Janesville77.2°

Control of GM site is key to redevelopment

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JAMES P. LEUTE
August 9, 2009
— Community leaders can talk all they want to about moving on without the auto industry.

But when it comes to any redevelopment of the shuttered General Motors property in Janesville, the challenges are enormous and a final decision ultimately will come from Detroit.


In the past, GM has redeveloped a handful of its former facilities, but conventional wisdom in Janesville is that the best prospects will result if the GM property is under local control.


Ultimately, that means GM would either sell or donate the property to the community or sell it to a third-party developer.


But before GM is asked to make that decision, Janesville must come up with a plan to redevelop all or a portion of the plant's 4.8 million square feet and 250 acres.


To that end, Forward Janesville will ask the city to take the lead role, said John Beckord, the private economic development organization's president.


Such a plan would be incredibly complex, Beckord said, adding that the city is best positioned with its resources to orchestrate a successful re-use strategy.


"There are significant costs associated with a redevelopment plan, and I think the first step would be to hire professional consultants who have experience redeveloping major properties and the environmental remediation issues that are expected to come up," Beckord said.


Liability costs


Environmental liability will be a huge factor in the site's redevelopment, Beckord said. Any buyer will want to know the remediation costs and who is responsible for them. Those costs and responsibilities need to be addressed before a proposal is dropped on GM's desk, Beckord said.


"At this point, no one has any idea what the environmental situation is at that plant," he said.


Beckord said a re-use plan is likely to call for several tenants involved in manufacturing, warehousing and distribution and other activities. Formulating the plan likely will involve a bevy of environmental lawyers, real estate developers and other professionals involved with everything from the condition of the building's infrastructure to its road and rail access.


"It's a huge animal, and the public needs to be aware that it could take several years to accomplish," Beckord said. "The world's awash in excess capacity, and this is a difficult time to be doing this.


"At the end of the day, it won't be so much about the cost to acquire the asset as it will be about the liability costs that could stretch the asset cost several times over. It's a competitive market out there, and for any plan to make sense, you have to get the costs down to a point where they are competitive."


If Janesville develops a specific plan to get the property under local control, GM would be asked to approve the project and either sell the property to a developer or donate it to the community.


As the owner, GM has the right to say yea or nay.


But history also shows that the union obligated to best represent laid-off Janesville workers could have a say in whether GM unloads or retains the local plant.


The UAW's role


GM ended production in Janesville in April. The local plant then lost out in a three-plant competition to build the automaker's new line of small cars.


The Janesville plant, as well as one in Spring Hill, Tenn., has since been designated as a "standby" plant. GM officials have said the two facilities will be first in line to ramp back up if the automaker ever needs more production capacity.


Whether or not that ever happens is uncertain. If it does, it's likely years away when GM would have essentially no local workforce. Within a couple of years, most of the GM workers now on the automaker's rolls likely will have run out of benefits, retired or transferred to other plants.


GM spokesman Dan Flores said the automaker certainly would listen to any redevelopment proposals from the local group. Ultimately, he said, the sale or donation of the plant is the automaker's decision.


But as a courtesy, the international UAW always has been notified of the company's plans first, Flores said.


"We're proud of our history of being a responsible corporate citizen, and although Janesville is no longer an active plant, and we don't know how long it will stay that way, we will continue to be a responsible corporate citizen," he said.


Others, including local, state and federal officials, have said that their impression is that the UAW has the contractual right to either approve or veto any plant disposition.


John Dohner Jr., the UAW Local 95 shop chairman in Janesville, said he's not aware of any contractual responsibility GM has to get UAW approval.


Dohner, who served on the UAW's main negotiating team for the 2007 contract, said the international union might be able to contest the disposition of the Janesville plant because it is in "standby" status and in line for future UAW work.


Several calls to the UAW in Detroit were not returned.


"If it comes down to a re-use of that property for something non-GM, it will be major project with a multitude of components, and it will take time," Beckord said. "In the meantime, however, we've got plenty of other space available in Janesville.


"The re-use of the GM plant isn't the only thing we're working on."



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