Tuesday, Jan. 30, 2007 • Supervisors look at two potential developers for excess Army land in Herlong

Publisher’s note: This story originally appeared in the Tuesday, Jan. 30, 2007 edition of the Lassen County Times.

Sometime next month the Lassen County Board of Supervisors will choose a new developer for surplus Army property in Herlong; one plans only housing; the other wants to attract industry to Herlong.

Assistant Community Development Director Joe Bertotti said the county received the two responses to a request for qualifications sent out in September 2004, seeking a developer for 400 acres the local reuse authority acquired from the 1995 U.S. Army Base Reuse and Closure process.

The board’s agenda will include an action item to choose a developer at its Feb. 13 or 20 meeting, Bertotti said. He added county staff will present an analysis of the proposals from Reno-based Leader Construction and Milwaukee-based Towne Development, of Sacramento.

Leader plan
Susanville resident Ken Battson made Leader’s presentation, saying  he’d lived in Lassen County almost 15 years and has a vested interest in this community.

“This is the area where we live,” Battson said, adding 80 percent of Leader’s team lives within a 50-mile radius of Herlong. “I think that’s pretty significant when you’re talking about a substantial project like this.”

He said the team was interested in the project because Herlong is part of their community. One member was particularly interested.

Former Sierra Army Depot Commander Col. Paul Plemmons, who will join the Leader’s marketing team in a few months when he retires from the Army, flew in from Iraq to Maryland on Dec. 10, and previewed Leader’s proposal before attending the presentation at the board’s Tuesday, Jan. 16 meeting. Plemmons has signed on to market the development.

“The RFQ was composed of three different phases, residential, commercial and industrial,” Battson said. “We have connected the sites with some unique, vital open space areas.”

Leader assigned two working names to the project that Battson said “will become the benchmark for future mixed communities,”: the Mountain View Eco-Industrial Park and the Herlong Valley residential project. The eco-industrial park is a “sustainable green-energy industrial park,” he said.

The eco-industrial park plan to offer fixed energy costs for 20 years will attract tenants, he said, and gain national recognition because the fixed costs offer a significant, strategic advantage for global competition. Creating 500-1,500 jobs, the industrial park will provide a sustainable tax base, Battson said.

“The goal of an eco-industrial park is to improve the economic performance of the tenants while minimizing their environmental impact,” Battson explained, reading from Leader’s business plan.

In a typical industrial area, manufacturing and service businesses buy power from a local utility that produces electricity using natural gas to power turbines. Producing electricity with gas powered turbines generates 900-degree temperatures as a waste by-product and involves heavy overhead and operating costs, Battson said.

Leader plans to install heat exchangers to produce other forms of energy, including steam, high temperature hot water, potable hot water and two temperatures of chilled water.

“If we produce our own power and we can sell it to a potential tenant in the industrial park at a reduced price on a long-term contract basis, he is then able to budget his long-term financial plan,” Battson said.

Since the number one business concern today is uncertainty of energy costs, the Herlong industrial park will attract industry because the long-term contract will significantly lower operating costs. It will also give Leader four or five income streams.

The park’s environmental responsibility and low cost will attract global recognition, Battson said.

“You will have a love-fest up here between Arnold Schwarzenegger and Barbara Boxer and Dianne Feinstein, thinking how wonderful this is,” he said.

The availability of housing nearby also will attract tenants, Battson said. Leader’s 460-acre plan includes 251 single-family homes, duplexes and town homes and 336 units of multi-family apartments.

As it builds out, the project will have a significant, positive impact on Lassen County. Growth will bring commercial opportunities, helping to transform the existing, deteriorated commercial area, Battson said.

In addition to new shops, cafes and boutiques, Leader hopes to attract a gym, a bowling alley, some gas stations, “maybe even a national grocery chain,” Battson said, adding Leader has proven management experience as a design-build developer.

He added the Leader team will not subcontract the project for single-point responsibility and control from initial conception through completion.

When District 3 Supervisor Lloyd Keefer asked about Leader’s approach to marketing the project, Battson said he already has companies prepared to sit down and sign a letter of intent to locate in the industrial park if Leader’s bid is successful. Battson said anyone who sells anything to the Army or FEMA will want to locate in Herlong.

“If you make glasses and you sell them to the military, what better place than to have your factory right adjacent to the Sierra Army Depot,” Keefer said. “You’re cost effective; you’re very competitive now because of the reduced cost in energy. The army can come over and pick it up and you save all that shipping, as well.”

He added such businesses don’t have to carry huge inventories and tie up cash flow. Battson said the industrial park will have a strategic advantage over any other location in the nation.

“I’m a firm believer that by the time we’re able to break ground, I believe I’ll have half that park sold out, maybe more,” he said.

Within 12-18 months of receiving the first permit to construct, Battson said phase one of the housing will be complete 22 single-family homes, 48 duplexes and 36 town homes. He predicted the entire build out will take less than five years and added there will be space for an ambulance station, sheriff’s substation and other community services.

District 5 Supervisor Jack Hanson said revitalizing the community is his primary purpose.

