Washington City Council Chambers

Washington city staff and the owners of a local family farm are at odds over a lease of land near the Washington Regional Airport.

The city has leased about 240 acres of farmland to Reigel Farms, Washington, since 2004. The most recent five-year lease was from Nov. 1, 2014, through Oct. 31.

Bids for a new lease to extend though Oct. 31, 2024, were opened in September. The city received just one bid — from Reigel Farms — for $125 per acre, which was the minimum amount published in the bid packet.

Under the lease the city would receive $30,000 each year. 

John Nilges, public works director, suggested the city reject the bid to determine fair market value of the property.  

He explained that the current lease agreement includes a right of first refusal clause for Reigel Farms that “discouraged” others from bidding on the property.

The clause allows for Reigel Farms to match any higher bid and then award them the lease.

Nilges recommended the city contact the Missouri Farm Bureau to better determine the value of the property and then solicit additional bids, possibly setting a higher minimum bid.

In the information submitted to the council, Nilges noted that if the lease is increased to $175 per acre, the city would receive $42,000 each year — an increase of $12,000.

He further recommended the city immediately seek new bids and prepare an ordinance to award the lease to be voted on at the Oct. 28 council meeting before the current lease ends Oct. 31. There was not an ordinance ready for the council to vote on Monday. 

During a workshop meeting prior to the council meeting, Councilman Jeff Patke questioned why the city should reject the bid at the “11th hour.”

“In my opinion we should leave well enough alone,” he said. 

Patke added that he has spoken with Reigel Farms owners who are seeking a green light to begin planting seed this month. 

“There was never a guarantee — the purchasing of the seed is somewhat a moot point,” Nilges said. “The lease doesn’t begin until Nov. 1.”

Patke then questioned the timing of the bidding process, suggesting the bid should be awarded over the summer so whomever is awarded the lease contract can plan ahead.

“They are expecting to have this 240 acres,” he said. 

Councilman Joe Holtmeier questioned the right of first refusal, asking why other farmers would put in the effort and the cost to prepare the bid.

“Why would they give bond money to bid if they will get locked out anyway?” he asked. 

Councilman Steve Sullentrup recommended a one-year lease under the $125 per acre price until the city can explore its options and determine a fair market value of the land.

“The sooner we get this done, the better off they are going to be and we are going to be,” he said. 

Ultimately, the council agreed to the recommendation by Mark Piontek, city attorney, who suggested the city look at the lease advertisement and review other documents before further discussing the lease. 

“Right now everybody is guessing,” he said. “That way everybody has all of the facts — you are going to get one, at least, or a five-year lease.”

Farmers

During Monday’s council meeting, Kenny Reigel, of Reigel Farms, argued that a delay will put the planting behind schedule.

“We were supposed to get an agreement back on Oct. 1,” he said. “The city is messing up on this whole situation.”

Reigel then asked if the contract was deliberately delayed. 

Patke explained to Reigel that the city is looking for a fair price for the land.

“We have to get fair market value,” he said. “We can renew it for a year, give you the option to plant now — if you don’t, the city has to maintain (the farmland).” 

John Reigel, also with Reigel Farms, said he was under the impression the deal was done and his family would be under lease for the next five years.

“To me, this is the first step to try and kick us out,” he said. 

“I feel we held up our end of the  bargain — it has been 15 years,” John Reigel added.

He further added that the farm grows one-third of its feed for their dairy operation on the city property.

“If we lose this we are so far behind the 8-ball to find feed this late in the season,” John Reigel said. 

City Administrator Darren Lamb stated the city is not trying to kick Reigel Farms off the property, but it is looking to “achieve fair market value.”

Right of Refusal

Kenny Reigel stated that right of first refusal is guaranteed to Reigel Farms under a condemnation settlement contract from 15 years ago.

According to Piontek right of first refusal was never in the settlement agreement, however, it has been included in some, but not all, lease contracts for the property.

“I think other bidders don’t want to bid because of the right of first refusal,” added Lamb. 

Piontek further stated that he was told several years ago by a prominent local attorney that giving right of first refusal is a disadvantage to landowners.

“It is the single worst thing a landowner can do is give right of first refusal,” he said. “My guess is that is why there was only one bid.”