Article date: March 29, 2000

Contract requires $75,000 be payed to trustee and several agencies to end longest bankruptcy case

By Richard Nash

Final approval was given Tuesday to a real estate contract that establishes the Front Royal-Warren County Economic Development Commission as the official owner of about 500 acres at the Avtex Fibers Superfund site.

EDA Chairman Richard M. Novak said town and county officials have been negotiating the terms of the contact with representatives of the U.S. Environmental Protection Agency and former site owner FMC Corp. for more than a year.

The finished contract, which transfers ownership of the former rayon plant to the EDA from bankruptcy trustee Anthony H. Murray Jr., is the end of a long struggle for town and county officials and the beginning of another, he said.

"Now, all the work starts," Novak said. "It’s taken us a long time to get this far. Now we’ve got the land deal squared away, but we’re really just at the beginning of all the work we have to do. The redevelopment and the cleanup efforts are both going to be a long and continuing process."

The EDA, which plans to develop the land as a combined business park, nature preserve, and recreation area, has begun asbestos abatement and demolition work on several buildings at the site, Novak said.

Officials are in the process of renovating the former Avtex office building at the entrance to the site that the EDA will use as shared office space with FMC, he said.

The site cleanup is expected to last five to 10 years, but redevelopment will last even longer, Novak said.

"The whole thing is going to be done in stages and we’re still in the earliest stage," he said. "We can’t start developing the land until it’s clean."

Judge Thomas Twardowski of the U.S. District Court for Eastern Pennsylvania approved the contract and other documents related to the land transfer in November, EDA Director Stephen A. Heavener said.

Heavener said he had hoped to settle the contract before the end of 1999, but officials had to wait until federal agents approved a prospective purchaser agreement associated with the land transfer.

The agreement, which went into effect March 20, contains covenants that guarantee that the EDA and the two local governments will not be held liable for any past pollution that might be discovered at the site in the future, he said.

The federal Superfund Act holds future owners of Superfund site land liable for past contamination that is discovered after they take control of the land, but the agreement lifts that liability in the case of Avtex, he said.

"Everyone involved with this has worked very hard to make it happen," Heavener said. "We’ve all been singing from the same hymnal."

He said the federal agency generally requires Superfund site buyers to pay $100,000 to the Superfund program as part of the land transfer, but agents reduced that amount to $10,000 in the case of Avtex.

Last year, the agency also awarded the EDA a $100,000 federal Superfund Redevelopment Initiative Grant, $25,000 of which was earmarked to ease the cost of the land transfer, he said.

The terms of the real estate contract require the EDA to pay $60,000 to Murray, $10,000 to the federal Hazardous Substance Superfund, and $5,000 to the Lord Fairfax Soil and Water Conservation District, Heavener said.

The EDA will use $50,000 in county funds and $25,000 in federal funds to pay the combined $75,000 in payments that the contract requires, he said.

The American Viscose Corp. began production of rayon fiber at the plant on Kendrick Lane in 1940 and sold the plant to FMC in 1963.

In 1976, FMC sold the plant to Avtex Fibers Inc.

The federal government placed the plant on its Superfund list in 1986 and Avtex Fibers Inc. closed the factory and filed for bankruptcy in 1989. The case eventually became the longest running bankruptcy case the history of the federal court in Pennsylvania.

Details of the Avtex land Transfer

• The Front Royal-Warren County Economic Development Authority has agreed to a real estate contract that transfers ownership of the Avtex Fiber Superfund site to the EDA from a bankruptcy trustee in Pennsylvania.
• The plant was added to the federal Superfund list in 1986. Avtex closed it in 1989 and shortly afterward declared bankruptcy.
• Front Royal and Warren County will forgive about $1.5 million in back taxes from the former rayon plant and the EDA will pay $60,000 to the trustee.
• The county will pay $7,000 an acre for any part of the 10 acre parking lot across Kendrick Lane from the main plant property if it choose to acquire that land.
• Th county also will pay $9,000 an acre for an eight acre parcel next to Ed Stump Park if that section is later added to the park, but there will be no additional payments for the 25 acre park or for the front building and about an acre surrounding it.
• No payments will be required on those parcels for eight years.
• The bankruptcy trustee, the U.S. Environmental Protection Agency and FMC Corp. will receive a portion of the profits from the sale of parcels as the land is developed. The EDA’s costs for redevelopment including administrative expenses or demolition of buildings will be subtracted from the amount received in land sales. Any grants received are excluded.
• The first $60,000 received will be paid to the bankruptcy trustee, Anthony Murray. The next $2 million in profits will go to FMC Corp.
• Of the remainder, the bankruptcy trusted receives 3 percent, the EDA receives 10 percent and FMC and the EPA receive 87 percent.

BACK