroyed by the Army in 1954. Further, many of the roads were considered to be in poor repair and the utilities, not the Army, owned the electrical and telephone systems.

In addition, 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 were also subtracted from the value of the property. Ironically, it later turned out that most of these were used by Benicia Industries and Humble Oil, and that any destruction that needed to be done was relatively simple.

There were also problems with the land. In addition to land 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 slice was reserved to be sold separately for the National Guard Armory, a parcel was kept by the Army for the military cemetery, and a small piece was transferred for an addition to the Dominican cemetery. The water system, which belonged to the Department of Health Education and Welfare, included a pipeline to Contra Costa County and was sold separately to the city for $70,000. The property on which the current armory sits was sold separately to the city for $5,000 and then turned over to the state.

The wharf was sold separately because it sat on submerged land owned by the people of California and held in trust by the State Lands Commission. The submerged and tidal land portions of the conversion required two subleases, an Act of the Legislature, and a special agreement with the commission.

Legal steps proceed

In quick succession, the following events occurred:

Oct. 28, 1963: A meeting was held in the offices of the State Lands Commission in Sacramento regarding the tideland boundary of the Arsenal. Representatives of the State Lands Commission, the U.S. Army Corps of Engineers, the GSA and Benicia were present — as was Sen. Luther E. Gibson. Everyone agreed to reset the tide-line boundary because of 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 proposed a new boundary agreement. This agreement set the new boundary about 150 yards farther into the Carquinez Strait than the old boundary.

March 30, 1964: The Master Lease was approved by the Surplus Property Authority, to be recorded one year later. The enactment of the lease had to wait for the resolution of a lawsuit against the city and SPA. The suit was decided in the city’s favor in February 1965.

April 7, 1964: In a letter from Benicia Mayor James Lemos to Gov. Edmund G. Brown, the city said it was having a problem purchasing the wharf because the title of the tidelands reverted to the state. Senate Bill 28, sponsored by Sen. Gibson, was designed to correct the problem. It did.

April 16, 1964: The California Legislature passed “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 granted to Benicia “… all the right, title and interest of the State of California, held by said state …” The land had to be used as an international port and could not be sold.

Feb. 23, 1965: The SPA signed a “resolution authorizing execution of deed of trust and promissory note, on Benicia Arsenal property with escrow instructions and accepting the quitclaim deed.” A quitclaim is a transfer of all one’s interest, especially without a warranty of title.

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

Feb. 26, 1965: A quitclaim from the U.S. government to the city of Benicia was executed. The U.S. sold the former Arsenal (minus the water system and certain other properties) to the city for $4,582,000, of which $916,440 was paid at the time of signing and the remainder paid in nine equal payments. The money was paid by Benicia Industries to the GSA through an escrow account, but the city of Benicia gained full title to the land. The wharf was not included in the sale because of questions about the submerged lands. A separate plot of land to be used as the new National Guard Armory was sold to the city for $5,000, with Benicia Industries again paying through an escrow account. The city, in turn, quitclaimed the property to the state of California.

On the same day, a “Lease of Tide and Submerged Lands” was executed between the city and Benicia Industries stating that the city acquired from the state the lands beneath the wharf. This lease was for 66 years and included charges to Benicia Industries of $1,000 to cover legal costs and a new survey. A careful legal description was given.

July 23, 1965: The Legislature passed “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.” The land was to be held in trust by the city for use as an international port. The city could not sell the land but was allowed to lease it.

Dec. 7, 1965: A service agreement between the city and the State Lands Commission was signed restating what the legislation mandated.

April 20, 1966: The city leased the tide and submerged lands that are now in the Port of Benicia to Benicia Industries for 66 years retroactive to February 1965. This was specifically for lands owned by the state and made available to the city to lease. Benicia Industries paid $5,500 through an escrow fund to cover legal costs. The date of April 26, 1965, became the base date for the lease of the submerged properties; it will expire in 2031.

May 21, 1966: The GSA received a letter from Benicia’s city attorney requesting a quitclaim on the wharf because the State Lands Commission did not consider the wharf as part of the revision of the tide and submerged lands back to the state.

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

* * *

PART FIVE: LEGISLATURE BOOSTS CITY’S ARSENAL BUY

ON SEPT. 14, 1966, BENICIA PAID the General Services Administration $65,000 for the wharf in the newly vacant Arsenal. According to GSA records, Benicia Industries placed the money into an escrow account from which a check was written to the GSA, and the city gained the title.

The following events quickly fell into place in the city’s plan to take over what had been an Army installation for more than 100 years:

Oct. 13, 1966: A quitclaim deed — a transfer of all one’s interest, commonly without a warranty of title — from the GSA to the city of Benicia 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 15, 1935.” This quitclaim was intended to include the wharf and not the actual land.

