RIVERBANK — The city sounded the alarm last week when it thought its plans to take over the Army ammo plant April 1 might blow up.
But it was a false alarm.
The city feared the military contractor running the plant could stay as long as September 2011 and occupy 70,000 square feet of offices and buildings rent-free, undermining the city's plan to turn the plant into a regional economic hub with at least 500 jobs.
But the Army says contractor NI Industries will clear out by September 2010, and the city should have known that.
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"We thought they understood," said Tom Lederle with the Army's Base Realignment and Closure program. "We didn't know they didn't know."
"We learned today about September 2010 and not September 2011," said Tim Ogden, the city's economic development manager, on Thursday. "They emphasized that's what they had always been saying, and we said that's not what we thought."
That still keeps NI Industries at the plant — also known as the Riverbank Industrial Complex and home to several business tenants employing about 300 workers — for several more months than the city once expected.
Last week, the city said it believed NI would leave by April 1, the date the city expects to take over the plant.
Ogden said NI will keep using 60,000 square feet rent-free beyond April 1 but will give up a 10,000- square-foot office.
The city plans to put what it calls an innovation center, a combination business incubator and training center, in the office and to put paying tenants in the 60,000 square feet of space.
"Worst case, that's delaying some of our plans by about five months," Ogden said about NI staying past April 1. "This is a 15-year plan, so a few months does not impede it too much."
Riverbank's plans could benefit a region struggling to reverse high unemployment far outpacing state and national trends.
The Army's assurances may be a relief for Riverbank, but the city got some bad news from Stanislaus County last week.
The Board of Supervisors rejected the city's request for a $335,000 loan from the county's Economic Development Bank.
The city wanted the loan to relocate an irrigation pipeline that bisects property the city wants to sell to Mid Valley Foods and Rizo Lopez Foods, two Riverbank businesses that want to relocate and expand at the ammo plant.
Not relocating the pipeline limits development on the property and could kill the deals that would bring in Mid Valley and Rizo Lopez.
"We don't have enough information about this at this time to make any additional comment," said Cheri Casey, who owns Mid Valley with her husband, on Thursday. "We continue to hope that this site will be the site we relocate to."
Rizo Lopez officials did not return several phone calls this week.
Mid Valley employs 17, and the city says Rizo Lopez employs 120 to 130 workers.
The city still is holding up submission of its Economic Development Conveyance application to the Army, the next step in the takeover. The City Council approved the application, which spells out the city's economic case for acquiring the plant, at its Nov. 9 meeting.
Ogden said the city expects to turn in its application this week once a dispute between NI Industries and AM2T, a small high-tech metallurgy firm and one of the plant's tenants, is resolved.
NI is evicting AM2T over the dispute, which involves who is responsible for potential environmental contaminants. The city has high hopes for AM2T's ability to grow and produce high-paying jobs and wants it to stay.
Ogden and Lederle expect a resolution soon that would keep AM2T at the plant.
The Pentagon announced in 2005 that it would be closing the plant under its Base Realignment and Closure program. NI Industries had made shell casings at the site for decades but stopped production this year. It is relocating its operations to the Army's Rock Island Arsenal in Illinois.
The relocation has been delayed because the U.S. Army Corps of Engineers has run into delays in remodeling a building for the equipment being moved from Riverbank to Rock Island.
Bee staff writer Kevin Valine can be reached at email@example.com or 578-2316.