City’s recommended 2022 budget includes first taxpayer spending for Farmland fertilizer plant cleanup; cleanup could cost as much as $73M over 30 years
While it is still relatively early in what will be a grand effort to clean up decades of environmental contamination at the former Farmland Industries fertilizer plant, the trust fund the City of Lawrence was provided to pay for the cleanup is reaching its end.
The city took over ownership and cleanup responsibility for the former nitrogen fertilizer plant in 2010 and was given a trust fund to help cover cleanup costs. But with no end in sight to the city’s environmental remediation obligations and the trust fund dollars almost gone, 2022 could be the year when Lawrence residents have to start paying for the cleanup with their tax dollars.
It’s now estimated the cleanup could cost the city as much as $73 million over the coming decades, with the first bill for taxpayers coming due next year. However, city leaders are hoping that instead of the city and its taxpayers footing all of the bill, the city will be able to get federal funds to help pay for the cleanup of environmental contaminants.
City Manager Craig Owens’ recommended budget for 2022 includes $2 million in spending beyond the trust fund, but city administrators hope that other governmental environmental funding will be available before the city has to spend those dollars. Owens said that considering the Farmland plant supplied nitrogen fertilizer for farms across the country and beyond, the city hopes to get the attention of federal and state agencies to help pay for the required cleanup.
“The pollution that we’re cleaning up is a side effect from the production of fertilizer that helped in the production of crops that literally fed the world for decades,” Owens said. “So that’s a wonderful thing to have had happen, and we’re locally now holding Lawrence residents accountable with what is clearly a fraction of the actual cost of cleanup.”
The city debated the deal to take over the Farmland site for more than five years and eventually took ownership of the plant in 2010, under former City Manager David Corliss, with the plan of using part of the 467-acre site for its new business park, now known as VenturePark. The city paid nothing for the property and received an $8.6 million trust fund to pay for the cleanup, but also accepted full responsibility for remediating decades of nitrogen fertilizer sludge and wastewater that contaminated the soil, groundwater and surface water. Though city leaders at the time of the acquisition were optimistic that the trust fund would be enough to cover the cleanup costs, recent studies indicate that the cost will be many times more. The city now projects it will need to spend another $13.25 million over the next five years to create a new pollution remediation system and $20 to $60 million in the ensuing decades to operate and maintain the system. The $2 million included toward that effort in the 2022 recommended budget are the first dollars budgeted for the cleanup outside of the trust fund.
What’s in the 2022 recommended budget?
The recommended budget for 2022 calls for more than $3 million in spending toward the monitoring and remediation of environmental contaminants on the Farmland site.
Proposed funding includes $1.24 million from the trust fund and an additional $2 million beyond the trust fund toward new remediation strategies in 2022. The city’s Capital Improvement Plan projects the city will need to spend $13.25 million over the next five years to design and construct a new system to remediate the environmental contaminants after the old system proved insufficient. Once the new system is in place, the city anticipates that the operations and maintenance of the system will cost the city $1 million to $2 million per year for the next 20 to 30 years, according to Trevor Flynn, assistant director of the city’s Municipal Services and Operations Department.
Under those projections, the Farmland cleanup is anticipated to cost the city a minimum of $33.25 million beyond the trust fund and a maximum of $73.25 million.
Though the budget calls for spending $2 million of taxpayer funds toward the remediation in 2022 — another $5.25 million is planned for 2023 — city staff will be seeking outside funding in hopes that the city will not ultimately spend those dollars. Flynn said potential outside assistance could come from funds allocated to the environment in the federal infrastructure package or other federal funding, and that the city is continuing to look for other funding sources and grants. He said it is less likely grants would be able to assist with the annual operations and maintenance of the site.
Finance Director Jeremy Willmoth said a lot of what’s being spent out of the trust in 2022 is for monitoring of contaminants on the site, and the $2 million beyond the trust fund budgeted for next year will go toward developing a new remediation system. The $2 million is included in the recommended budget’s capital improvement plan, and Willmoth said the city would make preparations to issue $2 million in debt for that purpose, but would hope to identify federal money before the process was finalized.
