WILLMAR — As was expected, Block 25, the site of the new Block 25 Lofts apartment project in downtown Willmar, does seem to have environmental issues that developer Lumber One will have to address prior to construction.

"The project may not happen as quickly as we had anticipated," said David Ramstad, Willmar Planning and Development director.

Ramstad updated the Willmar City Council on the project at Monday's meeting. In addition to letting the council know about the possible site contamination, Ramstad was also looking for the council's blessing to continue work on the project's tax increment financing plan.

The council gave its consensus to continue the work, even with the delay caused by the site complications.

"We need to do what we can to improve that piece of property," said Councilor Julie Asmus.

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In an interview with the West Central Tribune on Wednesday, Ramstad said traces of petroleum were found in soil borings from under the public parking lot on the west side of the block. That is in addition to the contamination found several years ago on the old Nelsen Laundry site including a fuel tank leak and contamination from a dry cleaning solvent.

The recent soil borings were taken during a phase one environmental study, and Ramstad said a phase two study will most likely need to be completed to find out exactly what is in the ground and what needs to be done to fix it. Lumber One will also need to work with the Minnesota Pollution Control Agency.

The assessments and testing will cost around $50,000 to $60,000. Possible remediation work, such as soil removal, vapor barriers and ventilation, could run into the hundreds of thousands.

Even with these costs, Ramstad said Lumber One is still planning on doing the project and was aware of the environmental issues of the site.

The tax increment financing district and agreement that is being planned for the project, which is an incentive of building in the Willmar Renaissance Zone, could help Lumber One recoup some of the costs associated with cleaning the site up. The tax increment financing would mean Lumber One would get back around $740,000 in taxes over 15 years.

"The great news, we knew it was a tough site to develop in the first place, and we are going to get the site cleaned up," Ramstad said at Monday's meeting.