A resolution OK’d Monday by the Warsaw Redevelopment Commission approves the authorization for the commission to acquire the Warsaw Chemical property on Argonne Road for an amount not to exceed $6.5 million.
It also approves the form of agreement for the real estate purchase.
“So you’re just approving the ability to acquire the property and you’re approving the form of the agreement, so we’re not actually approving the agreement. There’s a few other steps left to go, obviously, but this is just kind of the beginning stage of this process,” Warsaw Community and Economic Development Director Jeremy Skinner explained to the commission. “... We still need to further negotiate the acquisition of the property and then sign the final agreement that would be the acquisition.”
Some of the funds for the $6.5 million will come out of the Warsaw Technology Park, he said.
The real estate includes about 10 acres and both buildings on the site.
Commission member and former mayor Joe Thallemer asked about a $1.3 million credit from Warsaw Chemical to the city from when the city assisted them with an environmental remediation by providing monies from the State Revolving Fund. He said he didn’t see it mentioned in the paperwork. Skinner said that credit will be part of the final purchase price.
Mike Klondaris, commission member and city councilman, asked Skinner to provide an explanation as to why the city was acquiring the property.
“In general, we’re working with some entities to turn that into what I would call the Warsaw Orthopedic Innovation Center,” Skinner said. “Ideally, we would like to have Grace College’s engineering program come alongside us so their engineering program would be inside that facility. We would have our innovation center in there. Potential spaces for start-ups, and then we’re also talking to the school about potentially having their career academy in there as well.”
He said they’re trying to combine “all these educational components” and the innovation center.
The large Warsaw Chemical building is over 70,000 square feet, Skinner estimated.
“So that intended use as start-up space allows us to tap out of the Tech Park fund?” Thallemer asked, and Skinner said yes.
Commission member Bill Curl pointed out that the average of two independent appraisals on the real estate was $1,678,000 and the buildings were old, so why was the purchase amount up to $6.5 million?
Skinner said there’s two buildings on about 10 acres on Argonne Road.
“The appraisals seemed a little low to me, but the reality is we’re paying them for the property and, two, we’re paying to relocate Warsaw Chemical because they’re going to have to move,” Skinner stated.
Curl asked if Warsaw Chemical was staying within the city, and Skinner said yes.
In total, there’s over 140,000 square feet in the two buildings, Skinner estimated. “Ideally, we’re probably tearing down the other building, I don’t know for sure,” he said. “The end goal would be to create an innovation campus. So we’re potentially, hopefully, going to have the school career academy, Grace’s engineering program. We’ve got potential for some other innovation or educational components to come alongside that, and that might be where we tear down the remaining building to build some other educational components ... on the campus. We’re creating kind of an innovation campus in that area.”
He said they might look at a housing component to go along with Grace’s engineering program, but that will depend on what environmental restrictions they have.
“So, long term, there’s going to be a lot more than just the innovation center there, but we’ve got to do step one first,” Skinner said.
Klondaris asked if any other entities would be providing any funding toward the project. Skinner replied that he anticipated that eventually the city would not own the property. “So, yes, we’re going to eventually sell or dispose of the property to those entities,” he said.
Ideally, Skinner said Grace College would eventually own the innovation center as their engineering facility. The city may pay a long-term lease for the innovation center piece of it, he said, but ultimately the property would go to Grace. The same idea would apply for the rest of the property - the city would develop it and then dispose of it.
“It’s not my intent to hold on to these properties,” Skinner said.
He said the city’s real return on investment for the project is, “It’s imperative to grow Grace’s engineering program to benefit the orthopedic industry that we have and we hope to continue to grow Warsaw. I think, from our perspective, what we’re really investing in is Grace College’s engineering program and the jobs that will come out of that.”
After the resolution was unanimously approved by the commission, Thallemer asked about what future decisions will have to be made on the project by the commission.
Skinner said there will be the actual purchase agreement once it’s finalized. That agreement will contain some “environmental attachments” as well. There will then be the closing, and there’s some funding that has to be identified.
Some of the funding will come out of the Warsaw Tech Park. Up to $5 million potentially could come out of the $30 million Orthopedic Industry Retention Initiative, provided by the state, as identified recently by the OrthoWorx Vision Committee. Other potential sources could be the Regional Economic Acceleration & Development Initiative (READI) and Grace’s CCC (College and Community Collaboration) Lilly Endowment grant.
“All of that is kind of contingent upon getting this project across the finish line,” Skinner said.
Thallemer said the potential for the Warsaw Chemical building is “incredible.” He said a lot of things have to come together and it’s been in the works for a while.
“I think us approving this today is important to keep that opportunity alive,” Thallemer said.
Skinner said Grace should know in a couple weeks about their CCC application and they were eagerly awaiting that.