A legal soap opera has set the stage for a high-stakes, multimillion dollar property auction that has left economic development leaders concerned about the future of one of Lawrence’s most promising industrial areas.
About 155 acres at the northern edge of the Lecompton interchange on the Kansas Turnpike will be sold to the highest bidder at a July 15 sheriff’s auction.
Douglas County District Judge Peggy Kittel ordered the sale as part of a lawsuit that pitted Russell and Penny Tuckel against members of the Duane Schwada family after the two sides began disagreeing about their joint ownership of the land.
Now the future of the land will be determined by whoever can produce the largest cashier’s check.
“I don’t know how it is going to turn out,” said Penny Tuckel. “All I know is I would call it a prime real estate opportunity.”
The auction will be open to any bidders, but tough rules apply. The court has set a minimum bid of $1.29 million, and the successful bidder will have just two hours to present a cashier’s check for the full amount.
Project at stake
The auction is drawing a lot of attention in economic development circles, in part because the site has been mentioned as a likely location for Berry Plastics to build a 600,000-square-foot distribution center. A change in ownership could complicate those efforts.
“There’s always a concern about what will happen and who the owners will be and whether they are truly in favor of having industrial development at that property like the current owners are,” said Beth Johnson, vice president of economic development for the Lawrence Chamber of Commerce. “But we’re just waiting to see because there is not much else we can do.”
Community leaders have placed an emphasis on landing the Berry Plastics distribution center. The center, which would be the largest industrial building ever constructed in the county, would bring 11 new jobs from a Berry facility in Topeka, plus 350 construction jobs.
But Johnson and others have said the project is important because it would provide more assurances that Berry will keep its large plastic drink cup manufacturing facility in Lawrence for the long term. Berry’s Lawrence manufacturing plant employs about 950 people.
The Berry project is at a point where delays are becoming a concern. The project hopes to use $11.7 million worth of federal recovery zone bonds, which would allow Berry to finance the project at a lower interest rate.
The city and county are working with the state to keep those bonds earmarked for use in Douglas County, but Johnson said there is a risk that the state could pull the bonds to be used in other parts of the state.
Johnson also said she believes the site offers Lawrence one of its better chances of attracting other industrial users. Concept plans that were revealed as part of the lawsuit between the Schwadas and Tuckels revealed the 155-acre site could accommodate seven industrial lots ranging from 81 acres to three acres.
“The access that property has is just second-to-none compared to everything else we have in the community,” Johnson said.
The site is involved in two other lawsuits. Neighbors of the property have filed lawsuits alleging the property was not properly annexed or rezoned. The rezoning case in ongoing in Douglas County District Court. The neighbors recently lost a decision on the annexation case, but they have filed an appeal with the Kansas Court of Appeals. Evan Ice, counselor for Douglas County, said it likely will take several months for that appeal to be resolved.
A messy breakup
Both members of the Tuckels and Schwadas declined to comment about why the two families, which have been doing business together since the 1970s, have parted ways in such an odd manner.
Steve Schwada, president of Venture Properties, which owns a half-interest in the 155-acre tract, called the issue a “private business matter” and declined to comment.
Penny Tuckel also declined to go into specifics.
“I think I’ll just let the court files speak for themselves,” Tuckel said.
The families have been involved in two lawsuits. In one lawsuit, the Tuckels alleged that Duane Schwada had withheld $4.5 million in cash disbursements from about a dozen partnerships that he has with Russell Tuckel. The lawsuit alleges Schwada improperly withheld the disbursements in an effort to “squeeze” Tuckel to “create an incentive for him to sell his interest to Mr. Schwada at less than fair market value.”
In court filings, Schwada has denied those allegations, and has said the cash was needed as legitimate working capital for the companies.
Both parties agreed in February to dismiss that suit. No terms of a settlement were released.
In the case regarding the 155 acres, Schwada’s Venture Properties sought to have the property “partitioned” after the two sides differed on how the property should be developed.
But both sides wanted the western half of the property, which is the side Berry has expressed an interest in using for its distribution center. Kittel ruled that the way to resolve the dispute was for the entire property to be sold the highest bidder, with proceeds being split between Venture Properties and the Tuckels.
The lawsuit files contain several allegations, including that both sides were negotiating behind the other’s back with potential tenants for the property.
The Tuckels also alleged that Venture had allowed refrigerators, paint and other debris to be dumped in a pond at the site. Penny Tuckel this week, though, said she believed that situation had been resolved and the property was in good condition.