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Lexington Army Depot
Bluegrass Station
Lexington, KY

The Lexington Army Signal Depot opened in 1941. In 1964, the Blue Grass Ordnance Depot (located in Richmond, Kentucky) merged with the Lexington Signal Depot (located in Lexington, Kentucky) to form Lexington-Blue Grass Army Depot. Lexington-Blue Grass Army Depot operated until 1992, providing ammunition and general supply support and maintaining communications and electronics equipment. In response to a Base Realignment and Closure (BRAC) Commission decision in 1988, the federal government directed that the Lexington facility close by 1995. In 1992, the general supply and maintenance mission that the Lexington facility had undertaken ended. Final closure was completed in 1994.

The Lexington Army Depot was closed in 1988, and most of its functions were transferred to Bluegrass Army Depot [BGAD] at Richmond by 1994. In the transition, about 1,600 jobs were lost. Bluegrass Army Depot provides support to ten tenants, including the privately contracted special forces operations of Raytheon. At its Lexington facility, Raytheon performs modifications to aircraft and other military equipment to ready them for special military missions, such as stealth penetrations in deserts and jungles. The special ammo requirements for these missions is stored at BGAD, and Raytheon helps manage the various logistical functions. Raytheon employs about 200 people at BGAD.

The Lexington Facility of the Blue Grass Army Depot officially closed as a federal installation on September 30, 1995, when the Commonwealth of Kentucky, through the Department of Military Affairs, took over and renamed it Bluegrass Station. In 1995, the future of what was then the Lexington-Blue Grass Army Depot was in doubt. No one knew what would become of the land in the wake of the Base Realignment and Closure Act that ordered the military to downsize. Bluegrass Station is owned by the Commonwealth of Kentucky and operated by the Kentucky Department of Military Affairs. Its new mission was to retain the current jobs on the facility and to bring new employment opportunities to Kentucky. Bluegrass Station's 106 buildings provide 2 million square feet of retail, office and warehouse space. The updated infrastructure of the 780-acre complex is especially well suited for light industrial and redistribution activities.

Tall fences, drab buildings, guarded gates: Bluegrass Station at Avon still has a somewhat military feel to it. But the former Lexington Army Depot is being reinvented as a light-industrial park. The transition illustrates how America's "peace dividend" -- post-Cold War cuts in defense spending -- can be invested to promote economic development. The state obtained a 7-year lease of the property from the Department of Defense. According to the lease -- under which the state pays nothing -- the state owns the whole site once the property is brought up to light-industrial standards. The deal saves the federal government money by sparing the Defense Department some of the cost of having to clean the property so houses could be built there. Businesses that don't need prime space can rent at reasonable rates. And when they make property improvements, they get discounts on their rent.

By 1997 about 49 percent of the site was leased or occupied. The administrative staff of 35 uses about 3 percent of the space, and the Kentucky National Guard uses another 3 percent. The other 43 percent generated about $2 million a year in revenue. That revenue must cover the station's administrative expenses and site improvements. Rates at Bluegrass Station are lower than at other light-industrial sites. But the condition of the buildings and imperfect truck access make the pricing about right.

Bluegrass Station has attracted food processing and warehousing tenants. The leisure industry is represented by Bluegrass Golf Course. But military-support contractors dominate the tenant pool. One tenant with military ties is Advanced Technical Support Systems (nicknamed ATS-squared). Another division of Raytheon, it mostly buys or repairs spare electronic equipment for a unit at Wright-Patterson Air Force Base in Dayton, Ohio.

In 1997 Raytheon E-Systems signed a five-year contract to continue to provide logistical support to the U.S. Special Operations Command, its Special Operations Forces and various other federal agencies. The contract with the Special Operation Forces Support Activity at Bluegrass Station, worth up to $1.12 billion, ensured continued employment for almost 1,000 people, including about 650 at Bluegrass Station. The similarity of the Raytheon contract to the kind of work that used to be done at the depot played a role in the decision to put the support operation there.

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