UD to buy Chrysler property for $24 million
If approved, purchase will be largest single addition ever to Newark campus
Published: Tuesday, October 27, 2009
Updated: Tuesday, October 27, 2009 02:10
The university has agreed to purchase the Chrysler Assembly Plant for $24.25 million. If approved by a New York bankruptcy court, this purchase would be the largest addition to the Newark campus in university history.
President Patrick Harker announced that the 272-acre property on South College Avenue will be used primarily for a research and technology park.
"The size of this parcel of land and its proximity to our main campus make this truly a once in a lifetime opportunity for the University of Delaware," Harker said in a statement.
He has said acquisition of the property will be a major milestone in the university's history.
"It is the future of the university," Harker said in June. "And I don't mean for the next 10 years or the next 20 years. It's the next 100 years of the development of the University of Delaware."
The university's preliminary plans show the property split into three main areas of use: corporate partnerships for research and development activities, a medical partnership with Thomas Jefferson University and improved public transportation by expanding on the Amtrak station adjacent to the property.
"This piece of property is so big we can't even contemplate some of the things that might go there in the future," university spokesman David Brond said.
Brond said the bankruptcy court will make their decision by approximately Nov. 12.
Gov. Jack Markell said the state looks forward to working with the university to maximize the potential economic development of the site.
"Part of rebuilding Delaware's economy is revitalizing sites like the Chrysler Plant, so we are very pleased that the university has been able to secure the property." Markell said in a statement.
Mayor Vance A. Funk III said the university has said they will use Newark Electric on the property, not Delmarva Power.
"That site is currently exempt from having to buy utilities, so having the university go on that site and having an agreement where they would use our utilities is going to be far better off for us," he said.
Chrysler shut down the Newark assembly plant on Dec. 3, 2008. Since last spring, the university has been in discussions with Chrysler to purchase the property. Over the summer, Capstone Advisory Group, LLC, a financial advisory group, became responsible for selling the bankrupt Chrysler site. In a letter given to The Review from Funk, Capstone listed the company's valued site assets at approximately $43 million.
The university was able to acquire the property for a little more than half of its estimated value by agreeing to pay for the environmental cleanup needed on the site. The university felt $24.25 million was a fair price for the property, Brond said.
Funk said the announcement is tremendous news for the city of Newark. "I think there are some people on council that rather the university not buy the property because the city will lose some property taxes and we'll lose some transfer taxes, but in the long run, we'll be much better off," Funk said.
Brond said the technology and research campus, as well as the medical school, will provide jobs for the city.
"The plans for the economic development will bring partnerships and businesses in there," he said. "It'll bring people that are paying taxes to the state into the city."
Chrysler's history as a tank assembly plant in the 1950s, and then as a car manufacturing plant, has left a large amount of contamination on the site. According to a report by the Environmental Protection Agency, Newark had to close down one of its water wells in the 1990s after it was contaminated by Chrysler's leaking underground storage tank.
Brond said the university is purchasing the property as is and is paying for the environmental cleanup.
"We are assuming some risk because we're going to be involved in the cleanup of that property," Brond said. "But you can't equate the dollar amount that we paid because we don't have full information about what we think the estimates are going to be to clean that up."
Both Brond and Funk said representatives of the Delaware Department of Natural Resources and Environmental Control have been evaluating the site.
"They'll dictate what's going to happen there," Funk said. "I'm not worried about that."
Newark resident Gail Chickersky said she trusts the university will take the necessary measures to clean up the site.
"I think it's a once in a lifetime opportunity and I think the university will do the proper remediation," she said.
Funk said in the last couple of weeks, Chrysler hired moving trucks to relocate equipment and machinery from the site to be used at other Chrysler plants.
Brond said the university will be evaluating buildings on the site to determine which, if any, will be salvaged. There is no expected start date for construction, Brond said.
"It could take a couple of years just for demolition on some buildings," he said.
Brond said if the university provides parking adjacent to the Amtrak station, as expected, it will also provide shuttle buses to main campus for the commuters.
The university is using liquid assets and working capital to purchase the property, Brond said.
Senior Marissa Gilinsky said the purchase will help the university expand and grow. "We're land-locked, so the fact that we got this is great," she said. "I think it's a good thing."
Newark resident Anne Munyan said although the purchase may be met with resistance now, it could gain popularity years from now.
"Over the long run, down the years, way into the future, maybe we'll look back and think well, we got a bargain," Munyan said.
Erica Cohen and Samantha Brix contributed to this article.