The Two Harbors City Council approved a purchase agreement last week for the former JJ Castings foundry site just west of downtown.
The purchase agreement, which has a closing date of Dec. 31, is between the city of Two Harbors and Willamette Valley Co. of Eugene, Ore., for about 14 acres for the price of $200,000. Willamette Valley, a manufacturing company, currently has a facility in Two Harbors that makes water-based coatings for the lumber industry, such as sealants and primers.
“We are hoping to add another product line that we are not currently making at the Two Harbors location with this new facility,” said Jeff Nielsen, operations manager for the Midwest Division of Willamette Valley.
The proposed facility would be about 78,000 square feet in size and would bring 10 new jobs to Two Harbors.
“We’ve been here for 12 years now and it’s a great community and we look forward to growing with the community,” Nielsen said.
ADVERTISEMENT
According to the development agreement, the company is looking to manufacture water-based paints, sealers, inks and wax emulsions. Willamette also is hoping to work out an agreement with Canadian National Railway to bring in the material needed to make the products by rail. If an agreement is not worked out, then the project would most likely not be able to move forward.
“The trains would bring in raw material tanker cars and that material would get processed and distributed to our new customers,” Nielsen said. “It’s such a high-volume product that if we didn’t have rail it would not be cost effective to do so. We use a lot of trucking right now, but roughly one railcar is four tankers.”
According to the purchase agreement, Willamette must work out an agreement with CN by Dec. 14 to move forward with the purchase, but if the city agrees to waive the contingency then Willamette would have more time to secure an agreement.
The development agreement states that the city will apply for Iron Range Resources and Rehabilitation Board and Minnesota Department of Employment and Economic Development grants by Dec. 31 to pay for an extension and improvements of infrastructure to the property. The agreement also states that once Willamette breaks ground on the project, the company has 18 months to complete construction. These provisions are subject to possible unavoidable delays.
Willamette has until Oct. 31, 2019, to commit to moving forward with this project, but the city can buy the property back before then if another viable offer is presented for the property. If the city receives another offer it must notify Willamette, which then has 90 days to decide whether to move forward with the project or not. If Willamette decides not to move forward with the project, the property would be sold back to the city and the agreement would be terminated.
If termination occurs prior to or on Oct. 31, 2017, the city would be able to buy back the property for the full price of $200,000. If the agreement is terminated after that date and on or before Oct. 31, 2018, the city can buy back the property for $175,000, and if the termination occurs after that date the city can buy back the property for $150,000.
“That was put in the agreement to protect the interests of the community because of the long length of the purchase agreement since they were going to be holding the property for so long. If we get another offer and somebody is interested in the property, then we can go to Willamette and say, ‘Are you going to build or not because we have another offer and another party interested,’ ” said city administrator Dan Walker. “Because the purchase agreement allows them to hold the property until 2019, we wanted to make sure that something is built prior to that, whether it’s Willamette - which we hope they do - or if another offer comes through that’s attractive to us, then we have that option too.”
The termination option also allows Willamette to give the property back to the city if something falls through on their end.
ADVERTISEMENT
“There’s quite a few things on our side as far as securing raw material streams that we need to have in place before we can move forward,” Nielsen said. “Our intention is, though, that we need to get this down and we need to have this business secured and move forward with it.”
The old roundhouse and JJ Castings buildings on the site were demolished in 2013 in hopes of making the property more attractive to potential buyers.
“When this process started for us and we took that property down to grade, we were hoping for this day - having that piece of property used to bring jobs to downtown Two Harbors,” said Mayor Randy Bolen. “Now that it is finally happening, it’s just great.”
