RIVERBANK — City officials worry their plans to take control of the Army ammo plant by April 1 could unravel because of the actions of the defense contractor managing the plant.
The city says it thought NI Industries would be leaving by March 31 but now says it has learned the contractor might stay as long as September 2011 and plans to continue occupying 70,000 square feet of offices and buildings rent-free.
That's a quarter of the available leasable space at the 168-acre plant, now called the Riverbank Industrial Complex, at Claus and Claribel roads. The city expects to use that space for paying tenants and what it calls an innovation center, a combination business incubator and training center.
The city claims NI Industries is driving off one of the plant's tenants, AM2T, a small high-tech metallurgy firm, in a dispute over who is responsible for potential environmental contaminants.
"Our business plan won't work if we don't have AM2T and the 70,000 square feet for the other tenants," said Tim Ogden, the city's economic development manager. "We're hoping for a resolution on this by early next week."
Riverbank's plans for the site describe it as a job incubator that could benefit a region struggling to reverse high unemployment far outpacing state and national trends.
In November, Riverbank leaders were touting proposals from five companies to move to or expand in the plant. Their plans could generate 500 jobs there.
The city has held off submitting its Economic Development Conveyance application to the Army until it gets more clarity on these issues, Ogden said. The City Council approved the application, which spells out the city's economic case for acquiring the plant, at its Nov. 9 meeting.
The city expects to acquire the plant, which has several business tenants employing about 300 workers, at no cost.
Confident resolution can be reached
Tom Lederle, with the Army's Base Realignment and Closure program, was confident the issues would be resolved.
"I'm optimistic that we will have the Riverbank community in control of that site by April," said Lederle, the industrial branch chief of the Army's BRAC division.
He said a solution could be reached soon that would keep AM2T at the Riverbank plant. The city wants AM2T to stay on until the question of liability for any potential contaminants is resolved.
The city learned in a conference call with the Army's Joint Munitions Command on Nov. 19 of NI Industries' plans.
"We understand there will only be six employees left as of April 1, so why would they need 70,000 square feet?" asked Debbie Olson, the city's plant project manager.
NI Industries declined to comment on AM2T and did not return a call regarding staying past March 31.
Mayor Virginia Madueño said she met with NI officials Thursday afternoon and that she is optimistic NI is willing to work with the city. She said they did not discuss specifics but expects to do so next week.
The city has enlisted the help of Rep. George Radanovich, R-Mariposa, whose district includes Riverbank.
Spencer Pederson, a spokesman for the congressman, said Radanovich wants AM2T to stay because of its potential to create high-paying jobs but won't weigh in on the dispute because the issue probably will be settled in court.
Pederson said Radanovich will take a closer look at NI Industries' plan to occupy the 70,000 square feet. "That was very surprising for Riverbank and very surprising for us," Pederson said.
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 earlier this year and laid off workers. It is relocating its operations to the Army's Rock Island Arsenal in Illinois, a process that will continue into 2010.
Bee staff writer Kevin Valine can be reached at email@example.com or 578-2316.