“A close second might be trying to enhance the revenues for the county,” Hanson said.

Leader has already attracted one former county resident back to Herlong, who said he was glad to be back in the area.

“It’s good to be back and out of my colonel’s suit,” Plemmons said. “You all know how I feel about Lassen County and the Herlong community.”

He added he was always concerned about building the Herlong community and Leader’s vision and professional resumes can get the job done.

“I really believe, deep down in my heart, these folks can get this done,” Plemmons said, adding people would want to live there, especially those looking at a four-minute walk to work instead of a drive from Reno or Susanville.

Homes by Towne
“We’ve got a long history of doing a wide range or projects,” said Jeff Penstein, the regional manager Towne Development, in Sacramento, “everything from residential to commercial and industrial. We’ve even had occasion to build rocket gantries for NASA in Florida.”

Penstein said Towne does two things really well.

“When we look a project, we make sure that we don’t bite off more than we can chew,” he said. “And we think, when we build something, we build a pretty darn good product.”

Towne’s team includes a finance and consulting firm it’s worked with for years on numerous projects, he said.

As a very conservative company, Towne responded to the most immediate need: housing for civilian employees at SIAD and the Herlong Federal Prison. Its master plan calls for 154 residential units around a town green, along with duplexes and a retail area.

“I know the RFQ asked for a lot more,” Penstein said. “We thought it best to try and get something in the ground from a more practical and pragmatic stand point and see how the market develops.”

He said the company can design a larger component but decided to start with 1,300-1,600 square-foot houses as the first phase.

“Typically the type of housing that we would look at putting out there (includes a) standard foundation, sticks and bricks, not any type of modular development, again because we take great pride in the houses that we build.”

He said the plans don’t include any retail design.

“Our experience with retail is that you need more bodies out there,” he said. “The more bodies that live out there and habitate out there, the more the need for retail is. We certainly partner with and work with a number of retail, shopping center-type developers. We build them. And so, our thought was to provide a good logical space for it — off of Flagler and Susanville roads —but really start to test the residential market.”

Penstein said getting bodies in the houses makes retail attractive.

“Certainly, we don’t want to build a retail space that’s just going to sit there and be vacant,” he said.

If Towne wins the contract for development, he said the company would start work on how to get and pay for sewer and water service for the homes and get houses built within a year.

The board did not ask Penstein any questions and took no action because the presentations were on the agenda only for information.

County seeks developer to create a livable environment in Helong
In September, the board published its requirements in a request for qualifications. It was the second effort to attract a developer for the former Sierra Army Depot property.

As the only respondent to the county’s first request for proposals issued on Nov. 8, 2004, Bay Area developer Scenic Mountain Development LLC announced plans in February 2005, to invest $15 million to build Sierra Meadows Village in Herlong. The Sierra Meadows project included housing, offices, stores and light industrial buildings.

Negotiations ended unsuccessfully in July 2005. The county issued a second request for qualifications in September 2006.

It originally sought to transfer 50 acres the local reuse authority acquired from the 1995 U.S. Army Base Reuse and Closure process to a developer. The second RFQ offered almost 400 acres of LRA land for development in three tracts, as part of the planned progression for offering the more than 4,000 total acres of LRA land.

The request for qualifications issued in September 2006 said the reuse authority “has received the land offered for development and is working, in conjunction with the (Lassen County Community Development) Commission, to revitalize the community.

“The County Economic Development/Housing Division has homebuyer assistance available for qualified purchasers.”

The RFQ said the company selected to develop the land “will be responsible for the town planning/urban design, architectural, engineering and construction elements of the project.”

The selected developer would be chosen, according to the RFQ, based on demonstrated ability to provide necessary capital, how its plan furthered  project objectives, created “a livable community by way of appropriate high density residential and mixed commercial use development,” and utilized renewable energy resources.

“Creativity in this endeavor is encouraged. Traditional neighborhood design is preferred,” it said.

“The commission will seek a financial return on the proposed development site commensurate with market value of the development site taking into account the type, intensity and economics of the proposed development. The sale price of the site will be based on the market value,” based on the characteristics already listed, the RFQ said.

“The commission intends to have the site appraised to establish market value of the site once there is an approved conceptual plan(s) for development of the site.”

Project objectives include:

• Reasonableness of proposed overall concept and understanding of the Herlong real estate market including residential, retail/office and/or industrial uses;
• Responsiveness to development objectives for the site as set forth in this RFQ
• Understanding of approved policies, plans and guidelines FINANCING
• Market viability of proposed uses and related product type(s)
• Preliminary approach to project financing
• Potential construction and permanent employment created by the proposed project
• Potential increase to public tax revenues (i.e. property tax, sales tax, etc.); and
• Inclusion of additional amenities for the project site and surrounding community.

Once it selects a developer, the RFQ said, “the commission will expect to enter into an Exclusive Negotiating Agreement. If the commission awards an ENA the commission will not accept competing proposals for the subject development site unless the selected development team’s Exclusive Negotiation Agreement has concluded in accordance with the commission directive.”