Economic program approved for Castle

rgiwargis@mercedsunstar.comNovember 8, 2013 

Merced County has been approved to operate a program allowing foreign investors to pour money into projects at the former Castle Air Force Base in exchange for a green card.

The EB-5 program, sponsored by the U.S. Immigration Department, was passed by lawmakers in 1990 as a tool to help generate job growth. Foreign investors must invest $500,000 in businesses at Castle that create or preserve at least 10 full-time jobs, according to Bob Deklinski, director of airport development for Sierra Air Center Development.

Sierra Air Center Development is a company formed by the owners of the Atwater-based international flight school, Sierra Academy of Aeronautics.

Deklinski announced the approval during a Board of Supervisors meeting this week, saying his company intends to use the investors’ money to build a fixed-base operation at Castle, a one-stop shop that provides such services as corporate hangars, a fuel farm and maintenance repair operations.

The money would also fund building a general aviation flight school, Deklinski said. If the plan moves forward, it could bring about 879 permanent jobs to Merced County. “A lot of the jobs will be in construction initially,” Deklinski said. “And then once we establish the businesses, we’ll be hiring employees to service the aircraft coming in – catering, security, repair people, fuelers.”

About $30 million would have to be secured to fund the entire project. Sierra would lease about 18 acres at Castle from the county for the facilities.

Deklinski said his company is putting together a marketing team to reach investors in Korea and China. Some investors have expressed interest in Merced County, Deklinski said.

Mark Hendrickson, Merced County director of community and economic development, said this is the first time the EB-5 program has been used in Merced County and could provide an economic boost if Sierra is able to secure the needed funds.

“The county is very hopeful that they would be successful but obviously the actual development of the project is dependent on their ability to raise those resources,” Hendrickson said. “At this point we need to be cautiously optimistic that they will realize their goals, and if they’re successful, it will have significant economic benefits to the region.”

About 6,000 civilian and military jobs were lost when Castle Air Force Base closed in 1995, according to Hendrickson.

Similarly, the 2001 closure of McClellan Air Force Base in Sacramento County resulted in a loss of 12,000 jobs. The region used EB-5 funding to transform the defunct military base into a business park that now houses more than 300 companies, according to Frank Myers, chief financial officer at the business park.

About $18 million from EB-5 investors went toward roads, sewers and building improvements and helped to create at least 529 jobs at McClellan.

“We used EB-5 proceeds for infrastructure and building improvements,” Myers said, noting that McClellan faced similar challenges to those Castle faces. “The cost to convert an air force base to a private business park is very expensive. This is a source of money that allows you to make that investment and then attract businesses and bring employment to the area.”

Merced County District 3 Supervisor Linn Davis, whose district covers Castle, said he doesn’t see a downside to the EB-5 program. Unlike past plans and proposals to develop Castle, many of which didn’t materialize, this program puts the funding first.

“Before, there were plans but there wasn’t any money to support the ideas. The big difference is this is the money coming first,” Davis said. “I’m excited about the program and it’s nice that Mr. (Dan) Yoon (president of Sierra Academy of Aeronautics) stepped up to the plate and invested his dollars.”

Deklinski could not disclose how much money Sierra Academy of Aeronautics’ owners invested in getting the program approved Friday. If an agreement is reached with county officials to lease 18 acres, groundbreaking for the project could begin in early January or February, Deklinski said.

Sun-Star staff writer Ramona Giwargis can be reached at (209) 385-2477 or rgiwargis@mercedsunstar.com.

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