Castle Going Commercial?

Thursday, January 3, 2008
The Merced (CA) Sun-Star

Castle’s commercial future is moving from public to private. If all goes as planned, big changes are in store for Castle Commerce Center in the coming months. Besides breaking ground on a new passenger terminal at Castle Airport, Merced County officials say they’re only weeks away from penning an agreement that will hand responsibility for the decommissioned military base to a private company. Now called Castle Commerce Center, Castle Air Force Base closed in 1995. Though the county has spent more than a decade working to redevelop the base as a business center and airport, progress has moved more slowly than officials anticipated.

But in recent months, developments have accelerated. “We’ve got a lot percolating right now,” said John Fowler, the county’s director of economic development. “It’s an exciting time.”

Though negotiations continue, Fowler said he hopes to complete an agreement with Federal Development LLC and send it to the Board of Supervisors for approval within 60 days.

The agreement will put the Washington, D.C.-based company in charge of Castle’s redevelopment. That includes creating a master plan for transforming the 1,900-acre site, now home to about 60 businesses, into a flourishing commercial center.

Besides leasing out existing space at Castle, Federal Development will build new buildings, improve roads and other infrastructure at the site and market it to companies and investors.

The county took official ownership of Castle last December and in May entered into a temporary property management agreement with Federal Development. The Beltway company has overseen the redevelopment of other military bases, including Fort Bliss in El Paso, Texas, and Fort Monmouth in New Jersey.

Under its current agreement, Federal Development collects and keeps rent from Castle’s tenants and in exchange pays the county $2 million a year.

Fowler declined to discuss the financial terms of the agreement, which is now in negotiations, and they won’t be made public until they’re sent to the Board of Supervisors.

Officials say using a master developer and private investment dollars are the only ways to successfully redevelop the base. “The cost of redeveloping Castle could exceed $1 billion,” Fowler said. “There’s no way to implement something like that on the public trough … For the county to do that on its own would take a hundred years. That kind of money just isn’t floating around.”

Whatever the terms, Fowler said all major decisions about Castle’s redevelopment will still require approval by the Board of Supervisors. And the county will retain control over all of the site’s air operations.

Since 2003, the county has spent more than $17 million trying to turn Castle into a commercially viable airport. Several cargo airlines now fly to and from Castle. It also hosts two flight schools.

In January, the airport reopened its air traffic control tower, and the county now has its sights set on passenger flights. Fowler is reviewing bids this week from companies interested in building a two-gate passenger terminal at Castle. He said the project could break ground as soon as next month.

The airport has yet to contract with a passenger airline, however.

The county has long pointed to Castle as a vital part of its economic future. “We want to create jobs and dollars and opportunity, and that’s why we’re doing all this,” said Katie Albertson, a county spokeswoman. “The goal is to get as much out of this resource as we can.”

The county recently completed legally required studies examining how its general plans for redeveloping Castle will affect the environment, but more studies will be required as Federal Development creates more specific plans for the site.

The 60 or so businesses already located there include construction companies, a lumber company, UC Merced research labs, health care offices and a restaurant.

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