May 25, 1967: A Benicia Herald article reports: “The State Senate Natural Resource Committee gives a ‘do pass’ recommendation to SG 885 by Sen. John F. McCarthy which would provide the City of Benicia with 30 acres of Carquinez Strait Tidelands.” The act was necessary because the city needed more submerged lands on which Humble Oil could build a wharf. 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, Benicia Industries 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 later constructed a wharf on the property.

June 16, 1967: The 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 allowed Benicia to use the tide and submerged lands of the former Arsenal for “… the establishment, improvement and conduct of a harbor …” Other uses were also authorized. The state reserved fishing and mineral rights and stipulated that if the city didn’t use the property, ownership would revert 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 was entitled to use these lands for, including international commerce. However, if the city did nothing after the current lease ran out, the lands would revert to state control.

This act, and the one enacted prior to it, reserved about 30 acres of tidelands for use by the city for wharves for Humble Oil and Benicia Industries. The city wanted 130 acres but received only 30 from the state after objections were made by anglers that the wharves would harm the fisheries.

Years later, on Feb. 18, 1975, after an authorization vote of the people in a referendum, Benicia City Council authorized a property exchange. Benicia Industries gained full title to the wharf and the remaining 350 acres of Arsenal land that had not yet been sold to other companies, and the city received the land between First and Fifth streets on the waterfront.

The city also received the Camel Barns and pump house, Clocktower warehouse, Francesca Terrace Park, Magazine No. 5, and the Guardhouse.

The sale proceeds

When finally computed by the GSA, the balance sheet of the market value of the Arsenal was considerably lower than most people expected, including the congressional committee with oversight responsibility for the GSA.
The committee members were upset with the low value placed on the property and wanted to delay the sale for four years, but after intensive lobbying by Sen. Claire Engle, they relented.

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. The property was eventually sold by the GSA to the city of Benicia with Benicia Industries providing the entire sale price and fees through an escrow company.

Benicia 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 the city had in the Arsenal property gave it uncontested control over how the property would be sold and used.

For its part, the GSA didn’t fully trust the city or Benicia Industries to come through with the deal and proceeded with surveys to prepare the property for auction.

A review of recently opened GSA files revealed that the agency also monitored every move the city and Benicia Industries made — even to the point of assigning investigators to observe for fraud. None was found.

Too little? Too late

The relative costs of the Arsenal and the sale price became a cause celebré to anti-conversion forces, who saw Benicia Industries getting a great deal on the back of the taxpayers. They wrote letters to congressmen, senators and President Johnson — and the GSA, in turn, wrote letters back, explaining the difference between the acquisition costs of the property and the fair market value.

“The acquisition costs of the property and its improvements were $32,808,079 and the fair market value was $4,582,200,” said Ken Paulson of the GSA when interviewed at the Federal Building in San Francisco in 2008.

The cost of the Arsenal to the U.S. government over its 117-year history was given to the GSA by the Army, and the fair market value was determined by H.W. Thelander, the GSA’s regional appraiser. The determination of the market value was made after Thelander received two appraisals: one provided by the city of Benicia and paid for by the GSA, and one done on contract for the GSA.

Neither the city nor Benicia Industries had any input on the purchase price.

In all, there were five sales of Arsenal property to the city:

1. The wharf: $65,000.

2. The property on which the Armory now sits: $5,000.

3. The water system from the Department of Health, Education and Welfare (to the city): $70,000.

4. The bulk of the property: $4,582,200.

PART SIX: LAWSUIT, MISINFORMATION CAN’T STOP ARSENAL CONVERSION

BENICIA CITY COUNCILMAN JOHN F. (JACK) CODY and others were vocal in their opposition to the conversion of the Arsenal. Many of the things they said and wrote reverberate to this day.

In letters to President Lyndon Johnson and U.S. Sen. Claire Engle, D-Calif., Cody called for an investigation into the disposition and sale of the Arsenal. He questioned how a $30 million piece of property could be sold to a private company like Benicia Industries 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 response, the federal General Services Administration confirmed that J.J. Coney of Benicia Industries had been involved in other successful developments and reiterated that the property was being sold at fair market value.

Unfortunately, the appraisals were sealed under GSA rules until December 2008. Cody never had a chance to see the factors that went into the $32 million acquisition price to the Army and the $4.5 million set market value.

In 1964, anti-conversion advocates published a mimeographed broadsheet called The Benicia Advocate. It alleged that Benicia Industries still hadn’t met its obligations to repay the city and construct an industrial park in the reclamation district. In it, Cody questioned how the sewer lines would be handled — at the time, the Army was dumping raw sewage into the Carquinez Strait and had been doing so for decades — and whether Benicia Industries actually had the money to carry the deal through.

