A Dubuque-based furniture maker will assume responsibility of cleaning up and marketing its former plant site after pulling out of a redevelopment agreement with local entities.
Faced with a sizable environmental remediation cost and the loss of a planned tax benefit, Flexsteel Industries Inc. leaders have decided to retain and redevelop the property at 3200 Jackson St., according to local officials.
Dubuque City Council members will meet at 6 p.m. Monday, Oct. 7, to consider terminating the redevelopment agreement with Flexsteel. The meeting is set for the Historic Federal Building, 350 W. Sixth St.
The company recently closed operations at its aging facility on Jackson Street and invested $28 million in a new facility off Seippel Road in Dubuque.
Flexsteel has manufactured furniture at the Jackson Street property since 1936. Prior to that, the property was home to a battery factory and is contaminated from a century’s worth of industrial use, according to city officials.
The company had agreed to gift the 43-acre site to the nonprofit Dubuque Initiatives, and about $6.3 million was deposited into two escrow accounts for demolition and environmental cleanup.
About $1 million came from the Iowa Economic Development Authority, and $2.6 million from Flexsteel. The city would contribute $660,000, and the county was to pay up to $2 million over seven years.
By pulling out of the agreement, the city, county and state will be released from their pledged financial assistance of roughly $3 million for redevelopment. The $660,000 deposited by the city and $600,000 deposited by the county into escrow will be returned, Dubuque City Manager Mike Van Millligen wrote in a memo to council members.
The agreement sought to cap Flexsteel’s liability for building demolition and environmental remediation, which would have been managed by Dubuque Initiatives. The quasi-governmental nonprofit of city officials and Dubuque business leaders also would have overseen marketing of the site for commercial and light-industrial development.
“It’s a case of the unknown of their financial obligation of environmental remediation of the site,” Council Member Brett Shaw said, noting Flexsteel is responsible for cleaning up any contaminants below the soil. “They had a financially substantial stake in the game, and they ... ultimately wanted more control over redevelopment of the property.”
No specific development plans have been proposed, and Dubuque Initiatives did not have thoughts on who they would bring to the site, said Shaw, also a member of the Dubuque Initiatives board.
“Frankly, I was a bit confused and surprised by Flexsteel’s decision,” Shaw said. “This is not their core business and not necessarily their wheelhouse to manage a (contaminated) reclamation project. At the same time, they’re putting a sizable chunk of capital into something that’s tied up in this land.”
Shaw, though, questions how soon the site would be developed by Flexsteel as opposed to Dubuque Initiatives.
“(By) handing that over, you lose control from a timing perspective,” Shaw said. “But it alleviates a financial burden for the city, so it’s a trade-off. Whatever their plans may be, if they develop it themselves or sell it off, I would think they would want to do that as quickly as possible.”
Flexsteel CEO Jerry Dittmer did not return multiple messages Friday seeking comment for this story.
Dubuque Initiatives board President Doug Horstmann and board member Rick Dickinson, president and CEO of Greater Dubuque Development Corp., declined to provide comment for this story.