October 6, 2013 in Business, City

The next phase: Kaiser’s Mead smelting plant undergoes demolition

By The Spokesman-Review
 
Picture story: Old Kaiser Mead smelter site
Dan Pelle photoBuy this photo

A demolition worker cuts the bolts holding the siding in a pot line room at the old smelter. The dangerous siding is being removed before the rest of the structure is demolished.
(Full-size photo)(All photos)

Map of this story's location
Mead timeline

• 1942: Built by the U.S. government and operated by the Aluminum Company of America (Alcoa)

• 1946: Kaiser Aluminum takes over the plant and the Trentwood rolling mill

• 1998: Kaiser workers strike, then are locked out, in a bitter, two-year labor dispute

• 2000: Kaiser closes Mead plant, citing energy costs

• 2004: Commercial Development Company Inc. buys site for $7.4 million

• 2012: Industrial Realty Group (New Mill Capital) pays $1.5 million for the property

Thousands of people drew paychecks from the sprawling Kaiser Aluminum smelter in north Spokane during its more than 50 years of operation.

The California company that bought the Mead site last year is about a third of the way through a project to put people to work on the property again, this time as a new business and industrial park.

Rather than renovating the several dozen dusty and dirt-caked buildings on the 170-acre property, owner New Mill Capital LLC is tearing down nearly everything and starting from scratch.

New Mill Capital is a division of Industrial Realty Group, a California company that specializes in buying and converting distressed sites.

In 2000, for example, IRG bought the vacant, 3,000-acre McClellan Air Force Base near Sacramento. After cleanup and renovation, the former military base provides space for 240 small companies employing 14,000 people.

IRG Vice President Tom Messmer thinks the Kaiser site in Mead can produce similar, though smaller, results. But it won’t happen quickly, he cautioned.

New Mill, which specializes in salvage and demolition, is spending $2 million in the first phase of the project to tear down 18 buildings, including all 16 pot line buildings where aluminum ingots were produced between 1943 and 2000.

Another $2 million will be spent during a second phase, tearing down another 22 buildings.

When the demolition is finished in late 2014, a small fraction of the former Kaiser buildings – about 150,000 square feet in five structures – will be left standing. When New Mill started demolition, there was about 1.5 million square feet of space in buildings on the Mead site.

After demolition is complete, IRG will take over redevelopment of the site. Messmer said a realistic goal is that new companies will be moving in within five years. In 10 years he expects nearly all of the Mead property to be under lease or being developed.

Much of the cleanup cost is for handling and removing tons of hazardous materials from the site – asbestos- and PCB-coated galvanized steel walls and thousands of square feet of building surfaces covered in lead paint.

Still needed at the site are updated utility services, such as electricity, water and sewer. Less urgent but also important, Messmer said, is the eventual completion of the North Spokane Corridor to provide a direct connection to Interstate 90.

Once transportation access improves, Messmer and others say the Mead site might become a challenger to the area’s No. 1 business and industrial park in Spokane Valley.

Aluminum smelter opened for war effort

Kaiser’s Mead smelter is a gritty relic of the nation’s rapid buildup of production capacity during World War II.

Because Spokane was far from the coast and safe from potential Japanese attack, the government footed the bill to construct the smelter on isolated land in north Spokane. For additional protection, the smelter was sited about 10 miles away from the aluminum rolling mill built at the same time in Trentwood in Spokane Valley.

Those plants, like several others on the West Coast, contributed to a massive U.S. effort to build bombers and other airplanes with high-quality aluminum.

When the war ended, the government ruled that Alcoa, the original plant operator, would likely establish a monopoly on aluminum if it was allowed to continue running too many plants.

So, in a government bid process, Kaiser Aluminum & Chemical Corp. bought the Trentwood and Mead operations. At its heyday in the 1960s, the company had 2,100 workers at the Mead plant.

In December 2000, fresh off a bitter, two-year labor dispute, Kaiser shut down the Mead plant after concluding it was more profitable to resell the electricity the plant consumed than continue to smelt aluminum. About 400 workers were laid off at the time. Kaiser continues to operate the rolling mill in Trentwood.

In 2004, St. Louis-based Commercial Development Company Inc. (CDC) bought the land for $7.4 million and began to remove all the usable copper and other metals for resale on the scrap market.

After that, the Mead property sat unused and shuttered, looking for a new owner. One reason buyers were scarce, according to area brokers, was the site’s environmental problems related to leftover waste piles and buildings laced with toxic chemicals.

