Iceland: Water Damage at former U.S. base poses first

UNCLAS REYKJAVIK 000428 SIPDIS SENSITIVE SIPDIS DEPT FOR P (BAME),EUR/NB (MIDDLETON, MAHER) SECDEF FOR OSD/RA (HALL),OSD/P (KELSO, HURSCH) OSLO FOR DATT E.O. 12958: N/A TAGS: MARR PGOV NATO IC SUBJECT: Iceland: Water Damage at former U.S. base poses first headache for new redevelopment corporation ¶1. (SBU) Summary: The newly-formed corporation overseeing redevelopment of the former U.S. Naval Air Station Keflavik (NASKEF) site is inheriting an additional problem in the form of serious water damage from frozen pipes in a number of residential buildings. The Ministry for Foreign Affairs, which took ownership of the NASKEF site (less some properties retained by NATO) September 30 but had not gotten around to letting a maintenance contract, has confirmed that the Government of Iceland will bear the costs of repair, with early estimates ranging upwards from $150,000. (In contrast only one NATO-owned building suffered damage - and that minimal - as the U.S. military had contracted with a local firm to maintain NATO facilities.) ¶2. (SBU) Summary, cont'd: The redevelopment corporation, which was to have taken over responsibility for the facilities this fall but in all likelihood will not do so until January 2007, claims the incident will not pose an obstacle to plans for use of the property. Press coverage has been straightforward, with no implication of USG responsibility. We believe the corporation will attempt to make the best of the incident by using it to press for quicker action. End summary. ¶3. (SBU) Upon the closure of U.S. Naval Air Station Keflavik (NASKEF) on September 30, the Government of Iceland took ownership of roughly 500 structures, including 2000 housing units in multi-unit buildings. Media on the evening of November 20 reported the discovery of serious water damage in a number of the buildings, stemming from frozen cold-water pipes during a recent cold snap. The water leakage resulted in damage ranging from minor wall damage to collapsed ceilings and warped floors in approximately 90 individual apartment units, according to the director of the corporation overseeing redevelopment of the NASKEF site. ¶4. (SBU) A member of Post's interim military detachment (on loan from EUCOM to wrap up transition issues) visited the base and confirmed that only one of the 67 NATO-owned buildings on the site was affected. In that case, a burst pipe in a maintenance shed resulted in minimal damage. (Note: the USG has responsibility for maintenance of the NATO-owned buildings through September 2007; local contractor ICG has monitored the buildings for any problems and is adjusting its procedures to ensure that similar water-leakage problems do not develop. End note.) ¶5. (SBU) The Ministry for Foreign Affairs (MFA) was quick to note to the media that the Icelandic Government would have to bear the costs for any repairs. MFA officials also noted that work is continuing on wrapping up the necessary legal maneuvers to transfer ownership to the redevelopment corporation. Corporation director Kjartan Eriksson put a brave face on the damage, noting to Post that in any event there were plans for renovations in the apartment buildings and that the incident would simply accelerate those plans. Eriksson estimated that the cost of repairs could be in the tens of millions of Icelandic kronur (10 million ISK = $150,000) but demurred from elaborating further until a final assessment is done. ¶6. (SBU) Comment: the damage poses the first headache for the base redevelopment corporation (septel),which has watched in frustration as it has not legally taken ownership of the buildings and thus had not been able to arrange maintenance contracts for them. We believe the corporation will attempt to make the best of the incident by using it to press for quicker action in seizing the development opportunities presented at the former NASKEF site. VAN VOORST