CHAPEL HILL — The town has paid downtown developers $170,000 to help with the cost of cleaning up groundwater contamination at the 140 West Franklin project site.
The Town Council approved the settlement in a 6-2 vote Nov. 18, records show. Council members Matt Czajkowski and Lee Storrow voted against settling with Florida-based Ram Development Co. and 140 West Franklin LLC.
Storrow said the council’s biggest concern was avoiding a potentially expensive lawsuit. It was a unique situation, and every council member made “an appropriate and thoughtful decision,” he said.
“It was a difficult decision, and I thought (the town’s case had) merits. We had a strong case for settling, but I would have preferred a better settlement for the town,” he said.
The final amount, negotiated by Town Attorney Ralph Karpinos, was $20,000 more than town attorneys called a “reasonable settlement” of $140,000 to $150,000 in a Nov. 11 report.
The payment is in addition to roughly $312,000 the town paid to remove soil contaminated by at least two gas stations in the area prior to construction. 140 West Franklin LLC is leasing the town-own land for $1 a year for 99 years.
The developers will be responsible for future expenses and liability, Karpinos said.
According to a Feb. 5 report, a significant amount of water collected in an excavation pit at the construction site in 2011, where it was contaminated with “petroleum substances, solvents and other hazardous substances.”
The developer pumped out the water and had it treated and disposed off-site. The state also requires the developer to test groundwater at the site and operate a treatment system for three years.
The total cost of cleanup and maintenance is $410,281, Karpinos reported.
Developers wanted the town to pick up the whole tab, saying a 2007 Development Agreement makes the town responsible for any contaminants at the site. Town attorneys argued the developers are responsible under the agreement and a related ground lease, because the contaminants showed up after Ram took control of the land.
A report on the contamination was expected soon, Karpinos said in a February memo to the council.
Town attorneys and Ram representatives reached the deal following several months of talks. Both sides knew there would be “considerable cost and expense” if the dispute went to court, Karpinos said.