There was considerable finger pointing: In the March 23 issue of the Advocate, Cody reported that Mayor James Lemos blamed him for a failed deal with Kaiser Aluminum. Around this time there was a well-publicized confrontation between Cody and City Attorney John Bohn in Bohn’s First Street office. (The office is today marked with a bronze plaque honoring Bohn.)

Cody’s position was clear: If Benicia Industries 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, the newly created Surplus Property Authority 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. Benicia Industries was insolvent; 3. Negotiations with Benicia Industries 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 attorney argued that the SPA had been passed by the Legislature and not the city and was therefore valid; that not only was Benicia Industries solvent, but 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 Benicia Industries 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 dead.

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 Benicia Industries 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 reason the city’s portion of the rental profits were so low in subsequent years. Eventually the lawsuit would cost the city about $120,000.

Benicia Industries 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 Benicia Industries 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 how the defense repeatedly pressed Cody for details of the allegations made in the court papers — and how he was unable to provide any.

It came out in court testimony that all decisions on the Arsenal conversion were made in open meetings of the City Council after appropriate posting, and all were recorded in the usual way. Mrs. Pine, the city clerk, testified there were no hastily called last-minute or late-night closed-door meetings to decide public matters. Everything, she said, was done according to state law in effect at the time. Attorneys for Cody could elicit no testimony to the contrary.

Bohn testified that he had represented the city and not Benicia Industries in all negotiations and that the company had its own attorneys. Cody entered no evidence at all to support his allegations that Bohn had acted unprofessionally. Lemos testified that the master lease wasn’t a sales contract or a debt instrument and identified the document for the court.

J.J. Coney, Lemos testified, had extensive experience in large land acquisitions and development in 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 on Dec. 16, 1964, the judge ruled in favor of the city in every allegation. There was no evidence of unprofessional conduct on the part of Bohn; Benicia Industries was not only solvent but it 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.

Not yet. 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 California 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 spent thousands of dollars of his own money and was not inclined to spend more.

Cody’s next action was to forge an agreement with the city that if Benicia Industries would pick up the tab for the maintenance of the Arsenal for the time during which the lawsuit had delayed the conversion, he would not appeal. Since 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.

Bohn had earlier floated an idea to make part of the Arsenal a state park, even using the warehouses where Arts Benicia now resides as a display preparation center for the entire park system. But a lapse of political momentum, added expenses, and the rancor of the lawsuit had caused the Parks Department to lose interest in the project.

Campaign of disinformation

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

While the $4.5 million price to the city was on a take-it-or-leave-it basis 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 Benicia Industries was to subdivide the property and sell it piecemeal at auction. Ken Paulson of the GSA, with whom I spoke in 2008, said 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 agency expressed satisfaction with the sale. 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 gets to work

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

However, while the federal government was happy to deed property to the SPA, the Southern Pacific Railroad would only deal with 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 Benicia Industries and executed a promissory note to the United States for $3,665,760. The terms were nine equal payments with interest of 5 percent per annum. The note was paid in full in 1966 through an escrow account by Benicia Industries, 18 months later and nine years early. Benicia Industries also paid all legal costs and title fees, again through the escrow account.

All the legal fees, including fees for John Bohn, were paid by the SPA and reimbursed to the SPA by Benicia Industries, again through the escrow account. The city didn’t pay a dime.

The minute the lease was signed, Benicia Industries 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. Finally, Benicia Industries paid policing fees, too.

A careful review of documents in the city and GSA archives reveals that Benicia Industries met each and every requirement of the lease. At the time the 1966 San Francisco newspaper articles came out, the city owned the Arsenal properties that were, in turn, leased to Benicia Industries; the company had paid the entire $4.5 million through an escrow account; Benicia Industries had paid off the remaining money owned on the redevelopment of the waterfront; and it paid all other fees and legal expenses. As the properties were sold to Humble Oil and other companies, the city, county, and school district became the beneficiary of the property tax income. When the First Street property was traded in 1974 to Benicia Industries for the remaining 350 acres of Arsenal property, Benicia Industries became liable for the full amount of property taxes on the property.

The master lease was discontinued by mutual agreement of the city and Benicia Industries in 1974 as part of the land swap agreement validated by a vote of the residents of Benicia.

More than 600 U.S. military bases throughout the world were closed in the following 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 Monterey.

In 1965, Bohn received an award from President Lyndon Johnson and Defense Secretary Robert McNamara for his efforts.

The SPA continued until 1998, when it was eliminated by vote of the Benicia City Council.

Dr. Jim Lessenger is a docent at the Benicia Historical Museum and the author, most recently, of “Commanding Officer’s Quarters of the Benicia Arsenal.”