A resolution approved by the Warsaw Common Council by a 5-2 vote on Monday gives the Redevelopment Commission permission to purchase the Warsaw Chemical properties on Argonne Road.
In presenting the resolution, Community and Economic Development Director Jeremy Skinner said it does two things. The first is that it approves the ability for the Redevelopment Commission to purchase the 10 acres of Warsaw Chemical properties for $6.5 million. The second is that it provides the form of the purchase agreement.
Council members received a packet of information that Skinner said they’ve been working on for the last two years, which includes the Orthopedic Industry Retention Initiative (OIRI) and Grace College’s recently-awarded grant from Lilly Endowment’s College and Community Collaboration (CCC) initiative.
“This project has been in both of those documents and is supported by both groups. Moving forward, we’ll have to put those partners together that are kind of outlined within the memo I provided you. So grabbing those partners - Grace College, potentially Warsaw Community School Corporation, KEDCO, OrthoWorx, the OIRI initiative. Grabbing all of those partners to put this project together,” Skinner said.
The project is an Orthopedic Innovation and Research Center on Argonne Road.
Skinner said there are a number of elements to the project, one potentially being Grace’s engineering college within the Center.
“We will have our small piece of it, which will be the Orthopedic Innovation Center, which would be potential co-working space, shared space and start-up space for the orthopedic industry, i.e. our Tech Park elements, so that’s kind of where our funding is coming from, is part of that Tech Park. So that Tech Park piece, that innovation center, will be in this location,” Skinner said. “And then hopefully working with the school corporation to potentially move some of their training programs into this facility as well.”
There could be some space for OrthoWorx and other entities that would go into the site over the next couple years as the project comes together.
Since the project is part of Grace’s application with the Lilly Endowment, it has to come into fruition within the next five years.
The city will work with Warsaw Chemical as Warsaw Chemical moves and sets up its new location with new equipment on Ind. 15 (the former Spartech Plastics building). Skinner said that will be about an 18-month period, which is also about the same amount of time the design of the project will take.
Additional property not initially used by the Orthopedic Innovation Center will be “reprogrammed,” he said.
“We’re working, as part of this purchase agreement, through the cleanup of the environmental issues that Warsaw Chemical has. They’ve been at it for some time now. If you remember correctly, a couple years ago, part of our redoing of the State Revolving Loan, was to give money to that cleanup, so that’s also been part of our contribution - the money to clean up this site,” Skinner said.
He said the intent of the agreement would be “that they would continue that environmental cleanup through closing. So at some point, in the next couple years, we’ll be closing on that site for the environmental issues.”
The end goal of the project is to eventually turn it over to a manager, most likely Grace College, to take ownership of the end project, Skinner said.
“We are ultimately not going to hold this property for the long term. They will be the ones managing the innovation center,” he stated.
A lot of different elements are going into the project, with a lot of work yet to be done.
“Hopefully, over the next couple years, we can program this building, get the funding necessary to rehabilitate it. Obviously, the CCC grant is going to be a huge help. There’s $7 million allocated within that grant. We’re looking to hopefully get $5 million from OIRI. Another $5 million we will contribute from the Tech Park increment, so it’ll all be Tech Park money going into this project,” Skinner said.
Councilwoman Cindy Dobbins asked who will actually oversee the project, and Skinner said it’ll be a combination of the city and Grace. Ideally, Grace wants to take ownership of the property and project, he said, but Grace doesn’t want to do that until the city gets the environmental portion figured out.
The 70,000-square-foot building on the property will be rehabilitated, with the remainder of the property “probably” demolished, Skinner said. After the demolition, that 5 acres will be developed into other projects.
Councilwoman Diane Quance said people are under the impression that taxpayers are paying for the project. She asked Skinner to “clarify that.”
Skinner said, “It’s not going to be paid for from city tax dollars. So the Tech Park increment is income tax collected from those companies that are located within the Tech Park and they pay income taxes to the state, state income taxes. We’re allowed to capture up to $5 million of that. So that’s the money we’re capturing is the state income tax that we’re going to use to put into this project.”
Quance said that’s really important for property owners to understand - “that they are not paying for this project. That the Tech Park, all the businesses, contributing to their taxes - we’re getting that tax back to work in our community.”
Those are taxes the city normally doesn’t receive, Skinner said, but because the state allowed the creation of the certified tech parks, which allows the city to capture state income taxes to put back into those areas, that’s the tax the city is capturing.
Dobbins said she’s also had people contact her with questions and concerns about the project. “I wish that maybe sometimes when we’re doing some of these projects or considering them, that we might just have some information types of meetings for the general public,” she said.
Councilman Josh Finch asked about the $6.5 million price tag, even though the appraisals come in just a little under $2 million. He asked if the additional cost might include such things as demolition costs.
“No,” Skinner said. “The purchase price would be $6.5 million. I think it’s easy to look at an appraisal and say, ‘Why is it not worth $2 million?’ Obviously, they have to relocate the business. They have moving costs. They have replacement costs for the building. We can not build 140,000 square feet of building for $2 million.”
Skinner said the big issue here is the environmental issues, which devalues the property, even though the property itself is of significant value. It’s hard for Warsaw Chemical to pick up and move because they can’t get a fair value for their property, he said, which leaves the city with two options. One being Warsaw Chemical remains at its current Argonne Road site because it can’t make up the difference, or two the city makes up the difference and rehabilitates that site and Warsaw Chemical moves to a better site.
“We can’t build 70,000 square feet for $6.5 million, but we can rehabilitate it and that’s what we’re trying to do,” Skinner stated.
The project is going to take time, but Skinner is shooting for a September closing.
Councilman Juergen Voss asked why the city was funding the move for a company that wants to move. Skinner said Warsaw Chemical doesn’t want to move, and they’d be more than happy to stay where they’re at. However, the city had plans to rehabilitate the Argonne Road corridor and Warsaw Chemical said they’d be happy to be partners in that and move if that’s what the city wanted. That was five years ago.
Eventually, Councilman Mike Klondaris made a motion to approve the resolution and Quance seconded the motion. The motion passed 5-2, with Dobbins and Voss voting against it.