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Friday, Mar 29, 2024

Firm Nears Deal To Buy Troubled Munitions Land

Firm Nears Deal To Buy Troubled Munitions Land By SHELLY GARCIA Senior Reporter A large, private equity group with very deep pockets is close to a deal to acquire a 1,000-acre parcel that once housed the Whittaker Corp.’s Bermite Powder Co. munitions factory in Santa Clarita. If the deal goes through, it would put the site, contaminated with numerous toxins over a 50-year span, back on track for cleanup and redevelopment, an effort that has been stalled since Whittaker closed its plant in the 1980s. “We feel that we can in fact resolve that issue,” said Dwight Stenseth, managing director of Cherokee Investment Partners LLC of the severe contamination problems that have stymied previous redevelopment efforts. “It’s going to be one of money and time to get there, but we believe the technology is in place to get that done.” Cherokee Investment, which specializes in buying and refurbishing brownfields, has $625 million in capital for investment in real estate that has been contaminated. The company, which could close the deal as early as July, typically buys these properties, cleans them and leases, redevelops or sells them off. Since it was founded in 1990, it has acquired over 300 properties and now retains more than $800 million in assets under its management. The Whittaker site, which is bordered by Soledad Canyon Road to the north, the Circle J Ranch community to the south, San Fernando Road to the west and Golden Valley Road to the east, is especially challenging, however. Toxins from the weapons manufacturing operation have seeped into the groundwater, and four wells in the area were closed as a result. One of the chemicals in the soil is ammonium perchlorate, a substance that affects the thyroid at certain levels. It has only been detected in recent years, and some believe there is no known technology to remove it. Earlier failed attempt Cherokee is the second company to tackle the site. In 1999, Remediation Financial, the seller in the transaction with Cherokee, acquired the land from Whittaker for $15 million with similar plans. “They came in as white knights and said they could save the community and clean the property,” said Jeffrey Lambert, director of planning and building services for the city of Santa Clarita. “The bottom line is they failed.” In order to finance the project, Remediation Financial sought to clean the property in stages, and begin building on those cleaned areas as it continued to decontaminate the rest of the property. The community wanted to be certain the entire property was cleaned before any building began. Cherokee has proposed a different approach. The company said it expects to take four to five years to clean the ground contaminates and it will begin a continuous effort to pump and treat the water until it reaches acceptable levels. The company concedes that it has no specific experience with ammonium perchlorate, but says it has cleaned similar toxins before. Connie Worden-Roberts, chair of the Citizen’s Advisory Group formed to oversee efforts on the site, said many in the community have expressed optimism that Cherokee can do what Remediation Financial was unable to accomplish. “The Cherokee people have actually a lot of experience,” she said. “There is none they have done that is exactly comparable to Whittaker Bermite, but they have nevertheless done some things that are at least in the ballpark. And moreover, they’re well financed.” Silent on financing Stenseth declined to discuss the particulars of the financing involved because the company is currently in final “sensitive” stages of negotiations with the seller. But Worden-Roberts said the pump and treat procedures alone are estimated to cost over $60 million. Whittaker, which has since been sold to Meggitt PLC, a British aerospace company, is not off the hook for at least a portion of those costs. According to California law, the polluter retains ultimate responsibility for cleanup, and a group made up of city, state and county officials along with the California Department of Toxic Substance Control has formed to put pressure on the company to fork over a share of the costs. The task force estimates that Whittaker’s insurance could pay as much as $40 million towards the cleanup. “Whittaker does maintain responsibility for the cleanup and my observation is that they until now have been dragging their feet,” said Worden-Roberts. What’s different now, those involved say, is a unified effort underway for the first time. The property, which literally sits in the heart of Santa Clarita, has attracted a coalition of officials who have worked together for months to devise a plan for the cleanup, and an order issued in November against Whittaker provides an action plan, time lines and penalties if the deadlines are not met.

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