September 23, 1999

Town, county to get Avtex under contract

It is expected to be approved Monday

By: Diane Hartson

Warren County an Front Royal will take ownership of nearly 575 acres at the Avtex Fibers site, including the 440-acre federal Superfund site and 77 acres at the former Allied Chemical plant, under a contract expected to be approved Monday.

In exchange for the land, the county and town will forgive about $1.5 million in back taxes from the former rayon plant and pay $60,000 at the closing, which is to take place before the end of the year.

The county also will pay $7,000 an acre for any part of the 10-acre parking lot across Kendrick Lane from the main plant that it uses for a planned school maintenance building and $9,000 an acre for an eight-acre parcel next to Ed Stump Park if that section is added to the park.

The front building facing Kendrick Lane, which the authority plans to renovate and lease, and the 25-acre Stump Park won’t cost the county anything.

"I am definitely happy with it," Economic Development Authority Director Stephen A. Heavener said about the contract Wednesday. "I’m real excited about getting the (front) building. Only in the last couple of weeks have they agreed to give us the building."

Negotiations among the town, county, U.S. Environmental Protection Agency, Avtex bankruptcy trustee and FMC Corp., which used to own the plant, have been going on for months. Negotiations were completed Tuesday as officials waited for a federal bankruptcy court hearing to start in Reading, Pa.

The bankruptcy judge had ordered that the real estate contract and other documents be completed by Tuesday. That deadline wasn’t met, but the judge gave officials until Oct. 1 to complete the real estate agreement.

He will hear the matter again Nov. 23, when he is expected to approve the plan for the transfer of the ownership of the land to the authority.

Once the judge approves the plan, the land transfer can go to closing, probably by mid-December, Heavener said.

The contract calls for the division of the profits from the sale of the site as follows:

• The authority’s cost for preparing the land for redevelopment, excluding any grants it has received, will be subtracted from the amount received in the land sales.

• The first $60,000 will be paid to the bankruptcy trustee.

• The next $2 million will be paid to FMC

• Of the remainder, 3 percent will go to the trustee, 10 percent to the authority and 87 percent to FMC and EPA.

That formula won’t apply to the front building or Stump Park, but will apply to the parking lot and the eight acres next to Stump Park. The formula also doesn’t apply to more that 200 acres west of the railroad tracks that bisect the site, which are to be used for a nature conservancy and recreation.

Heavener said the eight acres may be added to the park, but the land now contains a coal pile. Once that site is cleaned up, local officials will decide whether to buy the land and add it to the park or sell it to a developer, he said.

Local officials won’t have to pay for those tracts for eight years, under the contract.

The agreement also provides for disposition of any parcels not sold for redevelopment at the end of eight years. The authority can buy the remaining parcels at fair market price or sell them to FMC for $1,000. FMC may, under the contract, deed the remaining parcels to a third party for redevelopment.

The contract requires that the land be redeveloped according to the authority’s plan.

Heavener said Wednesday that the authority will likely exercise its option to buy any remaining parcels at the end of the eight yeas.

The redevelopment plan calls for the half of the site east of the railroad tracks, excluding Stump Park, to become a mix of light industrial, commercial and office uses and a hotel-conference center.

The authority expects redevelopment to take place over 20 years, Heavener said.

The gross income from the sale of land will likely be $5,738,300, and the authority will spend $2,140,000 on administrative costs and $1 million for the local share of building infrastructure, he said. That leaves $2,598,300 from the sale, of which $60,000 will be paid to the bankruptcy trustee and $2 million to FMC, leaving $538,300 he said.

Of that $538,300 the trustee will receive $16,149, FMC and EPA $468,321 and the authority $53,830.

Developers will likely invest about $100 million constructing about 765,000 square feet of buildings, Heavener said.

Expenditures include $63 million from FMC for remaining cleanup costs, $17 million by the authority to demolish the remaining buildings at the site and remove asbestos, $3 million in grants and local money to build roads and put water and sewer lines into the planned business park and $30,000 to renovate the front building, he said.

Heavener estimated that land at the site will be valued at $33,000 an acre in eight years and $75,000 an acre by 2019.

The authority plans t lease half of the 13,200-square foot front building to FMC, which will need on-site office space as it oversees the cleanup, he said.

Heavener said he has proposed that ht company pay $150,000 up-front for a 10 year lease and that the money will go toward the $300,000 cost of renovating the building.

The contract also gives FMC the option of buying 68.5 acres west of the south Fork of the Shenandoah River for $1,000, but the land is to be donated to a local or state government for nature conservancy or recreational uses.

Covenants in the contract prohibit any use of ground water on or from the site, require that some sections, such as Stump Park and the land west of the railroad tacks, bu used for recreational or similar uses, and allow the main plant portion south of Kendrick Lane to be restricted to light industrial or commercial use.

The covenants will allow part of the parking lot to be used for a school maintenance facility, but none of the land south of Kendrick Lane can be used for such a purpose, Heavener said.

The 77.16 acre former Allied Chemical plant isn’t part of the Superfund site but is part of the Avtex Bankruptcy property, he said.

Allied Chemical sold the land to Avtex and holds a $1.7 million mortgage on the property, he said.

The contract calls for the authority to work out an agreement with Allied, now General Chemical, using a reimbursement formula similar to the one for the other acres to repay the mortgage, he said.

The Town Council and Board of Supervisors will meet Monday to vote on the contract.

The contract is the next to last step in the land transfer. Once local officials and the bankruptcy judge approve it, the acreage can be shifted into local hands.

About 46 acres is expected to be ready for immediate use, including Stump Park, the parking lot, and the front

building. Other sections will be released for redevelopment once they are clean.

The Avtex Fibers rayon plant was build in 1940 as American Viscose. Later sold to FMC Corp., and then Avtex, the site was named to the federal Superfund list in 1986. The plant closed in 1989 because of pollution violations.