Lawrence city commissioners are being told that a deal has been struck that will clear the way for the city to soon take over ownership of the former Farmland Industries plant.
Commissioners at their Tuesday evening meeting will be briefed on a deal that would transfer $8.5 million of trust fund money to the city in exchange for the city taking over ownership and cleanup responsibilities of the former fertilizer plant.
“It is just critically important to have locations for businesses that want to bring jobs to this community,” said City Manager David Corliss, who has been working on the deal for the 467-acre property. “That’s what this will bring us.”
It also will bring some risk. The $8.5 million in trust fund money is less than the $13.3 million the Kansas Department of Health and Environment estimates will be needed for 30 years of cleanup.
But Corliss said a city analysis shows the numbers can be workable. Corliss said if city interest rates return to their historical average — about 3.5 percent — the city could earn about $4.4 million in interest on the trust fund. That would give the city about $12.8 million to clean up the property. Corliss also said he’s hopeful the city’s costs to clean up the property will be less than KDHE has estimated. Of the $13.3 million estimate, $2.1 million is a contingency. Corliss also proposes using city employees for much of the cleanup work, which largely involves pumping contaminated groundwater out of the soil and onto farm fields.
The city’s analysis, though, does bet on interest rates soon rising. Currently, the city receives less than 1 percent interest on its investments, Corliss said.
Those costs also do not include what is expected to equal many millions of dollars to extend utilities and infrastructure to the site. But Corliss said the city expects development of the property to partially pay for those costs. He said special assessments likely will be placed on the property to recoup infrastructure costs. A recent appraisal by the city estimates that 10-acre industrial lots on the site — once roads and utilities are extended — would sell for $1 million.
City commissioners previously have been supportive of taking ownership of the property.
“It is absolutely the time to have this discussion with the community,” Commissioner Mike Amyx said. “I think staff has done a very good job of making sure we understand everything that potentially could be a problem out there.
“But if we invest that money wisely, I think we’re going to have ground for future employers for probably the next 25 years.”
The latest development in the Farmland saga — the city has been working on the project for more than three years — is a deal with Overland Park-based Capitana Redevelopment Group. The group previously purchased a legal stake in a portion of the trust fund money that had been set aside by Farmland Industries as part of its bankruptcy process. Without the deal, the city likely would have received only about $6 million of the $10 million that is in the trust, Corliss said. Capitana will receive the remaining funds of about $2 million, Corliss said.
Corliss said he will recommend that commissioners direct staff members to prepare the final documents that will allow the city to take over ownership by the end of this spring. He said his recommendation is based partly on a lack of interest from the private sector in the property. Private developers have expressed interest in the site, but commissioners have not been convinced that developers are committed to fully cleaning the site or using it for a business park.
“We would love for a corporate white knight to come in and do this,” Corliss said. “But it is like leaving the runway lights on for Amelia Earhart. I just don’t think it is going to happen.”