South St. Paul nabs $1.26M state grant to clean up future FedEx site

South St. Paul nabbed a $1.26 million state grant last month to fund cleanup efforts on a contaminated 36.5-acre site that city officials say will soon bring in dozens of jobs and significant tax revenue.

Once cleaned, plans call for a 270,000-square-foot FedEx distribution center to be built on the parcel near the Mississippi River and Interstate 494. .

The land at 843 Hardman Av. is now home to a nondescript truck service shop and piles of sand and gravel. But its toxic back story — it was once a sewage treatment plant and unauthorized dump — lingers on through its vapors and contaminated soil.

"This is the Super Bowl of dump sites," said County Commissioner Joe Atkins, a South St. Paul native. "But it is going to be a lot better."

The project, one of seven chosen to receive grants from the Department of Employment and Economic Development (DEED), is projected to create 86 new jobs and retain 35 positions when workers transfer from another location. It will add about $500,000 annually to Dakota County's tax base.

"Today it's pretty underutilized," said Ryan Garcia, South St. Paul's economic development manager. "We just thought that there was ultimately a higher and better use than what was there."

The grant money will pay for removal of soil contaminants, including petroleum, and vapor mitigation of methane and other gases, Garcia said.

Scannell plans to buy the property from Danner Inc., which runs a trucking and construction business there, Garcia said.

Danner Inc. bought the land in the 1990s and cleaned up part of it, but environmental regulations have grown stricter over the years, Garcia said.

"There's still significant work to be done," he added.

The project also got $323,700 in Metropolitan Council funds last spring.

DEED officials chose the project for several reasons, including the new jobs and tax revenue it is predicted to create and the site's threat to human health, said Ian Kushner, a DEED project manager.

The agency typically picks efforts that "reflect larger trends in economic development in Minnesota," he said, including a mix of housing, commercial and industrial projects.

"Our program exists because cities and developers often cannot afford to redevelop contaminated sites without financial assistance," Kushner said.

Scannell has been negotiating with the U.S. Army Corps of Engineers over an issue related to a 1930s-era easement the corps has on the property. Garcia said he believes they'll reach an agreement soon. He stressed that the deal between Scannell and FedEx isn't complete and that Danner still owns the property.

The grant will help move things along, Garcia said. "It shows a level of confidence from a number of parties that this is something we can get done."