SALE OF PROXIMITY PARK IN OTTAWA, KANSAS

GROUNDBREAKING AT PROXIMITY PARK

City of Ottawa Authorizes Sale and Purchase Agreement with Lightfield Energy for Proximity Park Development

Ottawa, Kansas – December 18, 2024 – The City of Ottawa today authorized a Purchase and Sale Agreement with Lightfield Energy of Nevada for the sale of approximately 300 acres in Proximity Park. The industrial park is a strategic development zone designed to attract economic growth and innovation to the community. The agreement, approved by the City Commission, represents a significant step forward in advancing the city’s economic development goals.

Lightfield has announced they intend to construct a natural gas fueled electrical generation facility, which will serve an onsite technology campus that includes data processing facilities for AI technology support in a variety of applications.

“This agreement demonstrates Ottawa’s commitment to bring well-paying jobs, attract investment and create opportunities for economic growth,” said Mayor Emily Allen. “The sale of Proximity Park represents a unique opportunity for our community be a part of the innovative growth that’ happening in our region, while also improving the economic opportunities available to the people of Ottawa and the surrounding area.”

Under the terms of the agreement, Lightfield will purchase the property for $5.0 million. The agreement also requires the purchaser to pay taxes from day one with a cap on tax abatement incentives at no more than 75% for no more than 10 years. The City and Lightfield will now begin negotiating the incentives package and a development agreement that will connect those incentives to the construction of the proposed project.

The City of Ottawa will work closely with Lightfield throughout the development process to ensure the project is completed successfully.

 Frequently Asked Questions

Q: What is Proximity Park? 

A: Proximity Park is approximately 300 acres north of Kingman Road and west of Montana Road just south of I-35. The land was acquired about ten years ago for the purpose of creating a site for future industrial development to grow Ottawa’s tax base and provide opportunities for more jobs for the area. The project was a joint venture between Franklin County and the City of Ottawa and was supported by voters through the adoption of a sales tax in 2015 to extend infrastructure and make the park attractive to a buyer. 

Q: Why is it being sold? 

A: Proximity Park has been listed for sale for ten years. Numerous companies have looked at the site over that period and some have come close to making an offer, however they did not. Now, the City of Ottawa has an interested buyer who wants to develop the site, build buildings, and hire employees.  

Q: Who is the buyer?  

A: The buyer is Lightfield Energy, LLC, a Nevada limited liability company.   

Q: What do they want to use the site for? 

A: The buyers want to create a data campus that will house data processing facilities to meet the demand for AI products such as those used in cell phones, home computers, and by large companies.  

Q: Why is an energy company considering this project?  

A: Data processing facilities use a large amount of power. Recently companies like Google and Microsoft have developed plans to build facilities with onsite power generation as they are unable to effectively purchase power from the surrounding grid. The City and surrounding utilities cannot generate and sell enough power to meet the demand for data processing centers in this project, so this company is planning to generate power onsite to serve their facilities, much like the companies above.  

Q: How will they generate power?  

A: Lightfield proposes to build a natural gas power plant to generate the majority of their power at the site. These turbines are similar to ones the City uses at its power plant on Second Street. They may also make use of other generation and storage as can any other owner in the City, but they are not generating power to sell or transmit offsite.   

Q: Is this company connected to the recent attempts to build a solar farm in Franklin County? 

A: No, they are not. This company is not connected with any recent attempts to build energy facilities in the county and this project is not connected to, nor dependent on the approval of any other project.  

Q: Why didn’t the voters decide who would buy Proximity Park? 

A: The law does not provide for a public vote each time land is sold. In the past several years, the City has sold several parcels of land, including the remainder of the Coves subdivision on the north side of town. The people’s elected representatives, the City Commission, make the decision on when and to whom property is sold.  

Q: Will the company have to pay taxes? 

A: Yes. The contract specifies that the project is not eligible for a 100% tax abatement. This means the purchaser will pay taxes from day 1 of their ownership. They may apply for no more than a 75% abatement and that can be no longer than 10 years in duration.  

Q: How many jobs could this project bring? 

