A month after negotiations between the City of Centralia and Logistics Property Company (LPC) stalled, the two parties have agreed to a memorandum of agreement (MOA) to allow LPC to continue with the construction of its project along Harrison Avenue.
The Centralia City Council voted unanimously Tuesday to approve the MOA, which also allows LPC to obtain its permits for the project. A development agreement was the originally proposed document before the two parties determined that the best path forward was to reduce it to a legally binding MOA.
LPC, an industrial real estate company, is developing the property with an approximately 604,854 square foot industrial building in the Port of Centralia’s Park I development. Centralia city staff previously rejected LPC’s proposal for a development agreement on the Fords Prairie Industrial Park but noted that they were still willing to renegotiate.
The Port of Centralia Commission voted to approve a purchase and sale agreement with LPC. According to the port, the project is expected to bring 761 new jobs to the community. LPC purchased the 38-acre lot at $5.25 per square foot.
The presented proposal caps the limit of the city’s contribution to the project at $1.5 million, which will pay for the change in sewer pipe size that the city requested of LPC, “above and beyond what they required for the project,” the city said in its Tuesday agenda report.
Included is a request by LPC to be allowed to seek state funding on its own behalf to offset further costs associated with the project. The agreement also limits the scope of changes that the city may apply upon LPC after it initiates construction.
The city and LPC initially disagreed on the city’s offer to provide significant funding toward the cost of the sewer main construction. LPC wrote in its proposed development agreement that it wanted the city to pay the company both $1.5 million in sewer line extension costs and $1.362 million for a secondary reimbursement amount. LPC is still expected to pay $3.34 million in sewer line costs.
The city’s 2022 design and development guidelines require developers of property to extend the city’s sanitary sewer system in conformance with the city’s facilities plan and general sewer plan and requires sewer mains to be sized for the ultimate development of the tributary area. The city has the legal authority to require LPC to install a larger-sized main if the city determines a larger size is needed to meet the requirements for future service.
The city did so, determining that a 36-inch main is necessary after LPC estimated a need for a 10- to 12-inch pipe. City Manager Michael Thomas told the council Tuesday that the $1.5 million the city will pay is to help offset the cost of the upsizing of the pipe and will come from the capital facilities fund, not the general fund. The estimated total cost to design and construct the sewer line extension is $6,205,966. Thomas added that a latecomers agreement is included for the sewer main to offset some of LPC’s costs.
“It’s a compromise, yes, but it’s a compromise all parties agreed to, and I think it’s in the best interest of the city and LPC to get this project moving, to keep them from being delayed, but it protects us and what our interests are,” Thomas said.
Councilor Norm Chapman called the difference between the originally proposed developer’s agreement and the proposed MOA “night and day.”
“I really appreciate city staff for what they did in terms of stepping up to the plate because in the previous one, the city was taking the chores,” he said. “This one here is clear and concise. The last agreement that was proposed, there was no benefit for the city. This one here is rock solid.”
The city will establish and apply traffic mitigation fees once LPC provides the city with its tenant for the facility. Payment of the traffic mitigation fees will be a condition of LPC and its tenant obtaining a certificate of occupancy.
Now that the council has approved the MOA, the city’s intent is to issue the remaining building permits to LPC, upon payment of its permitting fees, which amount to $262,976. This should occur before Friday, Dec. 12, according to city staff.
“The city does state that this has been a lengthy and often complicated process to get to this point. We understand LPC’s need to meet their internal timelines and the schedules given to their clients,” city staff wrote in its agenda report. “The city was adamant that LPC must meet our city development guidelines. Both parties agree this document gets us to where we need to be to bring this project to completion.”
For more reporting on the negotiations between the City of Centralia and LPC, visit https://tinyurl.com/3ka85kv2.
