80.3 F
San Fernando
Thursday, Sep 21, 2023

New Chapter for Contaminated Site

Another buyer for a 1,000-acre parcel in the heart of the Santa Clarita Valley could be close at hand as an Arizona court prepares to review offers on the coveted property. At least three potential buyers, and perhaps as many as a dozen are expected to bid on the property, the site of the former Bermite Powder Co., later acquired by Whittaker Corp., at an Arizona bankruptcy court hearing scheduled to take place in July. The site, referred to as Porta Bella, is being sold by its current owner, RFI Realty Inc., as part of a Chap. 11 bankruptcy proceeding. The buyer selected would be the third to attempt to redevelop the site, which for more than 50 years was used for munitions manufacturing and testing. The sale won’t come a moment too soon for city of Santa Clarita officials and community members, who have been waiting more than 10 years to see the property revitalized. Because of the munitions manufacturing that took place for years, the site is contaminated with perchlorates, a toxin believed to cause cancer and other diseases at unacceptable levels, that have seeped into the soil and the groundwater. Recently, an additional plume of toxins was found to have penetrated yet another water well in the area, indicating that the pollution is spreading further and increasing the sense of urgency to clean up the site. “Certainly the highest priority for the city is the remediation of the soil and the groundwater on an expedited timeframe,” said Lisa Hardy, planning manager for the city of Santa Clarita. ” It really is a blight on the community and something we’d like to address from a public health, safety and general standpoint.” Lawsuits, politics and the expense of the cleanup required have delayed efforts and quashed the plans of several developers going back to the mid-1990s. In 1999, RFI, a Phoenix-based company that specializes in remediating brownfields, acquired the property from Whittaker with plans to clean and redevelop it. After about four or five years of unsuccessful efforts, the company reached an agreement to sell it to yet another developer, Cherokee Investment Partners. But Cherokee too failed to move ahead and that agreement was terminated last year. In the meantime, RFI filed Chap. 11 with a reorganization strategy that includes divesting the parcel. There is no dearth of interested buyers who believe that the site can be sufficiently remediated to move forward with a redevelopment plan. “We’ve had over a dozen due diligence packages out,” said Alisa C. Lacey, an attorney with Stinson Morrison Hecker LLP, a Phoenix-based firm that represents RFI. Lewis Soledad Canyon LLC, one of the Lewis Group of Companies, an Upland-based developer that has built a number of master planned communities throughout California, was selected as a so-called “stalking horse” to establish a baseline price for the parcel. The bid, which includes funding to purchase a Metrolink site that runs through the property, along with remediation funding and other elements, is $71.5 million. Competition In addition, Cherokee continues to be actively interested in acquiring the site, and Suncal Cos., which is also developing Ritter Ranch, a community of 7,200 homes in Palmdale, is also planning to bid for the property. “It’s a location in the heart of the city of Santa Clarita,” said Frank Faye, president of Suncal’s Los Angeles/Ventura division. “There’s a demand in that area for housing as well as commercial uses.” The parcel sits in an area long considered critical for the economic development of the Santa Clarita Valley. “It’s the hole in the donut,” said Hardy. “Four major general plan roadways are planned to crisscross the site. There is a Metrolink station located adjacent to Soledad Canyon. Immediately north is an upscale residential community.” Cherokee, which in court documents has said it has already invested $1 million of its own funds on environmental investigation and “hundreds of hours to negotiations with the debtors” and others are also preparing to submit a bid. Dwight Stenseth, managing director at Cherokee, said that the company’s failure to meet some deadlines while the purchase agreement was active was due to the complex nature of the acquisition. “There are so many different parties, it complicates any transaction.” For years, a big stumbling block to redevelopment efforts had to do with the costs and responsibilities for cleanup of the site. But once RFI filed for bankruptcy and Avion Holdings LLC took over management of the property, many of those issues were resolved. Chief among them, an agreement was reached with the insurers to commit just under $64 million for the cleanup. “With those proceeds available, buyers are far more secure than they were that there’s a means to fund the cleanup,” said Lacey. Bidders are required to submit their proposals by the end of June. A court hearing date, when the bids will be reviewed in open court, initially scheduled for last week, has been moved to July 12. Considering offers Under the bankruptcy laws, Avion will submit its opinion concerning which is the best and highest offer, and the court will consider that along with the proposals submitted. “The debtor expresses an opinion knowing what it knows about the buyers, what the contingencies are and what the financing is,” Lacey said. “The court will digest that and will usually take into strong consideration the debtor’s business judgment, particularly in this case when it’s an independent restructuring agent.” The pollution on the site has even delayed plans by Newhall Land and Farming Co. to develop a housing development, River Park, nearby. The latest discovery that another water well used by Valencia Water Co. is contaminated with high levels of perchlorates does not affect the water sources for River Park, which are delivered from two other wells operated by the Castaic Lake Water Agency. But Newhall decided to err on the side of caution anyway, and delay a final hearing on the project, initially slated to take place in April, to allow additional public hearings. “The two wells on River Park did not test positive, but because we actually got the test back on Valencia Water Company’s well the afternoon our final hearing on River Park was to take place, we just asked the city for an extension on approving River Park,” said Marlee Lauffer, a spokeswoman for Newhall.

Featured Articles

Related Articles