Archive for Wednesday, December 9, 2009

New deal for city of Lawrence to purchase Farmland site is in the works

Officials with city, redevelopment group and others are discussing options

City leaders are forming a new plan to acquire the Farmland Industries property just east of Lawrence. The plan could make it to commission meetings as early as next week.

December 9, 2009


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.


OzChicklet 8 years, 4 months ago

You've got to be kidding! The city is talking about building another business park out there when they can't even get the buildings in East Hills Business Park leased! We can't even get our streets, curbs, and sidewalks fixed in Lawrence due to lack of funds! This is unbelievable. And I suppose Bowers is an environmental expert that knows more than KDHE staff. Sounds like same old same old...small government, no oversight, trust "them" to make the right decisions...Capitana Redevelopment Group doesn't care about environment cleanup - they care about how little environment cleanup they have to do so they can pocket the money. This is so typical. "Build it and they will come"...not...

cowboy 8 years, 4 months ago

Plan for Success

Have prospective occupants , tenants in sight - Not Firm cost of acquisition - Not Have adequate capital to develop / maintain , clean up - Not Have sales organization that can sell into capacity - Not Have firm marketing evaluation showing need for product - Not

GardenMomma 8 years, 4 months ago

Why, exactly, does the City want to purchase this money pit? I am getting the feeling it is only to get their hands on the clean-up trust money.

pace 8 years, 4 months ago

Face it, cleaned up, it is a good industrial site, Good for jobs, for for industry. Left a seeping sore it could ruin homes, families and Lawrence businesses. Clean, use it .
It won't go away.

GardenMomma 8 years, 4 months ago

Clean it, use it....?

That's the problem. It will cost WAAAAAY more to clean it than is in the trust and the city will be left holding the bill. Which means, we, the taxpayers and voters, will be left holding the bill.

pace 8 years, 4 months ago

Gosh, yeah, let's not clean up the site, let it seep, be a sore spreading blight. Great plan. now that will save money. your plan is sit on the clean up and sit on any money available, do nothing but whine. spin all your efforts in figuring out where the blame finger should go. What a plan. This problem will not just go away.
It should be cleaned up, it is seeping. You want everyone to sit on their thumbs whining and impotent. Farmland industries were criminals and the courts were criminal to let them off without a clean up, with just a estimated monetary liabiltiy. they should have been made to clean it. there the finger is pointed, didn't fix it , needs fixing. If our city and state and federal government continue to do nothing to clean it up they are criminal by inaction. It is a seeping sore. Clean it up, put it back to use, make industry and jobs, It is a seeping sore.

Richard Heckler 8 years, 4 months ago

*Economic Growth Problems in Lawrence

======================================== Over loading markets creates a situation where all available dollars are spread too thin = In essence when a new retail operation opens it can only take dollars from other existing business = economic displacement. Flooded markets cannot make money because all are in competition for the same dollars = economic displacement

Lawrence is losing population which means no new dollars for the existing market. There has not been an increase in the number of dollars so why does more retail construction continue? There has not been a significant source of new retail dollars for 20 years.

Then KU decides to send home games to KCMO to improve their economic growth = more economic dislplacement = huge loss in small pie of Lawrence retail dollars.

Economic displacement = wreckanomics

Tax abatements in a small town = wreckanomics

Lawrence Kansas was a "boom town economy" = wreckanomics because " boom town economies" are not sustainable thus more wreckanomics.

There is no economic logic to the helter skelter Lawrence growth pattern of the past 20 years.

Economic Displacement = higher taxes and user fees to cover the cost of sustaining Lawrence = wreckanomics.

BigPrune 8 years, 4 months ago

This site is better off being something other than industrial. Perhaps Lawrence should counter to something the Legends now offers. What US companies are seriously considering opening a new place of manufacture? Everything these days is manufactured overseas. It is too late to turn the tide.

Make it a regional draw. Get to work with a group of Lawrence visionaries before Lawrence purchases this property so a definite plan is in place.

Jerry Collins 8 years, 4 months ago

Hey commissioners, Stay out of business. If you want to develop properties, use your own money like all other investors do.

just_another_bozo_on_this_bus 8 years, 4 months ago

"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."

Why has this group even been allowed to butt into this process? What do they have to offer, other than sucking up as much of the clean-up fund as possible?

outtahere 8 years, 4 months ago

Isn't this where LCS wants to build their new shelter? Are businesses really going to move into a new retail space next to a homeless shelter? Is the city purchasing this so they can push the shelter through?

OzChicklet 8 years, 4 months ago

@pace -

If our city and state and federal government continue to do nothing to clean it up they are criminal by inaction.

Yes, cleaning it up would be ideal, but the cost will be astronomical. You never know how much it really costs until the cleanup is started, seepage analyzed, etc. Cleanups like these tend to cost 3 to 4 times more than the estimates. The city, state, federal government do not have that kind of money to spend. Do you think this is an isolated incident? This happens EVERYWHERE...right down to gas stations that go out of business. When a business goes down, you think they have the cash to leave behind for environmental cleanup? How things should be and how things are, are two very different things, unfortunately.

