NorthPoint Development -
Project by RACER Trust in Kansas City
Perfect Matchmaking in K.C.
By Bruce Rasher
A vacant, 74-acre industrial parcel and former site of General Motors automotive assembly plant in Kansas City, Kan., found an appropriate buyer because RACER Trust was able to determine the highest and best use for the site after consultation with local officials as well as the community.
Vacant, 74-acre industrial parcel; former site of General Motors automotive assembly plant.
Kansas City, Kan.
The property, adjacent to the Missouri River in Kansas City’s industrial Fairfax District, had been vacant since 1987, when the now dissolved GM Corporation demolished buildings totaling 2.2 million square feet. RACER Trust took title to the property in 2011 as part of the GM bankruptcy settlement. RACER Trust continues to work with the Kansas Department of Health and Environment to investigate environmental conditions and develop a remediation plan for the site. The settlement agreement that established RACER budgeted $4.8 million for remediation.
RACER is required by the GM bankruptcy settlement agreement to consider the views of the local community when evaluating a sales or lease opportunity, but even if that were not a requirement, finding out whether the community supports a proposed reuse is sensible and practical for reasons that should be obvious
Once RACER identified its product — industrial/manufacturing reuse — it moved to cure lingering issues that might hinder a smooth transfer of the property, including site separation with GM LLC, which operates an assembly plant on an adjacent property.
RACER Trust contacted more than 60 firms, including several in the Kansas City area, to introduce itself and its mission and to describe the opportunity, then RACER narrowed the field to two prospects before selecting NorthPoint Development, which is undertaking its first brownfield redevelopment.
The transaction with NorthPoint was contingent upon the execution of a mutually agreeable, binding development agreement between NorthPoint and the Unified Government of Wyandotte County and Kansas City, KS.
As it turns out, RACER Trust made a deal with a local developer who was familiar with the Unified Government and had a record of success in the market, but RACER’s groundwork was such that it had a great deal of insight and information with which to help an outside developer become acclimated and begin to assess the opportunity.
1. Know your product. Only after determining highest and best use (preferably in consultation with the local officials whose support will be critical to the ultimate success of your marketing efforts), the market and details about your property can you know the types of redevelopment and market you should be targeting.
2. Clearly communicate to the market. This takes patience, but it’s worth it. Once the market understood the value proposition RACER presented — a fully funded cleanup and ongoing responsibility for legacy impacts — the property became much more attractive to investors.
3. Address environmental issues in a proactive and timely way. An impediment to brownfield redevelopment is uncertainty with respect to environmental liability. RACER’s experience, while not typical (obviously not every seller has a fully financed cleanup budget), is also not unique.
4. Be as transparent as possible. Sellers who work with regulatory agencies and buyers in a transparent, cooperative way will be more successful than recalcitrant sellers who withhold information from buyers.
5. Remove encumbrances before you sell. Industrial property typically has a host of unresolved interests that you might not think about until it’s time to sell to a new user. If you’re a seller, do your best to clear any liens, mortgages, unused easements (railroad rights, for example) or licenses before you start marketing the property.
6. Package your product in a way that meets market expectations. This may seem obvious, but many sellers overlook this, particularly those, such as municipalities, that are strapped for resources. A marketing brochure that highlights a property’s assets and puts it into a broader context (local business climate, education system, local amenities) is extremely valuable. Spend some time imagining who your competition is and what they’re doing to gain an advantage in the market, then make sure you’re always at least one step ahead.
Bruce Rasher is Redevelopment Manager, RACER Trust (Revitalizing Auto Communities Environmental Response), created to clean up and position for redevelopment properties and other facilities owned by the former General Motors Corp. before its 2009 bankruptcy. For more information, please visit their website: www.racertrust.org.
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