August 17 2008 The News Journal
Written by: RACHEL KIPP
The University of Delaware and Pettinaro Enterprises of Newport, a big Wilmington riverfront developer, are among a handful of bidders vying to buy Chrysler’s Newark assembly plant property and redevelop the land in coming years.
Greg Pettinaro, chief executive officer of Pettinaro Enterprises, said his company submitted a bid for the 244-acre Chrysler property, but would not specify plans for the site. He said Chrysler wants to close the sale by the end of the year.
Last month, Pettinaro said the site had potential for a combination of offices, housing, retail, warehouses or manufacturing. Pettinaro has built many of the newer buildings along the city’s formerly derelict riverfront, a recent addition being the crescent-shaped Barclays Bank building on West and Justison streets.
Mayor Vance Funk said UD officials “very definitely told us that they put in a bid on the site and they hope that they are the successful bidder.”
UD officials would not comment, but have previously said they talked with Chrysler about buying the land and could use it for possible replacements for UD’s football stadium or the Bob Carpenter Center, or for a high-tech business park.
Mary Beth Halprin, a Chrysler spokeswoman, declined to comment. Chrysler plans to close the plant at the end of 2009.
What happens to the site after Chrysler departs is critical for Newark, which gets about $360,000 a year in property taxes from Chrysler, and for the state and region, which will be losing a big employer.
Replacing more than 1,100 good-paying jobs at the 3.4 million-square-foot plant will be an important part of a larger rebuilding of a state economy that has endured sluggish job growth in the last decade, particularly in the manufacturing sector, and more recently fell into a two-year housing and construction slump.
Job erosion in the blue-collar sector has been followed by disruptions in the ranks of Delaware’s big employers, as DuPont downsized its state operations and thousands of jobs were lost when MBNA was acquired by Bank of America.
The Newark assembly plant property also presents a great opportunity for UD, which is working to expand and raise its profile under a new president and serve as a catalyst for new growth with research and ideas.
Newark and state economic development officials want the Chrysler property to be a place where many of those hopes take real shape, serving as a staging ground of sorts for growth that will move
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the entire state forward, building on the success at the Delaware Technology Park.
Done right, Newark officials say, redevelopment of the site could bring sustainable, high-tech businesses to the city and capitalize on proximity to the university.
City officials also see an opportunity to attract companies that are relocating to be closer to the Aberdeen Proving Ground in Maryland as federal contractors move operations there in the Base Realignment and Closure program.
Newark also could gain financially by providing utility service to the new tenant. More than 40 percent of Newark’s net revenue comes from electricity bills. Chrysler is not one of the city’s customers, but future occupants of office, research or distribution buildings could become customers.
“Newark needs to control its own destiny economically and that means we need to be able to create jobs in addition to what UD provides,” City Councilman Paul Pomeroy said.
Reclaiming jobs
“Along with technology-based companies, I’d like to see some environmentally safe light manufacturing, because we need to reclaim some of the jobs that maybe were lost with Chrysler’s closing,” City Councilman Jerry Clifton said. “I think people are so intent on technology, technology, technology that they’re forgetting about the fact that there are some hard-working people that are overlooked in this.”
Before Chrysler’s July 31 deadline to submit bids, Newark officials met with representatives of several companies interested in the site. Many of them were large, out-of-state corporations that specialize in redeveloping former industrial properties. They asked questions about general conditions at the site and the logistics of moving a project through Newark’s permitting and approval process.
Officials are planning to designate the parcel the “Chrysler Opportunity Site” in the newest version of Newark’s comprehensive land-use plan, which is in the review stages.
The Chrysler site is currently zoned for industrial use. Creating the opportunity site would make it easier for the city to promote, and for a developer to build, a mixed-use campus with space for industrial, commercial, residential and retail uses.
An applicant for a mixed-use project or someone seeking rezoning would still have to go through Newark’s planning commission and city council, Interim City Manager Roy Lopata said. “This is the comprehensive plan, not the zoning, but it allows us to zone the property to what we think makes the most sense,” he said.
Development companies that met with the city also wanted to know what kind of vision local officials had for the site.
“What we’ve really heard from the community is they want something that is going to have a lasting, long-term, positive economic impact on the city,” said Pomeroy, who along with Lopata and Funk met last month with Chrysler and the Chicago firm advising the company on the sale.
Pomeroy said council members and residents would like to see developers do something creative with the site. One thing officials aren’t interested in, however, is a project that would focus on moving big-box retailers to the parcel.
“I think the only thing that has been presented to us where we absolutely cringed is a major retail shopping center,” Funk said. “We’re afraid that putting a major retail area at that site would affect downtown.”
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UD’s interest
Most members of the Newark community expect that UD will be a big player in whatever happens, either through a purchase of the land or as part of its redevelopment by another owner.
A UD purchase would mean less money to the city, however.
“If UD buys it, the [real estate] transfer tax in that situation will be zero,” Funk said. “That’s the downside. The plus side is they’ve assured us that if they are the successful bidder, they will use a lot of the city of Newark services for water, sewer and electric. Right now, Chrysler only uses our sewer. They don’t even buy water from us.”
One of the companies that came to Newark to learn more about the Chrysler property was Patriot Equities, a Wayne, Pa., firm that specializes in acquiring and redeveloping large, underutilized properties.
Jim McCahon, vice president of acquisitions for Patriot, said he and other representatives from the company met with city officials and with administrators at UD to find out how each group envisions the site’s future. McCahon said he “could not confirm or deny” whether Patriot bid on the Chrysler site.
“I can tell you we spent a decent amount of time analyzing the opportunity,” McCahon said. “I think the Chrysler site is a great opportunity. It’s at the gateway of the university and at the gateway of I-95. I don’t know where else you could find 200-plus acres for a development in suburban Wilmington and Newark.”
McCahon expects that whoever buys the parcel will repurpose it for a mixed-use development and that UD will somehow be a part of that enterprise.
“Location is critical because some sites may not be a good office environment and some sites may not be a good fit for industry use,” McCahon said. “This site in particular, it’s at the doorstep of the university and the university plays a critical role in that development. I truly believe that the university will become a piece of that redevelopment because it’s at the gateway to their campus and they want to control what it looks like.”
What the selling price will be is less clear, McCahon said. He added that the current credit climate is a problem for buyers who need to borrow to finance a large development deal.
“It’s hard to put a value on it because it’s speculative land,” McCahon said. “One of the other biggest challenges is, you don’t know when the project will start to come to fruition as far as the different uses. It could be a year, it could be two, it could be five years. You just don’t know.”
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