Sigmund 8 years, 4 months ago

The city can't budget to maintain sidewalks and they want us to believe they can do environmental cleanup of hazardous waste site and then build a successful new industrial/retail development using existing city employees and our tax dollars and do it within a budget?

Here is a reality check, nobody, absolutely nobody, outside of the City Commission believes that, nobody.

Sigmund 8 years, 4 months ago

GardenMomma (Anonymous) says… "Why, exactly, does the City want to purchase this money pit?"

I know it is just weird! Really hard to figure out why the Commission is so set on the taxpayers taking on the liability for a ecological and economic disaster.

Aron Cromwell, “Together with his wife Hannah, the Cromwells run a thriving “green collar” business in downtown Lawrence, Cromwell Environmental.

Michael Dever, “Dever is president of GuideWire Consulting, a Lawrence-based environmental technology consulting firm. He has worked as an environmental consultant since 1985, managing environmental assessment programs for several Fortune 500 companies.”

Lance Johnson, “Lance is currently President and Chief Executive Officer of Peridian Group, Inc., a local engineering, real estate and construction company.

I guess if the property was also scheduled to house a Academic Journal of Barber and Cosmetologist I some might think some members of the Commission were self dealing.

Robert Chestnut, “Rob is currently the Chief Financial Officer of Allen Press here in Lawrence.”

Mike Amyx, “Commissioner Amyx is owner of Amyx Barber Shop, Inc., a family owned and operated business since 1942.”

LawrenceKSHomeBoy 8 years, 4 months ago

This is insane. There is no logical reason the city should be thinking about buy this land.

How about some money for...


Hang them all!!!

LloydDobbler 8 years, 4 months ago

First, I have to say to you Marion, please stop pulling numbers our of your rear! $160 million? Please! You don't know what you are talking about and should research before you speak.

I am not an advocate for the City buying this property because the cleanup costs do, based on realistic plans, exceed the amount of money in the trust funds. I do environmental work for a living and, while there are a lot of variables, the actual cost of cleanup could exceed the trust fund dollars by up to $2 million. I don't know about all of you, but I don't want my hard earned tax dollars going to pay for cleanup that should have been (and could have been) paid for with the original trust fund before some of it was squandered.

That being said, the more pressing issue in my mind is the fact that City and County leaders have shown no prior ability to develop property in any economically beneficial manner (think East Hills - still highly underdeveloped - and Eagle Bend - a financial sink hole). They need serious outside (as in outside of Lawrence and even Kansas) industrial development assistance from someone who knows what the hell they are doing.

I also don't like this "executive session" garbage. If it's that great of a deal, do it in the light of day so that taxpayers know how their money is going to be spent.

Sigmund 8 years, 4 months ago

“It is definitely not a $13 million cleanup,” Bowers said.

This is the current owner of the land and the liability. If he really thought this he would do the cleanup and keep the profit himself. Perhaps he will put his company, home, and his personal wealth on the line and cover any amount over $13 million. Don't hold your breath.

LloydDobbler 8 years, 4 months ago

This is a complicated situation. Bowers and Capitana are NOT the current owners of the land. They bought...for whatever reason...a stake in the bankruptcy trust fund, not the land. There is a big difference. The land is still officially owned by the Farmland Bankruptcy Trust. Initially, JP Morgan/Chase was the trust fund general administrator with Shaw Environmental Liabilities Services, LLC serving as the environmental trust fund administrator. As I said, it's complicated and there are a lot of moving parts which makes it even more risky for the City and/or County to purchase the property.

What has never been reported is the issue of remaining infrastructure. Someone in an earlier post mentioned the idea that some of the equipment still on site might have salvage value. Unfortunately, nearly everything that has value has already been sold with the money going to pay creditors several years ago. What is left is a bunch of concrete and other useless structures that will have to be removed before any real development can occur. So, if the environmental remediation costs are $9 million at the low end, there is still somewhere in the neighborhood of $2 - $4 million worth of "ground leveling" sort of stuff that no one has discussed. This property needs to be developed...but the city doing it is a boondoggle.

50YearResident 8 years, 4 months ago

"It is definitely not a $13 million cleanup,” Bowers said."

If it could be done for $9 million this guy would have already cleaned it up and pocketed the extra $1 million. That is my opinion!

Sigmund 8 years, 4 months ago

LloydDobbler (Anonymous) says… "Bowers and Capitana are NOT the current owners of the land. They bought…for whatever reason…a stake in the bankruptcy trust fund, not the land."

I would assume he would profit if the cleanup is less than the trust, but is he liable if there is a cost overrun?

gl0ck0wn3r 8 years, 4 months ago

Maybe it could be turned into a giant roundabout for K-10... that way, business wouldn't actually have to come into Lawrence before rejecting it. It could simply turn around and head back to Johnson County. Hurrah!

