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