A new deal for the city to purchase the former Farmland Industries site appears in the works and may begin to publicly emerge as early as next week.
Officials with the city, a private redevelopment group, Farmland trustees, and the Kansas Department of Health and Environment met last week, with some participants in the meetings saying a new level of cooperation was forged.
“We all kind of sat down and asked whether there was a way to reach a situation where a deal serves everybody’s interest,” said Aaron Bowers, a leader of Overland Park-based Capitana Redevelopment Group, which owns a legal interest in one of two trust funds that are attached to the property. “We’ve had something along those lines articulated to us now.”
The city has long been interested in the nearly 500-acre property just east of Lawrence on Kansas Highway 10 because leaders believe it can be converted into a business park.
City commissioners met in executive session Tuesday night to discuss a possible property acquisition, and attorneys who represent the city on the Farmland matter were in attendance.
City Manager David Corliss declined to go into specifics about a potential city bid, but confirmed that the city is working on the matter.
“We think we are close, and we think we’ll be moving in that direction with the commission in the coming days,” Corliss said.
Lawrence Mayor Rob Chestnut said the city’s main philosophy on how to structure a bid for the property is unchanged.
“This is not about the city taking on more risk,” Chestnut said. “We’re still focused on making sure there is the right level of money available to pay for any remediation.”
He said the goal is for city tax dollars to not be used in the cleanup, although local tax dollars likely will be needed for infrastructure required to turn the property into a business park.
The former fertilizer plant needs a significant amount of environmental cleanup work, which the state will require the new owner of the property to complete. As part of Farmland Industries’ bankruptcy, two trust funds were set aside to manage and clean the property. The funds have about $10 million in them, but KDHE has estimated cleanup costs at about $13 million. There also have been questions about whether the entire $10 million in trust funds is available for cleanup because Bower’s company has purchased a legal interest in the administrative trust funds of the property, which account for about $6 million of the $10 million.
But Bowers said KDHE’s cost estimates were discussed at last week’s meeting.
“I’ve been critical of KDHE’s numbers from the get-go,” Bowers said. “When we were able to sit down with everybody and explain those numbers, I think there may have been a recognition that we are talking about something different.”
Bowers believes the KDHE estimates are inflated because they do not adequately account for the fact the trust fund money won’t have to be all spent at once, but rather over a 30 year period. He also believes the amount contingency costs built into the estimates are excessive.
“It is definitely not a $13 million cleanup,” Bowers said.
He said he thinks the site could be cleaned up for less than $9 million. The lower the cleanup cost, the more Bowers and his company potentially could profit. The legal interest his company purchased in the administrative trust fund makes it likely that his company would receive any money left over. How much, if any, money the city is proposing to leave in the trust fund for Bowers’ company to receive, has not been disclosed.
Such specific details, though, could be coming in future weeks. The city typically has not disclosed the details of its past offers, but if the offer is accepted by the other parties the City Commission will be required to take a formal action to execute the purchase.
Corliss said before that final action is taken all the details of the proposed deal will be made public as part of a City Commission meeting.
“We feel like we should know more in the coming weeks instead of the coming years,” Corliss said.