ABSTRACT: Corporations with surplus real estate can often obtain substantially higher returns from the property if they maximise their leverage with public jurisdictions surrounding the property.

Goodrich Corporation was able to work successfully with the Port of San Diego and the City of Chula Vista, California, to create a win–win–win public-private partnership. Goodrich ended up with a smaller, more efficient corporate facility, while the public entities realised the opportunity for substantially higher-valued re-use of a large tract of bayfront property. This paper reviews the key points to be aware of in conducting and structuring such a transaction, as well as the potential pitfalls.


The needs of a growing city, a port and a large aerospace manufacturing firm with surplus property are not necessarily aligned. Nevertheless, in late 1999 a successful win–win–win partnership was forged between the City of Chula Vista, California; the Port of San Diego; and one of the largest divisions of the Goodrich Corporation, Goodrich Aerospace Aerostructures Group. By December 2002, the over all transaction, involving approximately US$90m in value for all its components, was successfully completed.

In its 2002 Annual Report Goodrich stated,

"We are experiencing a down cycle in the commercial aviation market exacerbated by a weak economy and an uncertain global political situation ... we are putting more energy into delivering cost efficiency ... and ... productivity gains through continuous process improvement (CPI). CPI means looking at the way we manufacture things."

The largest manufacturing facility for the Goodrich Aerospace Aerostructures Group (Goodrich Aerostructures) is located adjacent to San Diego Bay in the City of Chula Vista. Before the partnership transaction, the facility comprised 94 owned and 48 leased acres, for a campus total of 142 acres. A total of 2.7 million square feet of buildings used for both manufacturing and office space occupied the site. At the completion of the transaction, the new campus had been 'rightsized' for the company at 87 acres and 1.8 million square feet of reconfigured space. The 'rightsized' facility optimised the production flow and supported the 'lean' manufacturing philosophy.

StoneCreek was retained in 1998 by Goodrich Aerostructures as its Owner's Representative. In this role, StoneCreek first determined the feasibility of reducing the size of this sprawling manufacturing facility by half. After completion of the feasibility analysis, StoneCreek developed a plan to maximise the results of rightsizing for the company. After obtaining management buy-in to this plan, StoneCreek assembled and led a project implementation team and negotiated the public–private partnership deal on Goodrich Aerostructures' behalf. The complexity of dealing with the Goodrich Aerostructures surplus real estate becomes clear when the boundaries of the Goodrich property, the City of Chula Vista Redevelopment Agency, and the Port of San Diego leasehold interests are overlaid.

Before: The crosshatched area is the orginal fee owned land. The areas bordered by the lines were leased.

Figure 1 is an aerial photograph of the Chula Vista Campus overlaid by the patchwork of elements before the transaction, and the more efficient campus afterwards. Over 60 years of operation the facility had expanded tremendously. In the beginning, the growth was largely fuelled by the Second World War; later, by the rapid expansion in commercial aviation. To accommodate this growth, the bay nearby was dredged to create additional land and building space. This land was all deemed 'Port' land and was available on a leased basis only. The main manufacturing building ended up being built half on owned and half on leased land. Later, the Redevelopment Agency of Chula Vista was formed and established its jurisdiction over both Port and Goodrich landholdings. To craft a successful deal, all three parties needed to have a satisfactory outcome from the overall transaction. For example, Goodrich required, as a part of the negotiated deal, a four-year relocation period from 1st January, 1999 to 31st December, 2002 to allow for an orderly transition by Goodrich from its South Campus (the relinquished property) to its North Campus (the existing and new properties for its facilities consolidation).