Memorandum

City of Lawrence

Legal Services Department

TO:	City Commission
FROM:	David L. Corliss, City Manager
CC:	Debbie Van Saun, Assistant City Manager Toni Ramirez Wheeler, Director of Legal Services
Date:	June 28, 2007
RE:	Participation In Auction of Former Farmland Nitrogen Facility

Staff has been monitoring the Farmland bankruptcy proceedings, including the planned sale of the former Farmland Nitrogen Plant located on Highway 10 through an auction held under procedures approved by the bankruptcy court.  We have been briefed concerning the environmental issues at the former Farmland Nitrogen Plant and have been advised regarding the likely restrictions on use of certain previously contaminated portions of the site. 

An environmental remediation trust fund exists to address anticipated necessary environmental remediation at the site.  An administrative trust fund exists for use by the entity holding title to the former Farmland Nitrogen Plant for use at the site. 

To participate in the auction, appropriate documents must be submitted.  Staff seeks authorization to prepare and submit appropriate documents to participate in the bidding for the acquisition of the former Farmland Nitrogen Plant.  Staff recommends the submitted bid documents be prepared to maximize the amount of administrative trust funds available to the City.  Under such a bid, the remaining environmental remediation trust funds would be left with the Trust which would use those funds to perform the required KDHE environmental remediation, and some portion of the administrative trust funds would be transferred to the City to perform necessary demolition.  The bid documents submitted will also clearly provide that acquisition of the former Farmland Nitrogen Plant by the City shall be conditioned upon the City receiving assurances that all current environmental liabilities will be retained by other parties and the City will receive releases for all existing environmental liability (known and unknown) from KDHE and EPA.  The bid documents will contain other provisions intended to protect the City’s interests.  Participation in the auction can be discontinued if it appears that the City’s acquisition cannot be achieved on terms favorable to the City.  

If acquisition of the site is successful, plans to convert the site to an employment center, industrial park, and other compatible uses to assist in accomplishing the City Commission’s economic development goals can be pursued.  Partnering with Douglas County, the Chamber of Commerce, area businesses, and other stakeholders will be critical to the accomplishment of these important community goals. 

Staff requests authorization to prepare and submit appropriate documents to participate in the auction of the former Farmland Nitrogen Plant held under procedures approved by the bankruptcy court.