“We’ll issue temporary notes to get that project started with the expectation and hope that the federal money will come along before we ever have to issue the long-term debt,” Willmoth said. “But if it doesn’t, the backstop is the debt levy.”
New pollution cleanup plan
The city hired GHD Services Inc. in April 2018 to come up with a new remediation plan for the Farmland site after the original method of pumping the nitrogen-contaminated water to nearby farmers to apply to their crops was not sufficient in getting rid of all the water.
GHD was tasked with coming up with at least five contingency remediation plans, each with a cost-benefit analysis, to deal with the contamination at the site. The study has since been expanded twice, most recently in February, because GHD needed to add more wells to the site and collect more data to better assess the level of contamination and inform its recommendations for the site’s cleanup.
As part of the acquisition of the Farmland site, the city took on permanent responsibility for cleaning up contaminants under an agreement with the Kansas Department of Health and Environment, and the agency must ultimately approve the new remediation plan. Too much nitrogen in the water — a form of nutrient pollution — can cause large algae blooms that harm water quality and decrease the amount of oxygen in the water, which harms fish and other aquatic animals, according to the Environmental Protection Agency. High levels of nitrates in drinking water can also be harmful to humans, especially infants.
At the time the city was considering the deal, KDHE estimated the cleanup would cost $13 million to $15 million over 30 years, as the Journal-World reported. But the city’s forecast was more optimistic, with city leaders hoping that by earning interest on the trust fund, making money from sales of the land for the business park, and saving money by using city crews for work KDHE assumed would be done by contractors, the trust fund would essentially cover the cost of the cleanup.
In reality, in addition to the cost of the cleanup being much more than the original KDHE estimates, the interest projections the city made were overly optimistic and VenturePark failed to attract any companies until the city created an incentive program that provided the land for free. Apart from the environmental remediation costs, the city is also responsible for the taxes known as special assessments that were placed on the empty VenturePark lots to pay for the streets and other infrastructure for the business park. Since the incentive program, the Catalyst Program, was put in place in 2017, some lots at the park have been developed.
Ultimately, the cost of the cleanup will depend on what type of remediation system is put in place. Flynn said it is anticipated several remediation approaches will be implemented to comprehensively address the impacted soil, groundwater, surface water and storm water. He said likely options include groundwater containment with nitrogen treatment; constructed wetlands; vegetative cover; and soil composting and impermeable capping, i.e. covering contaminated soil with paved surfaces or buildings.
“The City will have a much more accurate estimate of the remediation project once this plan is approved,” Flynn said in an email to the Journal-World.
Once the city determines which systems it will use, KDHE must approve the remediation plan. Flynn said GHD is currently completing the final phase of the study, which includes installing new monitoring wells, and will soon provide the city a report on the level of contamination at the Farmland site that will help determine the appropriate remediation strategies. He said those strategies that will be designed, constructed and pilot tested will be selected this fall, and the $2 million in the budget for 2022 is for the subsequent development of the new remediation plan. He said the $5.25 million planned for 2023 would begin to pay for the construction of the new systems.
In addition to the more than $3 million toward the Farmland cleanup, the budget includes more than $117 million in infrastructure and maintenance funding; the reallocation of existing resources to create a new Housing Initiatives division; $5 million total in pay raises for both union and nonunion employees; and eight new staff positions, four of which are funded at least initially by federal or state grants.
The city’s recommended budget is $383.87 million across all funds; includes a flat property tax rate and an increase in utility rates; and begins to allocate the approximately $19 million in federal coronavirus relief the city will receive from the American Rescue Plan Act. The budget assumes a 2.5% increase in assessed property values, meaning that though the city’s property tax rate wouldn’t increase under the recommended budget, those whose property values increased would pay more than they did last year.
The city’s budget hearing will take place Aug. 31.