AIRPORT: Closing Rialto Municipal has gotten more complex
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STAN LIM/STAFF PHOTOGRAPHER
A runway not in use at the Rialto Municipal Airport on March 27. In 2005, Congress authorized the airport to close to make way for homes and shops. The airport has remained open, though, while the city of Rialto and developers wait out the economic downturn and face questions about what the end of redevelopment agencies may mean for the property.
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It should have been simple, or as simple as it can be to shut down an airport after securing the first difficult-to-get go-ahead to make way for homes, shopping and industry.
But closing Rialto Municipal Airport has been anything but easy.
Seven years after a rare act of Congress authorized the airport to close — a workaround that avoided a showdown with the Federal Aviation Administration that had funded the airport's development — it's still open and none of the tenants have been moved to nearby San Bernardino International Airport as planned.
The economy's swift and enduring downfall put plans to develop homes, shops and a business park on hold and made land prices of 2005 unrealistic. By the time land entitlements were complete and a specific plan approved in 2010, "the economy was long gone," said Robb Steel, assistant to the city of Rialto's administrator.
The airport's fate has only been made more complicated with the dissolution of California's redevelopment agencies.
The city's redevelopment agency owned the airport property and had the agreements with a private developer and San Bernardino airport. That agency no longer exists.
"The economy kicked us in the gut and then the state kicked us in the gut," Steel said.
The plan has already cost the city of Rialto and the developer millions of dollars, and the delay kept San Bernardino airport officials waiting for a windfall that hasn't arrived.
View Rialto Municipal Airport in a larger map
In addition to transferring the land to the city of Rialto — which later transferred it to the city's redevelopment agency — Congress required that nearby San Bernardino International Airport would have a 45 percent claim on the appraised value of the land. Those funds, paid by Rialto, would be used for relocating tenants and building hangars to house planes and businesses that had been at the closed airport.
The tenants that remain at Rialto today pay rent month-to-month, knowing the airport will close, just not when.
New tenants have arrived knowing there's still time, including Fontana Police Department's air support and an owner who has ketchup bottles sitting on tables in a soon-to-open restaurant at the airport.
To kick start development, Rialto's City Council approved raising $30 million through a complex financing deal for management of the city's water system that would raise residential rates between 97 percent and 115 percent.
But first, the city has to regain ownership of the airport property and sign new agreements with the developer and San Bernardino airport.
POTENTIAL PROFITS
In 2005, the city had visions of grandeur — development that would include 4,000 homes, shops, restaurants, a corporate park, a school, even a new City Hall — with the project dubbed "Renaissance Rialto."
Lewis-Hillwood Rialto LLC, a combination of the Upland-based Lewis Group of Companies that developed Victoria Gardens and Hillwood, which developed all of the non-aviation space at San Bernardino International Airport, agreed to eventually buy more than 500 acres of what would be the 1,400-acre Renaissance Rialto development.
Early on, the developer agreed to take on all the costs.
Rialto would get paid for the land and share in the profits of development. But the economy inspired a shift in responsibilities as well as a scaled back plan. The two sides were in the midst of negotiating a new agreement when redevelopment went away.
The standstill and uncertainty now is in stark contrast to the speed at which plans and agreements were falling into place between 2005 and 2007, including moving Westpac Restorations, one of the largest tenants at the airport, to Colorado Springs, Colo., at a cost of close to $10 million.
"In 2008, the door shut," Steel said, referring to the economic downturn.
Lewis-Hillwood has spent more than $30 million relocating tenants and securing land entitlements among other costs, "and we are still excited about moving forward," said Executive Vice President Randall Lewis in an email. The city's redevelopment agency has spent about $8.4 million paying back Lewis-Hillwood for some of the costs.
The pay-off was expected to more than make up for the spending. Rialto was poised to make at least $26 million from land sales, not counting a share of profits from the development, as a result of the airport's closure.
The amount the city's redevelopment agency ultimately agreed to pay the San Bernardino International Airport Authority to take on its tenants before the development stalled: $49.5 million.
Recently, negotiations have been revived to move the San Bernardino County Sheriff's Department to San Bernardino airport. The agency brought its helicopters and planes to Rialto airport in 1978 and has since outgrown its 20,000 square feet of space. Capt. Jeff Rose said the department could use 65,000 square feet.
The hangar at San Bernardino airport could cost an estimated $8.7 million. A large part — $4.2 million — would come from the city of Rialto when it sells airport property to pay for relocation costs. In prior plans, the Sheriff's Department agreed to pay $1 million, and San Bernardino airport's related Inland Valley Development Agency which oversees redevelopment of former Norton Air Force Base property would cover the rest of the cost and recoup what was spent by leasing the building back to the county for at least 25 years. More than a year ago, the San Bernardino airport authority approved — in concept — to build the space.
Under a new proposed plan, the city of Rialto would pay a $375,000 cash down payment — an advance on the $4.2 million — toward the design of the new hangar. The remainder would still be paid from land sales, if and when that happens. It's a risk because Rialto would only pay the rest if the land is sold, Steel said.
"Now, we've got a few more potholes in front of us," he said.
