'Intense' interest, offers reported for General Motors Willow Run plant
Nathan Bomey | AnnArbor.com
And he’s got reason to be optimistic: Officials have already received “a number of offers” for the plant, he confirmed.
Bruce Rasher — redevelopment manager for the Revitalizing Auto Communities Environmental Response (RACER) Trust, which took control of GM’s abandoned properties on March 31 — told AnnArbor.com that several prospective buyers already have come forward.
“There is an intense amount of interest on the part of developers in this site,” Rasher told AnnArbor.com in an interview at the 5 million-square-foot plant in Ypsilanti Township.
The RACER Trust was set up as the legal entity charged with handling the long-term repositioning and cleanup of 89 former GM properties, including 56 in Michigan. Elliott Laws, a Washington D.C. attorney, is managing member of EPLET LLC, which was appointed as the administrative trustee for the RACER Trust.
The RACER Trust took control of the properties from Motors Liquidation Co., the so-called “old GM,” which was set up to handle the early marketing and legal duties associated with the old sites.But Motors Liquidiation, managed by consultancy AlixPartners, is set to dissolve in December — and, in fact, only now exists for tax purposes, Rasher said.
The RACER Trust is handling all the marketing and cleanup of the former GM sites into the future.
AlixPartners put together a negligible marketing effort for the 70-year-old Willow Run plant while it was managing the property.
Nonetheless, several prospective buyers emerged, but Rasher said it wouldn’t be prudent to jump at the first suitor that comes along. Instead, he wants to market the site to a global audience to ensure he’s finding the best offer.
“I really feel that with an asset of this value, I need to expose it broadly to the market,” Rasher said. “Motors Liquidation Co. basically had buyers come to them with proposals and really did not advertise the availability of the property. In contrast, we’re going to aggressively market the facility to end users and to developers in order to seek out and ultimately accept the best offer on the facility.”
Rasher said the early offers have come from redevelopers, which would be likely to lease space to other companies. He said no manufacturers have made offers for the plant, although some have expressed interest.
Rasher said he hopes to launch the marketing effort in the fall and to sign a contract with a buyer by spring 2012.
Alternatively, he said, if the trust is not satisfied with the prospective buyers, the trust itself has the legal capacity to operate the site and attract tenants.
Nathan Bomey | AnnArbor.com
“This site is strategically located for logistics for both air, rail and truck freight,” Rasher said. “I’m convinced we’ll be able to capitalize on the Aerotropolis strategy.”
Under typical bankruptcies, a receiver would have a legal responsibility to liquidate surplus property at the highest possible price — regardless of any ensuing implications for local communities.
But a 91-page settlement agreement reached by the U.S. government, Motors Liquidation, the St. Regis Mohawk Tribe and the 14 states with former GM properties lays out several factors the trust must consider in pursuing the disposition of the property.
Among those is “the potential for the reuse to create jobs,” as well as the likelihood of “increasing tax revenue, reducing blight and providing a sense of renewal.”
The trust also is obligated to consult with state officials and local municipalities to consider their wishes when weighing the future of the old GM plants.
Rasher said the trust already has met with many local officials to discuss the future of the Willow Run plant. They have a significant interest in the site's revitalization: GM paid about $5.4 million in property taxes to Ypsilanti Township in 2009.
The iconic site, designed by architect Albert Kahn, is one of the largest structures in the world. It has more square footage than the Willis Tower in Chicago, the tallest building in the Western Hemisphere.
At its height during World War II, the plant employed more than 40,000 workers as a bomber manufacturing plant for Ford Motor Co. The site was sold to GM in the early 1950s and employed 14,000 at its height as an auto plant in the 1970s.
GM announced in June 2009 that it would close the Willow Run plant as part of its Chapter 11 bankruptcy filing, displacing the 1,364 employees left at the time. It officially closed in December 2010, and the last of its equipment was auctioned off earlier this month. Over the next few weeks, truckers are shipping off the last machines still left at the site.
But the plant is not lifeless. Lawn care workers are mowing the grass, the plant is air-conditioned and workers are undertaking selective maintenance projects. A new site manager, Cliff Lewis, has been appointed, and security officials are monitoring the grounds.
Rasher said it’s all an attempt to preserve the site's marketability.
He acknowledged that possible buyers could include companies that would tear down the complex and sell scrap metal for a profit — but he said “we have no plans” to consider that route.
He said it’s likely that “portions of the building will be demolished” by a new user, if only because of much of the building is quite aged.
For example, one side of the building still has massive hangar doors that were built to allow complete B-24 bombers to roll out of the plant and right onto the Willow Run Airport runway to be tested before being shipped off to the Army Air Corps.
Nonetheless, Rasher said he expects to field a wide range of interest once the site is marketed broadly. He said the site could also be separated and sold off piece by piece.
“I’ll be talking to auto-related manufacturing end-users, renewable-energy-related manufacturing end-users and others that are in manufacturing that would benefit from a site with transportation amenities that this site has,” he said.
Perhaps the most marketable portion of the plant is a 1 million-square-foot section renovated by GM eight years ago to make six-speed transmissions.
“That portion of the building is high-quality space with recent renovations that we think is an ideal location for another user to step in immediately and reuse it,” said Grant Trigger, an environmental cleanup industry veteran hired to serve as the cleanup manager for the 36 Michigan properties that need remediation.
One of the key reasons why it’s even plausible for the RACER Trust to sell the plant is because of the $35.8 million budget for environmental cleanup at the 335-acre site. Those funds are part of a $518.9 million environmental cleanup budget the RACER Trust is managing.
Trigger said the Willow Run plant’s environmental problems could take “tens of years” to address.
“There’s some contaminated groundwater that needs to be addressed, largely attributable to releases of transmission oil and other oils from the site since 1941,” he said. “That’s really the primary issue.” Although the cleanup process will last a long time, trust officials said the environmental efforts would not stop a buyer from acquiring the site. The settlement agreement dictates that the trust will be responsible for the environmental cleanup even after new users acquire the former GM properties.
So a new buyer can step in without having to deal with the cleanup.
"We've taken care in how we manage the facility to ensure that they can step in and plug and play," Trigger said.