‘We're very excited:’ GM plant buyer identified
JANESVILLE—Almost a decade after General Motors shuttered its mammoth assembly plant in Janesville, news comes that the sale of the plant could be imminent.
The city announced Friday that Commercial Development Company, a St. Louis industrial property redeveloper, has a contract to buy the property from GM, and it could close on the sale by the end of the year. A 75-day due diligence period started Sept. 1 for the company to learn more about the plant and its redevelopment prospects.
The announcement means the 4.8 million-square-foot auto plant on 300 acres on the city's south side could go to a buyer that could renovate or redevelop it. GM ended most production at the plant in 2008 and closed it in early 2009.
"We're very excited," City Manager Mark Freitag said. "The community has been anxiously waiting for about nine months (to learn more about the GM plant's future). Well, actually, call it nine years."
Freitag said the Friday announcement came after a four-hour meeting Thursday involving city administration, GM officials and Commercial Development.
Word the property is moving toward sale comes as GM has capped off a wave of decommissioning and cleanup inside the plant earlier this year, which Freitag compared to a clean scrub of an apartment before occupants move out.
AHEAD OF THE PACK
Commercial Development was one of four potential buyers announced by the city in mid-2016 after GM and a real estate firm it hired shared some details about the plant's sale. Commercial Development acquires and redevelops underused and environmentally challenged properties.
Freitag said another St. Louis firm that's a subsidiary of Commercial Development, Environmental Liability Transfer, would be involved in the plant's new ownership and redevelopment.
Environmental Liability Transfer provides environmental risk management, insurance and engineering services for commercial redevelopment, meaning the company typically handles environmental remediation on sites it redevelops.
Freitag said Commercial Development has a contract to buy the property, but the sale is not a done deal because the company on Sept. 1 started a 75-day due-diligence process. At the end of that, GM has 30 days to look over a final deal before closing.
The sale could break nearly a decade-long purgatory that fell over the plant in 2008, when GM cut the cord on SUV manufacturing there. It later put the plant on “standby” and displaced or relocated more than 1,000 workers and thousands of others who worked at adjacent supplier plants.
The plant went on the market shortly after October 2015, when GM announced out of contract talks with United Auto Workers that it planned to permanently close the facility. GM began communicating to the city its process of finding a buyer and negotiating the plant sale within the last several months.
The plant's sale could make it the largest redevelopment site in the city's history, city officials have said.
Commercial Development has redeveloped about 175 sites in the U.S., and it has a history of buying post-industrial and brownfield properties like the GM site. Its dossier of projects includes properties valued between $5 million and $500 million, according to its website.
It's not clear whether Commercial Development would focus on clearing parts of the GM plant or finding tenants to fill existing buildings, but Freitag said it's his understanding the company intends to have sole ownership of the property. In the past, Commercial Development has sold some of its properties once they were renovated or redeveloped.
He said it's possible the company could opt to demolish some or even all of the huge GM facility based on its redevelopment needs.
“They could clear it and start from scratch. They could,” Freitag said.
The Gazette was not able to reach Commercial Development officials for comment Friday.
Freitag said the company has asked the city its preference on redevelopment of the property.
Freitag said the city has told Commercial Development it believes the site is naturally suited for a multi-space industrial center, in part because of its location and its situation next to a major rail hub.
“It's got rail and oversized everything. That goes to waste if you don't use it,” Freitag said.
The city in the meeting Thursday stressed it and other county economic development stakeholders would prefer a redevelopment that “maximizes” industrial capacity and infrastructure at the site, Freitag said.
Redevelopment would need to take into account the plant is next to a residential area and its reuse needs to remain “compatible” with the neighborhood, Freitag said.
“As we've talked, I've said it's tailored for industrial,” Freitag said. “We're not looking for one company to come in again and just be the only show. We'd like see multiple (industries) on site.”
Commercial Development hasn't signaled what its intent would be for future use of the property, but the company's reworkings of other industrial sites have run the gamut from industrial infill to residential and mixed-use commercial redevelopment. The company has a history of buying and redeveloping other defunct GM plants.
One such plant is now occupied and being reused.
The company bought the 1 million-square-foot General Motors Fischer Body plant in Euclid, Ohio, an industrial suburb of Cleveland with a population of about 50,000.
Commercial Development's purchase came after GM closed the plant in 1993 and laid off about 600 workers.
In a property profile on its website, Commercial Development indicates it performed an environmental remediation at the Euclid site and renovated the plant into a “multi-tenant” facility before selling the property to a warehouse operator.
One company, HGR Industrial Surplus, says on its website it began leasing 150,000 square feet at the plant in 1998 to house industrial equipment it buys and sells. HGR says it now occupies about 500,000 square feet, roughly half of the former Euclid plant.
A Google Maps image from 2016 shows the remaining areas of the plant had at least two other tenants, including a large-scale indoor sports complex and a local police department substation.
The Euclid plant, which was used for seat and upholstery manufacturing, is about one-quarter the size of Janesville's GM plant.
While smaller, the plant has similarities to Janesville's plant. It sprawls for blocks in a working-class, residential neighborhood.
Most recently, Commercial Development launched an advanced phase of demolition and redevelopment on a former smelting plant in Perth-Amboy, New Jersey, that had operated for 80 years, according to a June news release from the company.
Commercial Development bought the plant in 2009. Under a multiyear environmental remediation and redevelopment plan, the company said it had cleared out more than a dozen buildings on the property.
That paved the way for work with another investor and developer on what the company says will be a 2.4 million-square-foot logistics center.
In another redevelopment, Commercial Development during an eight-year process cleaned, cleared land and transformed a former Viacom warehouse in Atlanta into a “premier” golf and sports entertainment facility, according to a property inventory the company supplied the city.
CITY GETTING READY
Within the last year, Janesville has set up a framework to ready itself for the GM plant's sale and the prospect of it being redeveloped.
In mid-2016, after GM put the plant up for sale, the city council approved an overlay district that blankets the 300-acre site.
The overlay district creates a structure of rules requiring city approval for any redevelopment or reuse of the property, and it prohibits redevelopment for “intense” land uses, such as foundries, junkyards, smelting plants and fertilizer production.
The city also has worked to track environmental remediation at the site, which is finished at the 120-acre haul-away yard south of the main plant area, officials have said.
Freitag said Commercial Development officials have told him that compared to plant sites it has vied for, the Janesville plant site has a lower level of environmental contamination.
“Their comment was they've had to deal with much worse,” Freitag said. “So it's really not that bad in the scope of things.”
He said the company has confirmed that pending a due diligence process, it would assume any remaining environmental liabilities linked to the GM site—including cleanup of adjacent, off-site sediment contamination in the Rock River that GM and the state Department of Natural Resources have been working to identify.
Freitag said the city is now working to “synchronize” removal of the Monterey Dam, which is downstream from the GM plant. Its removal would have the side benefit of drawing down water, which would allow Commercial Development to do some of the necessary cleanup of river sediment on land, rather than under water, Freitag indicated.
“That was wonderful music to our ears, if you will, that CDC (Commercial Development) is going to take that on,” Freitag said.
Last updated: 8:07 pm Friday, September 15, 2017