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Garver Feed Mill

Garver Feed Mill on the city's East Side. The city and a developer are addressing environmental issues at the site in anticipation of a $19.8 million redevelopment.

The city and a developer are addressing a newly surfaced environmental problem that will add costs to the long-delayed, $19.8 million redevelopment of the landmark Garver Feed Mill on the East Side.

The exact amount of contaminated soil at the site is still undetermined, but removing or capping materials could cost in the hundreds of thousands of dollars or more than $1 million, city officials said. The city has budgeted $1.95 million for the redevelopment, but that doesn’t cover the environmental problem.

The environmental issues, however, do not threaten the project, City Council President Marsha Rummel, who represents the area, said after a closed session of the city’s Finance Committee on Monday evening. “We’re all just doing our due diligence,” she said.

The city, which chose Baum Development over three other suitors for the project in April 2015, has already extended several deadlines for Baum to secure financing and meet other milestones for the project, which would transform the crumbling Garver building and its surrounding 5 acres into an artisan food production facility and “microlodging” units averaging 250 square feet for short-term rental.

In mid-March, city staff informed the Finance Committee that Baum had secured critical federal New Market Tax Credits, which will be used with a bank loan, equity, historic tax credits and grants to fund the project.

Now, the city and Baum are moving to address problems with soils at the site discovered earlier this year by hiring more private environmental engineering services and depositing 9,000 cubic yards of clean topsoil there to help with future remediation work.

The Finance Committee, without discussion, on Monday approved resolutions to provide $75,000 for a contract with SCS Engineers to do more investigation, and with Homburg Contractors to deliver the topsoil at no cost. The committee and city staff then met in closed session for more than an hour.

The full council will consider the resolutions next month.

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Meanwhile, Baum and city staff continue to negotiate a development agreement that will cover final details on financing, ground leases, sale of the Garver building, and a lease back to the city of a cold storage building, said Dan Rolfs, city community development project manager.

Of the city’s $1.95 million, $1.82 million is for the Baum redevelopment and the rest to the Parks Division to build out the cold storage.

“I think we’re getting close,” city economic development director Matt Mikolajewski said, adding that a tentative deal could be completed by the end of the week or early next week. “The conversations have been good.”

If a tentative agreement is reached, the deal and a budget amendment for the environmental remediation will be introduced to the council, perhaps as soon as July 11, Mikolajewski said. After committee review, the council could act on the agreement and budget amendment in August.

The city won’t know the scale and cost of final environmental remediation until further study is completed, Mikolajewski and Rolfs said.

The soils are contaminated with some petroleum and polycyclic aromatic hydrocarbons (PAHs), which can cause a health risk if people come in direct contact with it, Rolfs said. The materials must be handled properly but aren’t the sort of contaminants that would require a federal Superfund cleanup, he said.

The final grading and restoration of the site will require clean cap material and clean top soil to cap contaminated soils as part of a remediation plan with the state Department of Natural Resources, the resolution says.

The two-story, Industrial Romanesque feed mill, 109 S. Fair Oaks Ave., was built in 1905 and named a city landmark in 1994.

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