Archive for Sunday, June 20, 2004

Farmland quarrel baffles developer

Businessman, county at odds on how to refurbish industrial site

June 20, 2004

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Under a course being charted by elected officials, Douglas County residents may be asked to spend millions of dollars to buy and redevelop Lawrence's defunct Farmland Industries Inc. fertilizer plant site.

But a Lawrence businessman says that may be unnecessary. He has formed a group of investors interested in buying the 467-acre site east of Lawrence on Kansas Highway 10. And he said it was possible his group could redevelop the environmentally blighted site without public assistance.

But Samih Staitieh said his efforts had been hampered by county officials' stubbornness. A representative from his group was rebuffed in an attempt to meet with Douglas County Commissioner Charles Jones, the area government leader most active in the Farmland issue, to present the group's ideas.

"There is a definite sense of frustration in how difficult it has been to work with the public entities," Staitieh said.

The plan

Staitieh is no stranger to Lawrence development. Among his many business interests, he's the owner of Lawrence-based Westheffer Co., a distributor of agricultural-spraying equipment. He also is a member of the development group that owns the I-70 Business Center, which last week landed the corporate headquarters of Protection One Inc.

Staitieh, though, said county officials had been reticent to work with him because his group had a different idea for the Farmland property than county officials did.

Staitieh's group -- composed of Staitieh and members of Cleveland-based Hemisphere Development LLC, a firm specializing in redeveloping blighted properties -- wants a mixed-use development at the site. Staitieh envisions about half the property being used for industrial development with the remainder equally divided among retail, residential and office uses.

County officials have said the property should be used entirely for industrial development and open space.

Samih Staitieh, president of Westheffer Co., is interested in
buying the Farmland Industries plant but feels he is not receiving
cooperation from local government leaders. Staitieh was
photographed Friday at his North Lawrence office with a computer
screen shot from the Farmland plant.

Samih Staitieh, president of Westheffer Co., is interested in buying the Farmland Industries plant but feels he is not receiving cooperation from local government leaders. Staitieh was photographed Friday at his North Lawrence office with a computer screen shot from the Farmland plant.

Staitieh said such a recipe would be costly for county taxpayers because it would take 15 or 20 years for the site to attract enough industrial tenants to fill it. And because the property needs significant environmental cleanup, he said no developer would agree to develop the site as an industrial park without considerable public subsidies.

"To use the entire site for industrial basically would be a death wish," Staitieh said.

Officials with his group are not promising mixed-use development wouldn't require a public subsidy, but they said such a subsidy would be less likely than if the site was developed solely for industrial use.

"We absolutely think a mixed-used development is the way to go," said Bob Amjad, managing director of Hemisphere Development. "It reduces the private sector's risk and makes it a much more viable property. Their approach (the county's) essentially guarantees there is going to have to be a public subsidy."

Industrial needs

County officials last week strongly asserted the site should be used for industrial development. But Jones disputed the notion he refused to meet with Staitieh's group.

Jones said he had a conversation with Amjad and decided he wasn't interested in meeting with Hemisphere Development. But that was because Jones thought Amjad was seeking to make a presentation about how Hemisphere could provide consulting services to the county.





Jones said he would not meet with any consultants unless or until the county put out an official request for proposals for consulting services.

Amjad said he made it clear he wanted to talk about a possible mixed-use development for the property.

Regardless, Jones said a meeting probably would not have changed his mind about the plan. He doesn't dispute Staitieh's contention it would take years to fill the site with industrial users, but he said that didn't mean it should be used otherwise, especially if that meant residential development.

"Once you allow residential development to occur out there, it will be very difficult to ever do industrial out there because those residents will rise up in opposition," Jones said. "You basically would be sowing your own seeds of discontentment."

County Commissioner Bob Johnson, a partner with Staitieh in the I-70 Business Center, also said he thought the Farmland property's future should be industrial.

Johnson said he agreed with Staitieh's assertion the property would need a public subsidy if it was developed as an industrial park. But Johnson said it might be a good investment.

The new jobs and investment the property would create as an industrial development would be more beneficial to the community's tax base than residential or retail development, he said.

"It seems like industrial serves the best long-term interests of Lawrence and Douglas County," Johnson said. "And it is not like there are no other viable alternatives for residential and retail development in Douglas County."

County costs





Farmland Industries Inc. manufactured fertilizer for nearly 50 years at the sprawling site east of Lawrence on Kansas Highway 10 before ceasing operation in 2001. The manufacturing process left behind contaminated soil and groundwater that must be cleaned up before the site can be reused.City and county officials earlier this year pledged that none of the plant would be annexed into the city unless a plan for the entire 467 acres was presented.

If the county pursues buying the property, it is unclear how much it would cost taxpayers. The property is part of the trust established as part of Farmland's bankruptcy proceeding. To be purchased, the county would have to make a bid and could face other bidders at an auction conducted by the bankruptcy court.

Jones said the county, in partnership with the city of Lawrence, was "awfully close" to deciding whether to submit a bid for the property. He has declined to discuss how much the local governments may be willing to offer.

Kamyar Manesh, the trust administrator who oversees the property, said there would be significant costs to buy the land and provide necessary infrastructure to redevelop the site.

Cleanup costs also are an issue. Farmland has set aside $7 million in a fund overseen by the Kansas Department of Health and Environment to address many of the environmental problems.

Jones has said $7 million wouldn't cover all of the cleanup costs. More money will be needed to buy the property, extend city streets, sewer and water to make the site suitable for open space and a proposed expansion of East Hills Business Park.

"It is going to take a lot of money," Manesh said.

He said the county's position that the property should only be used for industrial development had potentially "cooled off" the interest of some developers. In late April, a Missouri businessman abandoned plans to convert the site into a cutting-edge manufacturing facility for hydrogen fuel cells. He blamed difficulties reaching a cleanup deal with state regulators.

"I think what that means is the city and county are going to have to come up with the plan for redeveloping it," Manesh said.

Still, Staitieh said his group still would be interested in the property if the county reconsidered its position. Without a change in heart, Staitieh said he was worried the property would linger in its current state.

"It is essential that something positive happen there," Staitieh said. "It is a property at the edge of Lawrence. It gives the community an image. You don't want to begin your drive through Lawrence with a property that is shut down and has environmental issues."

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