RACER Trust


The RACER Trust was created in March 2011 by a consent decree in the United States Bankruptcy Court for the Southern District of New York to clean up and position for redevelopment certain real properties owned by the former General Motors Corporation and various GMC affiliates at the time of GMC's bankruptcy in 2009.
Through its bankruptcy proceeding, GMC became known as Motors Liquidation Company and has since been effectively dissolved. Before its dissolution, MLC was carved into five separate trusts; the first to settle the claims of unsecured creditors ; the second to manage, perform environmental activities at, and ultimately dispose of certain remaining MLC real and personal property assets; the third to manage asbestos-related claims ; the fourth for litigation claims ; and the fifth for general unresolved GMC matters.
At its inception, RACER's portfolio included properties at 89 locations in 14 states, comprising 358 individual parcels and more than 7,000 acres of primarily industrial land, making RACER one of the largest holders of industrial property in the United States. When it was formed, RACER was the largest environmental response and remediation trust in U.S. history.
RACER is headquartered in Detroit, Michigan. Its administrative trustee is EPLET, LLC, the managing member of which is Elliott P. Laws, a former assistant administrator of the U.S. Environmental Protection Agency's Office of Solid Waste and Emergency Response and a partner in the law firm Crowell & Moring. The Bankruptcy Court appointed EPLET, LLC to a five-year term as administrative trustee when RACER was established in 2011; EPLET, LLC was then reappointed to a second term in 2016 and a third term in 2021.
The Settlement Agreement assigns RACER two general roles regarding the former GMC properties in the RACER portfolio. First, RACER manages these properties while under RACER ownership and performs certain environmental cleanup of them where needed, even in some cases after RACER is no longer the owner. Second, RACER seeks to sell or transfer the properties for productive or beneficial reuse.
RACER is not a government entity but rather an independent trust with the United States of America as its sole beneficiary.

Background

On June 1, 2009, General Motors Corporation filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York. On October 9, 2009, Remediation and Liability Management Company, Inc. and Environmental Corporate Remediation Company, Inc. each filed voluntary petitions for relief under Chapter 11.
On July 5, 2009, the bankruptcy court approved the sale of the old GMC's good assets to a new General Motors Company. Following the sale of assets, the old GMC was renamed Motors Liquidation Company. The new GM did not purchase all plant locations, and most that remained with MLC were transferred to the RACER Trust for environmental remediation in preparation for sale or transfer.
Parties to the consent decree and settlement agreement that established the RACER Trust included MLC, REALM, and ENCORE ; the United States of America; the states of Delaware, Illinois, Indiana, Kansas, Michigan, Missouri, New Jersey, New York, Ohio, Virginia and Wisconsin; the Louisiana Department of Environmental Quality, the Massachusetts Department of Environmental Protection; and the Department of Environmental Protection for the Commonwealth of Pennsylvania ; the Saint Regis Mohawk Tribe; and EPLET, LLC, in its capacity as administrative trustee.

Properties

MLC's portfolio included properties at 89 locations in 14 U.S. states. These properties totaled more than of land and nearly of structural area. By the time MLC's assets were transferred to RACER Trust, MLC had sold six properties outright and a portion of a seventh. While RACER Trust was conveyed the remaining properties, it was transferred the environmental cleanup and monitoring responsibilities of all properties that required environmental remediation and long-term monitoring, regardless of whether the property had changed ownership. Sixty of the properties carried environmental obligations, including four sold by MLC prior to RACER Trust's creation.

Environmental mission

RACER Trust is responsible for conducting safe, effective cleanups of legacy environmental contamination resulting from previous operations at 60 former GM locations. The cleanups are conducted with the approval and oversight of state and federal regulatory agencies and funded by the principal and investment income from nearly $500 million that RACER received from the U.S. Department of the Treasury at the time of RACER's establishment. RACER's goal is to obtain "No Further Action" letters or other such instruments of completion from responsible regulatory agencies for all locations where cleanups were required.
To the extent possible, RACER coordinates its cleanups to accommodate the interests of buyers or end users who seek to invest in new industrial or commercial development and job creation. In most cases, RACER properties can be sold for new uses even before environmental cleanups are started or completed, assuming RACER is guaranteed continuing access to the properties to conduct cleanup work.
Budgets for each cleanup were incorporated into the settlement agreement that established RACER Trust. In cases where the established budget is insufficient, RACER Trust has access to supplemental funding with the approval of the signatories to the settlement agreement.