LloydDobbler 8 years, 4 months ago

Sigmund - I haven't been able to figure out the remaining relationship between the trust and the land at this point. All of the creditors have allegedly been made whole, so they don't care anymore. The land and the trust are not inextricably linked. In other words, Capitana has no real responsibilities tied to the land itself, only the trust. They kind of took over administration of the trust from the bank, who had drained their requisite 50% net margin through trust oversight. Capitana would legally be able to charge some administration fee for basically doing nothing and relinquish whatever amount they agreed to release to a prospective purchaser. Outside of KDHE who has some say in how the environmental trust is used, the administrative trust can just set there (and presumably drain away through legal and administrative "fees") until a buyer comes forward that is approved by the Bankruptcy Court of Western Missouri (Judge Venters, I believe).

In the long run, Capitana will get whatever money they can and fade into the sunset. The unfortunate thing is that, if the City was hell-bent on purchasing the property, they would have been better off doing it about three or four years ago before so much of the funds were drained. Either way though, the City owning it is not good in my view.

50YearResident 8 years, 4 months ago

Sigmund asked: I would assume he would profit if the cleanup is less than the trust, but is he liable if there is a cost overrun?

I think that is why he (Bowers) is inviting the city in for, the liability part.

LloydDobbler 8 years, 4 months ago

I doubt Bowers has any liability regardless of the I said, he doesn't own the land. Just as JP Morgan/Chase walked away, I would guess he can as well. Buying in as a trust administrator can apparently be lucrative with no real exposure.

LloydDobbler 8 years, 4 months ago

Marion - Let's not get carried away. There is a legitimate range of cost known for site remediation (probably $8 million at the low end and $13 million at the high end). And there is no open ended "contract" and pre-approved cost increases. These type of projects are normally bid as a lump sum guaranteed fixed price or time & materials with a price not to exceed. It's not a good thing at all, but it's not the end of the world either.

50YearResident 8 years, 4 months ago

In addition to this Farmland purchase the city is considering funding 1/2 of a 4.75 million Bus Facility with KU and another 1 million on the Train Station. It seems the Money Pit has no bottom.

GardenMomma 8 years, 4 months ago

This is a serious waste of money. I wasn't aware that the City of Lawrence was in the business of cleaning up environmentally contaminated land.

I thought another company was interested in purchasing the site at one time.

So, am I correct in thinking that the city purchases the site for how much? I don't recall hearing how much the city needs to spend to purchase the land. And then the city would get the $10 million in clean up trust to be used for cleaning up the site? Is that how it works?

LloydDobbler 8 years, 4 months ago

The City most likely (unless they are totally nuts) wouldn't pay a dime for it. Throughout the process it has been sort of a reverse sale - the most beneficial buyer being the one who was willing to take the least amount of the trust. At this point, the only deal that makes sense is for someone with a legitimate development plan and deep pockets to take both the land and all of the remaining trust...the City doesn't fit either of these criteria.

LloydDobbler 8 years, 4 months ago

Yes, Marion I have...and you are completely nuts! Out of 467 acres, about 350 hundred of it is NOT impacted and the rest is impacted to varying degrees.

50YearResident 8 years, 4 months ago

If 3 feet of soil is removed in cleanup won't they they have to haul in 3 foot of new soil to keep the grade from being too low? Last time I priced one load of fill dirt it was over 100 Dollors for about 8 cu yards. How many cu yards will it take for 400 acres?

GardenMomma 8 years, 4 months ago

Q: How many cubic yards are in an acre one foot deep?

A: 3,560 sq. ft. (1 acre) * 1 ft. deep /27 cubic ft. (1 cubic yd) = 1613.333 cubic yds.

LloydDobbler 8 years, 4 months ago

You don't move contaminated soil from one site to create a problem at clean the soil through bioremediation or some other method.

yoornotmee 8 years, 4 months ago

Being broke is depressing, but shopping is fun! Shopping will make Lawrence happy....... yeah.

KsTwister 8 years, 4 months ago

CLEAN up FIRST!!! If you cannot start (I dare ) to clean it up 100% first,from day 1 of purchase, then do NOT buy it. I have seen Lawrence do this before. You get the money and then expect someone to buy the property and let THEM deal with it. No, no, no. Lawrence as stupid as it gets. Maybe this is being handled wrong and the governor should decide when dealing with contaiminated properties with slush funds. I do not (and would not) trust city hall with this at all.

Boston_Corbett 8 years, 4 months ago

Just what this community needs. People here getting their expert advice about environmental law and remediation from an unemployed, ex-narc, "internet marketer" (ha ha), bankrupt tobacco shop merchant from Wyandotte Co. who makes ends meet by shilling articles of incorporation and paypal accounts over the internet.

Boston_Corbett 8 years, 4 months ago

Marion (Marion Lynn) says…"Uh, GardenMomma: An acre is 43,560 square feet, “NOT” “3560” as you posted!"

Uh, Marion: so she inadvertently dropped the leading 4 in a cut-and-paste, but her answer was entirely correct. And she sourced it. Sheesh!

Jerry Harper 8 years, 4 months ago

Gotta love those public private partnerships. The public takes the losses, the private takes the profits.

Oread, now Farmland.

Sure glad we got rid of those 'smart growth' commissioners and got these tight-fisted business men in office. They are doing a bang up job.

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