Archive for Monday, December 1, 2008

City commission to discuss bid for Farmland property

Plans for the city to purchase the environmentally-blighted Farmland Industries fertilizer silo are back on the front burner.

December 1, 2008

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Bidding for Farmland

Here’s a look at how a bid to purchase the Farmland Industries site would work:

-- The city is not proposing to actually pay any money for the site. Instead, the property could come with as much as a $10.5 million trust fund to clean up the property. The city’s bid is based on how much of that trust fund it would take, and how much it would leave for the bankruptcy trust.

-- The bankruptcy trust will review the city’s bid in the next several weeks. It will make a decision on whether to recommend that the bid become the opening bid in a public auction conducted by the bankruptcy court.

-- If the court agrees to conduct the auction, other interested parties will be allowed to submit bids. The party that agrees to leave the most money in the trust fund is declared the winner.

City commissioners are making another push to buy the environmentally contaminated Farmland Industries property to convert into a new business park.

At their meeting tonight, Lawrence city commissioners will consider authorizing staff members to submit a new sealed bid for the 467-acre piece of property that currently is tied up in bankruptcy court.

“I’m convinced that Farmland needs to be the focus for our future job creation efforts,” said City Commissioner Boog Highberger.

But the site — just east of the city limits on Kansas Highway 10 — comes with the risk of the city being stuck with a sizable bill to clean up decades worth of environmental contamination at the former fertilizer plant.

When Farmland Industries filed bankruptcy in 2002, the company was required to set aside money for environmental cleanup of the property. Currently that trust fund contains $10.5 million, but the Kansas Department of Health and Environment is now estimating it will cost $12 million over 30 years to clean the property of soil and groundwater contamination.

And thus far, the state has rejected a request by the city that a cap be placed on the total amount of money the city would be required to spend on cleaning the property.

City Manager David Corliss said the city’s new bid would make it clear that the city would assume the liability for cleaning up the property, something the previous bid by the city did not do.

Corliss said that makes it possible city taxpayers may have to contribute to cleanup costs in the future, if the trust fund money isn’t adequate to complete the project. But several commissioners have expressed optimism that the cleanup could be done in phases and with city crews so any shortfall in funding would be minimal.

City leaders also have said some of the property could be sold to potential business users relatively quickly, which would give the city a source of revenue to fund any shortfall. The state estimates that about 300 acres of the site already is environmentally clean.

A larger question, though, may be whether the city can afford to extend infrastructure — roads, sewer and water service — to the site. Cost estimates for the infrastructure improvements have been sketchy, but Corliss said it is possible that they could run $10 million to $15 million over 30 years.

But Corliss said some of the infrastructure could be done in phases, and some parts of the property could be developed with relatively minor infrastructure improvements. The southern part of the property, for example, already is served by Kansas Highway 10 and has access to some water and sewer service.

City Commissioner Mike Amyx said he wants more discussion about how the city would pay for future infrastructure costs. The city’s finance department has estimated the city can issue about $5 million in debt annually without requiring an increase in the city’s property tax rate. Whether that would be enough to fund the Farmland project and other capital improvement projects in the city is an open question.

“Let’s face it, we’re not going through the best of times right now,” Amyx said. “We do need to understand what the impacts will be in future budget years.”

Commissioners meet at 6:35 p.m. today at City Hall, Sixth and Massachusetts streets.

Comments

50YearResident 6 years, 4 months ago

"Revenues that support Douglas County government are down this year, and adjustments will have to be made to the 2009 budget, County Administrator Craig Weinaug said on Monday."

Tony Holladay 6 years, 4 months ago

I just wish the city would find better things to waste our money on.

KU_cynic 6 years, 4 months ago

Stop, stop, stop this madness!The City of Lawrence does not possess the managerial nor scientific expertise to manage this site and do the required clean up. The notion that the city can use current workers to do environmentally sensitive clean up at a lower cost than the private sector is just ludicrous. Yes, Larry, Daryl, and Daryl might be paid lower wages than private sector competitors, but that doesn't mean that they have the skills. Also, the city would be self-insuring for liability assumed by the workers (I can envision the workers comp suit now; maybe Erin Brokovich would return to town to sue the city on behalf of sick workers), whereas private competitors would build that into their expenses.If acquiring and developing the Farmland property is such a swell idea, why aren't private developers lining up to do it? Simple answer: because they are waiting for our City Commission to commit our tax dollars to an endeavor they don't want themselves. After the City provides some deep pocketed security (with OUR money), then the devlopers will line up for their pieces.Let's get the city to disavow an interest, and let the private sector assume this risk.

classclown 6 years, 4 months ago

You all voted for this when you voted for sales tax increases. You didn't really think they were going to use that money for what they said they would did you?