Redevelopment mission

RACER begins the redevelopment process for new job-creating uses by meeting with local elected officials, community leaders and economic development organizations, with a goal of understanding the local community's common vision for the optimal re-use of each location. Based on this common vision, RACER determines how best to market the property for sale to prospective buyers. Following these initial steps, RACER published detailed marketing brochures and documents describing the terms for purchase, formally opening the marketing process.
Offers for purchase are evaluated by RACER against six criteria set forth in the Settlement Agreement that resulted in RACER's creation. RACER also may consider additional factors, in its sole discretion, when assessing whether these criteria have been best satisfied by a particular offer. While purchase price will be evaluated, RACER also must consider each offer's ability to create jobs and generate new economic opportunity in the communities hurt by the GM bankruptcy.
RACER strongly prefers buyers who have a specific plan to create new jobs in those properties while reusing, improving and expanding existing buildings, rather than buyers who intend to dismantle buildings and sell components of the properties they have purchased.
Proceeds from property sales or leases are used to pay so-called holding costs at RACER sites, including the property taxes RACER pays on these properties, and maintenance, insurance and security expenses. Proceeds from the sale or lease of RACER properties are transferred to RACER's Administrative Funding Account, from which RACER pays its day-to-day expenses. RACER is self-sustaining, and the anticipated proceeds from the sale or lease of properties were factored into the ongoing operations of RACER at the time of its creation. Thus, donation of property as a redevelopment strategy is precluded.
RACER does not invest directly in redevelopment or otherwise pay third-party expenses. RACER invests in local communities by maintaining properties in a marketable condition, paying property taxes and acting as an economic development partner in pursuit of new investment and job creation.

Sales criteria

RACER is obligated by terms of the Settlement Agreement to sell its properties at prices that approximate fair market value and that take into consideration the jobs and other economic benefits new projects can bring to auto communities hurt by the GM bankruptcy.
The Settlement Agreement described the criteria that RACER, at a minimum, must consider when selling properties. These criteria include:
  1. Whether the purchase price is sufficient
  2. The potential for job creation in the affected community and the state
  3. Increases in tax revenue or other benefits, like the reduction of blight, to the community, state or Tribe
  4. Avoiding an unanticipated increase in costs for the environmental cleanup
  5. The views of the local communities, the Tribe or the state
  6. The reputation and credibility of the prospective purchaser.
The Settlement Agreement does not require any particular weighting of the factors. Although the effects of a proposed sale on the states and localities are to be considered — and are considered — by RACER, these entities are not beneficiaries of RACER. Its sole beneficiary is the United States Government.

Notable sales

Moraine, Ohio

RACER sold two of its properties, Moraine Industrial Land and Moraine Assembly Plant, to Industrial Realty Group in June 2011. The adjacent sites totaled more than 3.3 million square feet of factory space on 379 acres of land in Moraine and Kettering, Ohio. In one of the largest international deals in Ohio's history, Fuyao Glass America purchased 1.5 million square feet of manufacturing space from IRG. The company, now the largest auto glass manufacturer in the world, supplies customers such as General Motors, Ford, and Honda. The plant also serves after-market glass suppliers, which includes companies such as Safelite AutoGlass.
Fuyao originally pledged $230 million in investment and the creation of 800 jobs. One year later this jumped to $360 million in investment and 1,550 jobs. One year after that, Fuyao announced its labor need had risen to a total of 2,400 workers at this facility. A total of 622 temporary construction jobs also were created. In July 2016, Fuyao announced it is leasing an additional 241,000 square feet of the plant in a 15-year agreement with IRG. Fuyao's chairman, Cho Tak Wong, said it expects to have more than 3,000 employees at this site sometime in the future. IRG leases portions of the sites to other auto- and non-auto related manufacturers.