The city of Albert Lea has the right to hold up to 25 percent of Farmland’s total $89 million insurance payment as the city waits for the company to clean up its fire-damaged plant, City Manager Paul Sparks said.

Friday, January 11, 2002

The city of Albert Lea has the right to hold up to 25 percent of Farmland’s total $89 million insurance payment as the city waits for the company to clean up its fire-damaged plant, City Manager Paul Sparks said.

Sparks said the city would agree to a contract with Farmland that would have the company forfeit $2.5 million in case the company failed to comply with an immediate cleanup the city is demanding. Sparks explained the detail of the insurance-payment process to councilors Thursday.

According to Sparks, the total amount of Farmland’s insurance claim is $89 million. Eight insurance firms are involved.

The insurance company has already paid $5 million for cleanup costs. Now the company is negotiating a claim of $10 million for product loss, he said.

The Sept. 11 attack is part of the reason for the stalling negotiations, Sparks suggested. Six out of the eight insurance firms got caught by a considerable amount of claims incurred by the attack.

State law allows the city to hold up to 25 percent of insurance proceeds for property owners. The city can forfeit the money if the owner does not comply with cleaning up the debris.

Sparks said the city would seek a formal contract with Farmland that stipulates the forfeiture of $2.5 million out of $10 million currently discussed, if the cleanup or rehabilitation of the plant would not be initiated this year.

After the July 8 fire, the city offered Farmland the chance to exchange the old site with new land in the industrial park near I-35 so the company can resume production without a burden for cleaning up. The cleanup cost would be $5 million.

The company originally said that the decision would be announced by early October, but the answer has not been heard so far.

Being tired of waiting, the city started pressing Farmland by demanding immediate cleanup.

The abandoned structure threatens the environment and safety and impedes the city’s environmental study team to conduct a survey, according to the city.

A hearing to discuss the cleanup is scheduled on Monday. Fire Chief Richard Sydnes will make a presentation about the situation of the structure. It is uncertain if Farmland Foods President George Richter is attending the hearing, according to Sparks.

The plant was hit by fire July 8, 2001, and Farmland has said the building is damaged beyond repair.