IRG researched the site and concluded the smelter had a future if the hazardous materials could be removed and the land prepared for future growth; the company bought it in 2012 for $1.5 million.

Like CDC, IRG bought the smelter property without the 50-acre adjoining section of land that’s been declared a federal Superfund site. Located north of the smelter, the Superfund site is a 128,000-ton pile of smelting wastes containing cyanide and fluoride, which have leached into the underlying soils and groundwater. State environmental regulators continue to monitor that site, funded by a trust set up by Kaiser.

Messmer, of IRG, said a key factor in concluding the deal was discovering the ceilings and roofs of the buildings were not coated with asbestos, which would have upped the cleanup cost by at least $2 million.

“Because of the advantages the site has, having a heavy-industrial (zoning) designation and with lots of available space and extensive rail service from BNSF, we believe this property is unique in the Spokane area,” Messmer said.

Since taking over, IRG has worked with state environmental and regional air-quality agencies, making sure the site work complies with regulations, he said.

Later this month Messmer and other IRG managers will start the process of getting electrical power and water and sewer connections from Avista Utilities and Spokane County.

A Kaiser survivor faces change

Ken Hoff, 61, worked at the Kaiser Mead smelter plant from 1977 until it closed in 2000. He was a pot line laborer, electrician and supervisor in the buildings that made carbon rods for the production of aluminum ingots.

He returned to the site in 2004 when CDC bought the plant. That company hired Hoff to help remove and sell valuable copper and other metals.

After New Mill Capital/IRG took over the property, Hoff became site manager, overseeing the planned demolition and removal of hazardous waste.

Hoff said he’s convinced the long-term goal – to transform the smelter site into a dynamic industrial zone – will succeed. But the job sometimes leads to moments of personal regret.

“It’s pained me dearly to see the old plant shut down and scrapped out,” Hoff said. “Even though the process will mean this (site) could create jobs, it’s hard. It’s hardest to be tearing down some areas where I worked and areas I actually helped build.”

One of his jobs is to find buyers for still-useful or recyclable items; many of the remaining steel girders and supports, for example, are likely headed to China.

Already sold from the site are pieces of industrial machinery, machine shop equipment, tools, office furniture, ladders, old lighting fixtures, transformers, doors and even signs from around the plant.

He’s trying to find a buyer for a huge pile of bricks coated with lead paint.

“I’ll find someone. There’s always someone to buy stuff like that. It just may take some time,” Hoff said.

Brownfields are risky to redevelop

The Mead smelter project is a brownfield site, in the jargon of urban planning. That means it had an industrial use and may have some history of contamination.

A 425-acre parcel of undeveloped land north of the smelter, still owned by Kaiser Aluminum, is considered a greenfield site – open property. Kaiser spokesman Bob Burke said the company will likely look for a developer to take over the property and convert it into a mix of retail and commercial parcels.

Brownfield conversions typically follow the ups and downs of the commercial real estate market, said Robert Colangelo, a Chicago business owner and former editor of a magazine and website dedicated to brownfield activities.

Colangelo said he’s watched some of the projects IRG has taken on, but he’s not familiar with the Mead site. “The IRG owners and partners are very reputable. They have expertise in this area,” he said.

“What matters is how much demand the local area will produce for (the Mead location),” Colangelo said.

Even so, brownfield development is high-risk, he said.

“Brownfield conversions are more risky than traditional real estate development because of their complexity,” he said.

Mike Livingston, a real estate broker representing IRG, believes the Mead site will compete well in Spokane, especially with the Spokane Business & Industrial Park in Spokane Valley.

The Valley park has more than 40 buildings with 92 percent occupancy, according to marketing director Dean Stuart.

Livingston said, “The business park (on Sullivan Road) is out of land and can only offer what already exists.” The Mead site will offer the option of building custom-designed, state-of-the-art manufacturing buildings not available now, he added.

But Mark Pinch, a broker at Spokane’s NAI Black, said he believes the former Kaiser site’s location might work against it, even if the North Spokane Corridor is finished.

Pinch predicts that most large business expansion will occur along the Interstate 90 corridor from Post Falls to the West Plains, rather than in north Spokane County. The lure of inexpensive West Plains property and the airport will be key incentives encouraging that growth, Pinch said.

Joe Tortorelli, a consultant who’s worked on development projects across Spokane County, notes the former smelter site has a critical BNSF rail line for hauling large equipment in and out of the property.

“There really aren’t that many ‘full-service’ heavy industrial zones in the county,” Tortorelli said. “If this project is well-capitalized, it could offer the full package and be a major success.”


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