Whether Farmland rebuilds or not, city can acquire old site

Published 12:00 am Monday, July 8, 2002

So many offers have been made, so many promises have been breached, to get back Farmland to the community since the fire that wrecked the gargantuan plant &045; once a home of around 500 workers &045; a year ago. The City of Albert Lea is now ready for a worst-case scenario &045; a scenario where the debt-stricken, world-largest cooperative retreats for good.

The city had planned to acquire the old site from Farmland in exchange for a site for the company to build a new plant. But if the company doesn’t rebuild, the city can employ a different exchange. The city could acquire the 40-acre site on East Main Street from Farmland in exchange for taking over the decontamination project on the polluted land.

An environmental study by SEH, a St. Paul-based consulting firm, shows that soil and groundwater in some spots contain excessive heavy oil and other chemical solvents. The cost for restoration would be $1.5 to $2 million, according to City Manager Paul Sparks.

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Farmland has completed the payment for a lease-purchase agreement with Seaboard, so it now owns the property. The co-op could carry out the decontamination by itself and sell the site to whomever. But City Manager Paul Sparks thinks that is not likely.

&uot;It would take a long time for Farmland to find a buyer,&uot; he said. &uot;This is a pretty good deal.&uot;

Sparks said the city can apply for federal and state grants for the project. It can also pursue remedies from insurance policies that former property owner Wilson and Co. had purchased.

&uot;We will get the land no matter what happens to the new plant. This is a great opportunity for the city.&uot;

In accordance with state law, the city has already been exercising its right to retain 25 percent of the insurance payments for the fire damage to Farmland. The escrowed money will cover the cost for removing the destroyed plant, which is estimated to be around $5 million. But that doesn’t cover the cost of environmental restoration.

The city has proposed one possible redevelopment plan that would make the site a &uot;Family Destination Center.&uot; The blueprint shows a complex consisting of hotels, restaurants, a convention hall, and a sport facility.

Farmland had promised that it would build a new plant in the Habben Industrial Park on the south side of the city if its insurance negotiations were settled. The co-op wants reimbursement in the neighborhood of $80 million, claiming the plant must be replaced, but insurance companies want to pay out a much smaller amount, which they say could be used to repair the old plant.

The agreement with the city was to swap the old site with the new one, leaving the city will be in charge of the demolition of the old plant. The city also arranged for a tax-increment financing designation for both sites and a state sales-tax exemption for building the new plant.

But the situation changed when Farmland filed for Chapter 11 bankruptcy protection on May 31.

Now, all new spending of the co-op is under the supervision of the U.S. Bankruptcy Court. Even if the co-op won the full amount of insurance proceeds it’s asking for, it would be up to the court to decide if that money can be used for the Albert Lea plant.

Farmland management has indicated that its restructuring under the bankruptcy protection would center on the refrigerated meat production that is the most profitable branch of the co-op, and that it still wants to have the Albert Lea operation recovered.

&uot;The chance to have Farmland back got slimmer,&uot; Sparks admitted. &uot;But it’s not dead.&uot; He believes the court may allow the new plant if Farmland can prove it would be crucial for its revitalization.