The City of Omaha has backed out of a north Omaha redevelopment deal because of sticker shock over the projected environmental cleanup cost: $18 million.
That’s vastly more than city officials had expected to spend on environmental remediation for the proposed Ames-Locust industrial park.
So the city recently canceled a $1.9 million purchase agreement it had signed with owners of the property. The mostly vacant land, some of which is a former construction landfill, is about 70 acres between 13th and 16th Streets, from Locust Street to Ames Avenue.
Under terms of the agreement, the city could terminate the purchase if remediation costs beyond grading and building demolition exceeded $500,000.
The city put the purchase on hold in June when it looked like environmental costs were going to come in higher than expected.
But Omaha Mayor Jean Stothert said she would still like to see an industrial park come to north Omaha.
“We’re not giving up,” she said.
Consultants for the city have put the environmental costs at $18 million, Stothert said. The city had projected the total cost of the redevelopment to be $8.6 million.
Stothert said much of the cost is related to rubble in the ground. The site doesn’t pose an environmental risk to neighbors, she said.
At a town hall meeting Monday evening, Stothert addressed the industrial park, saying that it would cost as much as $25 million to get the site to the point of being “shovel-ready.”
“We’re going to walk away from that property, but we’re not going to give up on it (the industrial park),” she said. “I did not think I could in good faith charge the taxpayers $2 million for that property and $25 million to clean it up.”
She wrote a letter in late July to property owners, including Virgil Anderson and Michael Henery, asking them to donate the land. In return, Stothert offered, the city would pay the remediation costs.
Had property owners donated the land, the city would have turned it into a green space, Stothert said.
“We know it’s an eyesore. We know it’s important to the city.”
But they did not respond within the allotted time, she said, so the city terminated the purchase agreement in late August.
The Ames-Locust industrial park was a joint project of the City of Omaha and the Greater Omaha Chamber of Commerce to bring well-paying jobs and business to north Omaha. A development-focused arm of the chamber was willing to chip in $1 million in private contributions to help with site acquisition.
“It’s disappointing, but not overly surprising,” said Randy Thelen, the chamber’s senior vice president of economic development. “Developing these types of business parks in an urban setting is always a challenge. ... In this case, the costs were far greater than anyone could have anticipated.”
He said the chamber remains committed to finding land in north Omaha for industrial development that will generate jobs.
“We think it’s important to the continued revitalization of north Omaha,” Thelen said. “It didn’t work out at this site. We’re going to look for one that will.”
Carrie Murphy, Stothert’s deputy chief of staff for communications, said the city and chamber immediately began looking for alternate sites in northeast Omaha that can be developed for industrial use. Stothert has said businesses interested in locating at Ames-Locust have contacted the city and chamber.
Thelen said those businesses could find homes elsewhere in north Omaha.
Chamber officials “already kicked off discussion on a couple of other sites” and more could be considered, he said. He declined to specify where they are.
“We’re doing homework on two (sites), but that doesn’t mean it’s going to be limited to those,” Thelen said.
City Councilman Ben Gray, whose district includes north Omaha, said the money set aside for the Ames-Locust site acquisition should be applied to land acquisition elsewhere in north Omaha.
Stothert said at Monday’s town hall meeting that what the city would have contributed to the industrial park will instead go toward street resurfacing.
As for the Ames-Locust property, “that site can’t stay like it is,” Gray said. “It needs to be cleaned up. ... The mayor or someone else needs to make sure the DEQ (Nebraska Department of Environmental Quality) is involved, that they’re testing that site and that they are levying fines if there are violations.”
Stothert said Monday that the city has been in touch with the state environmental department.
World-Herald staff writer Roseann Moring contributed to this report.
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