A: The proposed project is projected to bring over 100 permanent jobs in the first phase and closer to 200-300 at full build-out. Those jobs range from construction jobs in the beginning, to ongoing maintenance and security jobs, to power plant jobs, to computer engineering and technology jobs. All proposed jobs are to be competitive with or exceed local median wages.  

Q: What safeguards exist to ensure the project is built as proposed?  

A: The next step in the process will require the developer to apply for economic development incentives with the City and the State of Kansas. Those incentives require the execution of a development agreement that contains all the terms of the deal. Those terms include what the project is and what the developer will build. If the developer does not build the project they promised, then the incentives are not provided. The City approved this sale because the project itself will generate jobs for our community and investment to help expand our tax base and keep costs down. If the proposed project is changed, the sale can be cancelled, and no incentives would be available. The City also negotiated a provision that it can block the assignment of the purchase contract if the developer seeks to assign its rights to any other party that is not building data processing facilities.  

Q: Did the city pass on Kubota?  

In late 2014 Kubota looked to locate a manufacturing facility in the Midwest. Representatives from the City, County, and Franklin County Development Council all worked to pitch the community to Kubota. Kubota reps visited the community and were impressed with Proximity Park, even though it was not fully built out. Ottawa was one of the finalists. Initial indications were that Kubota may want to purchase the entire acreage of Proximity Park, and such a sale was welcomed by those working on behalf of the City and County. 

The company’s representatives were consistent that access to the intermodal was an important requirement for their operation. They went silent shortly after their site visit and later that year announced they were leasing warehouse space in Edgerton nearer to the intermodal.  

Kubota then said they were delaying the manufacturing facility for at least a year. Their next announcement was that they were building the facility in Edgerton, near their parts warehouse and closer to the intermodal.  

Q: What are the economics of Proximity Park?  

Proximity Park was a joint venture between the City and the County. The park was acquired because Ottawa had missed out on the Hill’s Pet Nutrition plant that ended up in Emporia. They attempted to acquire land near the north industrial park, but the owners were not interested in selling and the city was unwilling to use eminent domain to acquire the land.  

The Franklin County Development Council created a land committee made up of some of its members and engineers. They reviewed over 100 parcels in and around the community. The City and County provided technical assistance with questions about utility availability and road access.  

The land committee narrowed possible sites until there was one clear best choice, the land that would become Proximity Park.  

The city hired outside counsel to handle negotiations with the landowners and the city and county split the costs of acquisition.  

Both elected boards committed to adding utilities and roads to make the park “shovel ready” for development. The voters of the city approved a half cent sales tax to fund utility extensions. The county used bonds to install the roads. The project was designed to extend utilities and design roads that would open up additional acres for development. The final plan opened up 1,600 plus acres for future development. 

The goal was to use Proximity Park to prime the pump of development. The first sale would be the publicly owned land, but additional development on privately owned land would follow without the need for government to purchase land. 

The acquisition of Proximity Park, the expansion of utilities and roads to make the 1,600 acres ready for development cost $31 million, or about $19,000 per acre. Using that number, Proximity Park would be predicted to sell for $5.8 million. The contract for the sale of the Park has a purchase price of $5 million for 300 acres. Note that not all that land is capable of supporting building, some of it is flood plain.  

Why would the City sell Proximity Park for less than $5.8 million? 

First, the city is getting very close to recouping what both it and the county put in per developable acre on this portion of the park, with 1,300 additional acres remaining available for future development. 

Second, the community does not just receive the purchase price of the land like a private seller would. It will also receive revenues from utilities, sales tax from construction work, and property taxes every year the facility is in operation.  

Based on projections for the initial 10 years of the project, it will generate $10 to $12 million in property taxes for the city, county and school district. After that, it is projected to generate between $7 and $8 million per year in property taxes for all entities. Those future revenues more than make up for sale price, and do not include the potential for revenue from the full development of the remaining 1,300 acres now capable of supporting development.  

Q: When does the current sales tax end? 

Voters approved the half-cent sales tax in 2015, and it took effect in mid-2016. It is a ten-year sales tax that will expire next year. The city commission cannot legally terminate the tax early.