First Person: Redeveloping Former GM Sites for New Job-Creating Uses
The editor of Area Development recently spoke with RACER Trust’s Redevelopment Manager Bruce Rasher about his organization’s goal of cleaning up and marketing former GM properties to companies that will invest in the communities where these facilities are located and create good-paying jobs.
Rasher: The RACER Trust was established to take ownership of certain former General Motors properties after the company filed for bankruptcy. Our mission is twofold — to conduct environmental cleanups where necessary and to market the properties to end-users who will invest in job creation. Our mandate includes seeking community input as we market these properties and, inevitably, what we’re hearing is that communities want us to find buyers who will create jobs and related economic benefits. It’s a task that far exceeds merely listing and selling properties.
How many properties does the portfolio contain and where are they located?
Rasher: The Trust was assigned former GM properties and other assets in 89 locations in 14 states, primarily in the Northeast and Midwest. About two thirds of the properties are in Michigan. Our initial portfolio included 7,000 acres of commercial and industrial land and more than 44 million square feet of industrial space under roof. This includes the five-million-square-foot former Willow Run Powertrain plant in Ypsilanti, Mich., birthplace of the iconic Rosie the Riveter.
Which industrial sectors are showing interest in these properties and why?
Rasher: We’re seeing interest from a broad range of industrial users, including automotive, aerospace, defense contractors, alternative and clean energies, some agriculture and aquaculture, and chemical manufacturers. We’ve had some contact with commercial interests and recreational ventures, and even a few residential developers. Our focus has mainly been on industrial buyers, however, both because of the nature and amenities of the properties and because these are the kinds of jobs communities are telling us they’d like to pursue. Will the existing infrastructure at these sites meet industries’ needs?
Rasher: Almost without exception, these properties have excellent highway and interstate access; high-capacity water, sewer, and electric; and wiring for high-speed data processing — the kind of amenities you would expect from a modern, world-class manufacturer. GM had negotiated low-cost power deals at many of the sites, and we’ve found that local utilities are very accommodating and willing to extend similar considerations to companies in exchange for job commitments. Many of the properties are serviced by rail spurs and one, Willow Run, has bay doors that open to an airport runway.
Are there environmental concerns at any of these sites and, if so, how are they being dealt with?
Rasher: Yes. About two-thirds of the former GM properties in our portfolio have known environmental liabilities. The Trust is fully funded to conduct safe, comprehensive cleanups that are protective of human health and the environment. In fact, we’re the largest environmental response and remediation trust in U.S. history. We have a huge advantage over other sellers of surplus corporate space because we’re able to offer legal protections against environmental liability associated with GM’s operations, which removes a major barrier of uncertainty for buyers.
Can you explain that further?
Rasher: In some transactions of this nature, the environmental remediation costs exceed the value of the property, and so the seller would actually have to pay the buyer to take it, which most corporate sellers aren’t willing to do. We don’t have that challenge. In addition, we are actively seeking to get these assets back into productive use as quickly as possible, so we can market and sell and close on a transaction before environmental remediation is completed, as long as we retain the necessary access to complete the cleanup. We share the communities’ sense of urgency to put jobs back into these facilities.
Can these massive facilities be converted to use by smaller firms?
Rasher: Definitely. The former Mansfield Ontario Stamping Plant in Northeast Ohio was sold to a buyer who’s planning a multi-tenant facility. The same is true of the former Parma Powertrain Plant in Ohio. A former auto body plant near Syracuse, N.Y., was redeveloped as an industrial park in 2006. It’s difficult to imagine a facility the size of Willow Run would ever be purchased for a single-use purpose. Several other buildings in our portfolio have the size, infrastructure, and amenities to support multi-tenant reuse.
Can you highlight some other successful transitions that have already taken place?
Rasher: We sold the former Grand Rapids Stamping Plant in Wyoming, Mich., to a buyer who is in partnership with the city to redevelop the site. And we sold large properties in Parma, Ohio, and Moraine, Ohio, to buyers with concrete plans to redevelop those sites as well. We have been very pleased and encouraged by the market’s interest and activity surrounding a number of our sites, and we expect to announce additional deals before the end of the year that will result in new jobs and other economic benefits. The number and quality of prospects we’re talking with are extremely strong in a variety of places.
Is there anything else that manufacturing companies seeking new locations for expansion should know about these sites?
Rasher: They should know that RACER Trust is in business solely to prepare these properties for redevelopment and beneficial reuse. Our mandate requires us to seek a sale price that is at or near fair market value, but it’s important that we get these properties sold to buyers who will put people to work. These sites are surrounded by well-trained, available, and eager work forces. Many of these communities have been hit hard by job losses, and they want nothing more than an opportunity to rebuild. We aim to help them do so. We believe in what we’re doing, and we believe in the communities we’re working with. It’s a great honor and a great challenge, and we’re determined to do it right.
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