San Bernardino Airport Officials Fear Developer Gets Rialto Too Cheap

But the city agency won't get the full $79.5 million -- the agreed upon appraisal. It will deduct the developer's cost of demolishing the runway, relocating the airport tenants and cleaning up environmental problems.


A deal between Rialto and a big developer to turn the municipal airport into a giant commercial, industrial and residential tract is being eyed nervously by San Bernardino International Airport Authority officials.

They're worried Rialto could give developer Lewis-Hillwood LLC a big discount on the airport land, cutting into their airport's share of the sale price.

Federal legislation passed in July 2005 allowed the city to close the airport, on condition that 45 percent of the money generated by the sale goes to San Bernardino International Airport, where many tenants are expected to move.

The San Bernardino airport, formerly Norton Air Force Base, is counting on the money to fix up its terminal, create five gates and make the facility a real international airport, said San Bernardino Mayor Pat Morris, president of the airport authority board.

Everyone agrees that the Rialto airport is to be appraised at fair market value.

The Rialto Redevelopment Agency's appraisal came in several million dollars higher than Lewis-Hillwood's appraisal; the agency agreed to "split the difference," said Redevelopment/Economic Development Director Robb R. Steel.

The agency's appraisal of the 482 acres came in at $83 million; Lewis-Hillwood's at $77 million. The agreed-to split is $79.5 million, Steel said. A third appraisal, for the FAA, isn't public yet.

But the city agency won't get the full $79.5 million. It will deduct the developer's cost of demolishing the runway, relocating the airport tenants and cleaning up environmental problems.

Those costs are estimated at $35 million, so the agency would get $44 million, Steel said.

Would the San Bernardino airport get 45 percent of $79.5 million or $44 million? Apparently the lower figure, because the legislation calls for a share of (SEE CORRECTION) net land-sale proceeds.

Airport Authority board member John Mitchell, a Colton councilman, said he will scrutinize Rialto's appraisal closely. "I think the concern is to make sure ... our region, our area (and SBIA) airport get what they deserve," he said.

Airport Authority Vice President Bob Christman, Loma Linda's mayor, said he's concerned that the appraisal done nearly two years ago doesn't reflect today's real estate values.

I asked Scott Ostlund, senior vice president of Lee & Associates commercial real estate brokerage, how land values have fared since 2005. He said they are up about 20 percent since the year before last.

Ostlund said industrial land in Fontana, Ontario and Rancho Cucamonga now goes for $10 per square foot. Rialto's March 2005 appraisal valued the industrially zoned portion of the airport at $9 per square foot, or $43,560 per acre less.

Rialto Mayor Grace Vargas said she wants an appraisal all parties will be happy with.

But Councilman Ed Scott said the city probably won't want a reappraisal because it has a profit-sharing agreement with Lewis-Hillwood.

If the city demanded a higher price, it would cut into the developers' profit and therefore into the city's approximate 25 percent share. The city will make more by offering a lower sale price and holding out for higher profits, Scott said.

The conflict doesn't bode well for the airport authority, unless its leaders can convince Rialto selling short wouldn't be fair.

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