County ready to sign over Castle to private developer

ATWATER -- 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 signing an agreement that will hand responsibility for the decommissioned military base to a private company.

Castle Air Force Base was closed in 1995 and is now called Castle Commerce Center. 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 had anticipated. But in recent months, development has 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 the deal to the county Board of Supervisors for approval within 60 days.

The agreement would 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 space at Castle, Federal Development would construct buildings, improve roads and other infrastructure, and market the center to companies and investors.

The county took official ownership of Castle in December 2006 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 temporary agreement, Fed- eral 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 redevelopment agreement, which is in negotiation, and the terms 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 redevelop the base successfully.

"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 would require approval by the Board of Supervisors. And the county would 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 fly to and from Castle. It also is home to two flight schools.

In January, the airport reopened its air traffic control tower, and the county has set its sights 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 not contracted with a passenger airline, however.