County envisions Castle as future state manufacturing hub

Merced County will move forward with a plan to develop Castle Commerce Center into a manufacturing hub that officials hope will create nearly 10,000 jobs and draw up to $1 billion in investments.

The Board of Supervisors voted 4-0 Tuesday to move forward with the Castle strategic development plan. District 4 Supervisor Deidre Kelsey left the meeting before the vote.

Mark Hendrickson, the county’s community and economic development director, presented the plan to the board, calling it “innovative, visionary and strategic.”

Hendrickson said that by seeking a public-private partnership, the county essentially has “flipped the traditional economic development model on its head.” Castle will remain a public sector asset and function under the county’s power, but it will require private-sector investment and development. The partnership will allow the county to facilitate the development while the investors foot most of the risk.

The county has partnered with GLD Partners, a consulting firm that helps develop assets at and around airports, seaports and inland ports. Adam Wasserman, a GLD partner, said the project, if successful, could become an economic force in the state.

“This project probably could be a recognizable asset in California because we’re not seeing a lot of this kind of activity in other places,” Wasserman said.

At full success over the next 15 to 20 years, the county hopes Castle will include 7 million square feet of development and account for one in 10 of the county’s jobs. Wasserman said three-fourths of the hoped-for $1 billion investment in the project would come from foreign investors.

“This is about trade,” he said. “Trade is where it’s at.”

One of the early steps of the plan was to analyze the current infrastructure at Castle – including electric wiring, gas lines, telecommunication ability and sewage and water mains – something that likely hasn’t been done in Castle’s history. The space already has hundreds of millions in suitable infrastructure, Wasserman said. Over the full length of the project, Castle will require about $70 million in infrastructure updates and additions, which will be paid for by the investor.

A market analysis showed Castle is best positioned to be a manufacturing hub for businesses in industries such as food processing, specialty chemicals, medical equipment, industrial machinery and self-driving cars.

The county sees development as starting small and slowly scaling up and diversifying. By the later years of development, officials are hopeful the workforce would cater to bigger companies that require a higher skill set.

But before the county can start seeking private investors, there needs to be a plan in place to complete the Atwater-Merced Expressway, shorten the runway at the airport and change the layout of Castle.

“In terms of site selectors, we need to give them reasons to be here,” Wasserman said.

The plan cannot move forward without clearance from the Federal Aviation Administration to shorten the runway and a funding plan for the expressway from the Merced County Association of Governments.

The Merced and Atwater mayors both acknowledged the development could help their respective cities and said they support finishing the Atwater-Merced Expressway, but they expressed frustration that the county didn’t give them more insight into the plans. Both also were leery of shortening the airport runway.

“Anything that happens to Castle impacts Merced,” said Stan Thurston, Merced’s mayor. “I beg of you, as you go forward, please involve us in the discussions.”

Jim Price, Atwater’s mayor, said residents have wanted development at Castle since before the former Air Force base closed. He suggested the county step up its game in marketing the base and improve the Castle page on the county website.

“Come and talk to us,” Price said. “I think we can enlighten you on a few more things that have not been discussed here.”

Thurston and Price have co-owned Gemini Flight Support since 2000, an Atwater company that fuels planes at Castle Airport and provides ground support.

Hendrickson said the runway still will be plenty long enough to remain useful and communicating with Castle’s stakeholders was part of the planning process.

District 3 Supervisor Daron McDaniel, whose district includes Castle, said he likes having a plan and is glad the county isn’t using a “shotgun approach.”

“It’s allowing us to step away and let the private sector take off and grow with it,” he said. “It’s not our job to be slumlords. That’s all we’re doing out there right now. It’s not working. ... If we continue to do business out at Castle the way we have been the last 21 years, nothing’s going to happen out there.”

Castle generates about $2.4 million in lease revenue yearly from 70 tenants and 100 leaseholds. In the last year and a half, the county has sold about 20 pieces of property.

Jerry O’Banion, who’s represented District 5 on the board since 1990, said it’s the first time he’s seen a plan to have Castle operate independently.

Addressing the two mayors’ comments, O’Banion said Tuesday’s actions weren’t cut and dry, but they pave the way for further discussion.

This story was originally published August 30, 2016 at 5:07 PM with the headline "County envisions Castle as future state manufacturing hub."