A new group of investors has become interested in the former Farmland Industries site, just as city leaders race to get the vacant fertilizer plant purchased before the upcoming April City Commission elections.

Capitana Redevelopment Group — an Overland Park-based group led by an insurance attorney — has purchased a legal interest in the approximately $10 million trust fund that has been set aside to clean up the environmentally blighted, 456-acre tract of land on Kansas Highway 10 east of Lawrence.

“We’re absolutely interested in the property,” said Aaron Bowers, who is leading the investment group. “Capitana’s goal is to return this property to productive use.”

Bowers wouldn’t comment further on what type of uses the company may be interested in seeing on the property.

A new twist

That creates a question of whether Capitana’s goals will run counter to the city’s interest in converting the property into a business park. City Manager David Corliss said he expects to meet soon with Capitana, Kansas Department of Health and Environment and Farmland bankruptcy trust.

“We’ll get together and see if we can have a meeting of the minds about what the next steps are,” Corliss said.

Capitana’s involvement, though, could produce significant changes in the process the city would have to go through to acquire the Farmland property. Corliss said the city believes that Capitana’s involvement likely will mean the property no longer will be required to be sold through an official bankruptcy auction.

That’s because Capitana purchased from the creditors of Farmland their rights to receive any money that is left over from an environmental fund that has been set aside to clean up former Farmland properties in Lawrence, Topeka, Hutchinson and Wichita.

That action essentially removes the last interest Farmland creditors had in the land.

Because of that, city attorneys believe that the bankruptcy court will simply allow the Farmland trust to negotiate a sale of the property, rather than requiring the auction process.

‘Productive use’

But Corliss said regulators with KDHE still must approve the sale because the new owners will be legally responsible for cleaning the property, which has been damaged by years of fertilizer spills.

Previously, KDHE leaders have urged the city to purchase the property because they believe the city is in a good position to conduct cleanup operations.

The city submitted a bid for the property in January. The amount of that bid hasn’t been announced, but Corliss has said the bid is structured in a way that the city doesn’t propose to pay any cash for the property. Instead, the city’s bid is based on how much of the approximately $10 million in the trust fund the city would leave untouched.

Under the previous scenario, the leftover money in the trust fund would have been returned to the creditors — or former owners of Farmland. Now, the money will be given to Capitana.

Bowers said Capitana is open to working with the city on the property.

“We’re committed to considering any structure that will accomplish the goal of returning that property to productive use,” Bowers said.

City’s view

Corliss said the city also was open to possibilities, but said the city was not interested in a deal that would use some of the property for retail or residential use, as previous private parties have suggested.

“The community has clearly spoken that it wants to use this property as a business park,” Corliss said. “It would be a natural compliment to the East Hills Business Park, and we know we’re going to need more industrial space to grow our job base in the future.”

Time is also becoming an issue for the city.

Corliss said he would like to get a deal done before the April 7 City Commission elections. The elections could produce a new majority on the City Commission.

It is possible that a new majority on the commission may not be willing to spend the amount of money needed to convert the property into a business park.

Details to come

Although there is about $10 million in the trust fund, KDHE has estimated it will cost $12 million to $15 million over 30 years to clean up the property. It also could cost another $10 million to $15 million over the next 30 years to improve infrastructure at the site.

Bowers said he likely would be ready to provide more details about his company’s plans in the near future. Bowers manages the environmental liability division for Haake Cos., an Overland Park-based insurance company. But Bowers said Haake Cos. is not involved with this venture.

“This is a separate deal that some of us who happen to work here have put together,” Bowers said.