041002 Federal Beef Processors Sale Faces Hurdles

Rapid City, IA - The would-be buyers of the Federal Beef Processors property have come forward. Businessmen Mike Tennyson of Custer and Pat Tlustos of Rapid City say they envision a combination of office commercial and residential uses for the 20-acre site.

However, many nettlesome issues must be resolved before they will know whether any project at all is feasible, the developers said.

Last month, Tennyson and Tlustos negotiated an option to buy the former packing plant property. The option expires Dec. 1. By then, they will either close the sale or walk away from it.

A spectacular fire in January 2002 closed the meatpacking plant forever and put 400 people out of work.

There has been little cleanup at the site since the fire. The plant's owner, GFI King's Deluxe Foods of Minneapolis, faces more than 900 municipal citations for maintaining a public nuisance. The city also has a civil suit pending to force GFI to clean up the mess.

Under the terms of the deal, Tennyson and Tlustos would be responsible for all site cleanup. The equipment that survived the fire should be gone by Dec. 1. Auctioneer Martin Jurisch has scheduled a huge Nov. 4 auction of all equipment and fixtures.

Before the land sale closes, a minefield of issues - starting with environmental, zoning, land-use, water and sewer, flood plain and street access issues, and ending with marketing and financing - must all be resolved, Tlustos said.

After decades as an industrial site, there could be a number of hidden and costly environmental problems. A formal environmental assessment is planned, he said.

Tlustos said it is too soon to say what type of housing the residential part of the project would involve. Because of the potentially high development costs, he said it would probably be a higher-density use, such as townhouses and apartments.

"The project is not without its challenges, and it will take a great deal of due diligence for us to decide if we will ultimately move forward with closing this purchase," Tennyson said in a news release. "But sometimes, you find opportunities in strange places. We enjoy new challenges and are very hopeful that we can bring this project to fruition."

In some ways, the property is a jewel: 20 acres of partly wooded hillside flanked by Rapid Creek, the Executive Golf Course and Cowboy Hill. It is a 10-minute walk from downtown, and much of it offers a view of the Rapid City skyline.

"It's a gorgeous setting that will enhance any development that takes place there. We will make every effort to capitalize on these unique attributes to develop a project that that will enrich the entire community," Tennyson wrote.

His partner, however, was less enthusiastic. "I think it's an interesting project, but from my side of the fence, when I'm forced to look at the numbers, I'm real hesitant to get very excited because I know the hurdles we have to get over," Tlustos said.

"It's high-priced dirt, especially when you lay in the cost of cleanup and the potential environmental problems. I'm not ready to jump up and down and click my heels."

Tennyson and Tlustos are old hands at land development in the Rapid City area. They have worked together on a number of residential, commercial and apartment projects in the Rapid City area, including Vista Pointe Apartments and the Minnesota Ridge subdivision.

Two other investors, whom they have not named, will be brought in if the project moves to the development stage.

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