Bids to convert former Farmland fertilizer site into new business park come in far lower than expected
If you have about 450 acres of an abandoned fertilizer plant, now is apparently a good time to convert it into a business park.
The city is in the process of awarding two key construction contracts to convert the former Farmland Industries fertilizer plant on the east edge of Lawrence into a business park. And both bids for the contract came back well below what the city was expecting.
Last week the city awarded a $4.98 million bid to Lawrence-based R.D. Johnson Excavating for street construction, waterline installation and lot grading at the site. The city’s engineers had estimated the work to come in at $8.16 million. That’s a difference of almost 40 percent.
This week, commissioners are scheduled to accept bids to install the necessary sewer lines for the site. The low bid is from Amino Brothers at $601,089. The city’s engineers had estimated a cost of $1.41 million. That’s a difference of almost 60 percent.
I guess that is why you take bids.
City officials are hoping other construction firms are as hungry as these. The city in the next week or so is set to approve a set of bids for the $18 million library expansion project. Those bids have already come in, and my understanding is interest was extremely high by contractors.
On May 14, the city will be getting bids on an even larger project: the $25 million city recreation center. We’ll see how hungry recreation center builders are. But what we won’t see are any bids for the infrastructure work on that project.
The city negotiated a deal with KU Endowment officials and Thomas Fritzel’s Bliss Sports that calls for the recreation center building to be bid through the city’s normal bid process. But the infrastructure work for the KU and city project — things like streets, sewers, waterlines and parking lots — won’t be bid through the city’s open bidding process. Instead, Fritzel’s Bliss Sports will use its preferred contractors and will negotiate a price for that work. I’m sure the city will make Fritzel aware of these bids, assuming the price hasn’t already been fully determined. (Some dirt-moving work is under way at the site.)
The city has an interest to pass these bids along because the city likely will be paying for a portion of that infrastructure work. The Rock Chalk Park deal calls for the city to pay for 100 percent of the cost to build the recreation center building. The city then will pay for infrastructure work up until a point that the city’s total cost on the project reaches $25 million. So, if the city’s recreation center bid comes in at $19.9 million, which is the current estimate by the city, then the city will pay $5.1 million for the infrastructure/parking work. (I previously had said $7 million, which shows why I don't have a career in math.) That means the city would pay a little less than half of the infrastructure/parking costs that are estimated at $13.5 million. Some people have said that sounds about right, since the infrastructure will serve both the city-owned property and the property that will house the KU track, softball and soccer facilities.
But as the Farmland project has shown, estimates are more of an art than a science. If those estimates — much like the Farmland estimates — are 50 percent too high, then the city would be paying for about 75 percent of the infrastructure and parking costs for the entire Rock Chalk Park project. (That is assuming that the city’s estimate for the construction of the building comes in at $19.9 million. Perhaps that estimate is high also, which changes the dynamics even more.)
It will be interesting to watch but perhaps hard to sort out. What is clear is it seems to be a good time to be going out for bid on construction projects.
The city is taking advantage of the good prices on the Farmland project. Originally, the city thought it may only be able to install the streets, sewers and waterlines in this first phase. But because the prices were low, the city added an alternate that allows for about 12 pad sites to have preliminary grading work completed. That will speed up the process for future business park tenants to build on those lots.
Work on the streets and sewers at the Farmland site is expected to go on throughout the summer and into the fall. The city hopes to have lots ready to build upon at Farmland by late 2013 or early 2014.
It may end up being a good time to have industrial property to offer. I read this article today from the Washington Post about how European manufacturers are starting to relocate to the U.S. because of our cheap natural gas prices. Chemical companies, in particular, are among those migrating.
It is funny how quickly the world changes. When I covered Farmland’s bankruptcy about a decade ago, high natural gas prices were one of the leading factors that put the Lawrence fertilizer plant out of business. Not that I think it is very likely, but how odd would it be if the big new user for the revamped Farmland site is a fertilizer plant?