TheStig 6 years, 4 months ago

Dear Commish: Get real or get out...

somebodynew 6 years, 4 months ago

This is just beyond stupid. They already know that it is going to take more money than that is there. And they still want to do it, even though the city has no money for everyday things. Let private indusdry deal with this. Do Not lay this on the back of taxpayers.

somebodynew 6 years, 4 months ago

Wow, Hawk - That is a very good question. I had almost forgot about that position. I guess if you don't hear about it you tend to forget it. Why hasn't he chimed in with his expertise ??

cowboy 6 years, 4 months ago

Where is the groundswell of public demand to purchase this property ? Or is it the pet project of a couple commissioners who may have special interests. I hear the constant whine of eco devo folks that they need this land. What new business have they delivered in the past decade. What is the 5 year outlook for lawrence ? What are the other options ?If our city is going to spend huge dollars it should be on a properly planned project , not a Vegas bet.The highest growth is in small business. Invest in incubator districts that can help new local owned ventures . Arts , tech , custom products , retail. watch the little engines get bigger. Stake your future on the big boys and you will only end up the jilted hooker.

gccs14r 6 years, 4 months ago

If the City buys Farmland, it should keep the land and build a bio-diesel plant to fuel the busses and other City vehicles and build a solar/wind farm to power the street and traffic lights and maybe some City buildings. Both projects would eventually pay for themselves, saving taxpayers millions in the future.

tolawdjk 6 years, 4 months ago

I have been on that property as a chemical engineering student, a state pollution regulator, and a federal regulator. I have been involved with Farmland's environmental team in Lawrence, Dodge City, and Coffeyville.There is no way in hell that $10.5 million will cover that clean up, nor does the City of Lawrence have the manpower or expertise to handle a clean-up of that magnitude. This isn't going to be fixed by hauling some junk to the curb for the trash truck to pick up or by sprinkling some mulch on the ground.I vividly remember an instance of unspent platnium catalyst laying in a pile on the ground. Stuff costed a fortune, just blowing in the wind, and none of the staff I was with could find out why it was there or even what it was supposed to replace. I also recall that when I was working with their Coffeyville refinery, they went through 3 environmental chiefs in about a year. Each one a scapegoat for the sins of his predecessor.

SMe 6 years, 4 months ago

And here's the key information in this article,"City leaders also have said some of the property could be sold to potential business users relatively quickly, which would give the city a source of revenue to fund any shortfall."Let me translate."City leaders have already worked behind the public's back to locate and make arrangements with certain developers that they will be able to purchase the "clean" portions of Farmland for a very reasonable - under market - price."

50YearResident 6 years, 4 months ago

Have each commissioner that votes for this project sign a million dollor bond guarantee that says if there are cost shortfalls he will personally make up the differance up to $1 million US dollars.

LogicMan 6 years, 4 months ago

Add me too to the chorus that's against the city, county, or state from acquiring that property (and its unlimited clean-up liabilities).But it does need to be put back into productive use. I wouldn't be opposed to the government spending a little one-time money and effort to clean off the site (recycle all that leftover metal, etc.).Then maybe it would be more attractive to a private developer, or at least a more attractive field on our southeastern entrance to the city. The similar clean-up of the north Lawrence corridor has gone well.

WWoftheW 6 years, 4 months ago

SME is right. IF the City Commission is talking selling to developers then they have already made contact to some of their good friends and will probably sell for cheap or even better let the developers build and then use some benefit district financing so that everyone around the lots pay the developers to build. Or the City Commission will give the developers a tax incentive like a TDD or TIF which means we pay for the development and someday, if we are lucky, the money will be paid back, but in the meantime the money that should have been used for our streets is gone and now you know why the city needed a sales tax for our streets.

tir 6 years, 4 months ago

This is sheer fiscal irresponsibility. The City shouldn't even consider spending our tax dollars to clean it up. It would cost more than the trust fund contains, and we can't afford to foot the bill for the rest. Especially not now, when the city has to pass a sales tax to even fix the streets!

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