"County Poised to Turn Over Castle; Private Company Would Run the Former Air Force Base"

Thursday, January 3, 2008

COUNTY POISED TO TURN OVER CASTLE; PRIVATE COMPANY WOULD RUN THE FORMER AIR
FORCE BASE. 
BY CORINNE REILLY
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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