BELLINGHAM - When the Port of Bellingham acquired the Georgia-Pacific Corp. pulp and paper mill site, the potential cost of environmental cleanup was a big, worrisome unknown.
The port's preliminary estimate of that cost was $40.3 million, but nobody knew for sure the extent of contamination from decades of pulp and chemical operations that involved mercury, among other things, or what it would cost to deal with that contamination in a way the Washington Department of Ecology would accept.
So in late 2004, before closing the deal with G-P, port officials arranged the purchase of a complex insurance policy to cover potential overruns.
Eight years later, that looks like a pretty good investment. Port Environmental Director Mike Stoner said cleanup costs will likely total about $102 million, but the insurance policy should enable the port to cover the added cost, partly because payments from the policy can be used as matching money for state cleanup funds.
While the full cleanup of the waterfront and adjoining waters is still years away, there is some good news: Contamination at the northern end of the site around the Granary Building is comparatively minor. Stoner said cleanup of that area could be complete by the end of 2013.
If the city and port can complete master planning and land-use regulations to lay the legal groundwork, the job of recruiting private investment in the waterfront could begin in earnest. Then, actual buildings could go up, but probably not before 2015 or 2016, said Tara Sundin, one of the city's lead planners on waterfront issues.
The city also faces millions in expenses before that day comes. The city must build the streets, sidewalks and parks that will make the industrial ghost town an attractive opportunity for private developers. The city then recoups its costs via property and sales tax revenue the development would generate.
Mayor Kelli Linville said the city has money available to take on some key early projects at the northern end of the site, as well as the Wharf Street roundabout project to smooth the street connection between Cornwall Avenue, Boulevard and State and Forest streets. Details of street projects envisioned as Phase I are:
- The roundabout will cost an estimated $3 million, Money is in hand in the city's street fund, with construction planned for 2013.
- Another $6.5 million in federal grant money is available to build a new street with two names. In keeping with Bellingham tradition, maps show it starting out as Granary Avenue, then veering a bit to the south and becoming Bloedel Avenue, linking up with other new streets called "Commercial Street" (which does not share the alignment of the downtown street of the same name) and Laurel Street (which does.)
- The aforementioned Commercial Street segment has a price tag of $4.4 million.
Port and city staffers have drafted a facilities agreement - still to be reviewed by port commissioners and the City Council - that sets up a complex system for determining when the city will be expected to build early- and late-stage streets, parks and bridges. While the Wharf Street roundabout is slated for 2013, construction of the other projects will depend on the pace of development.
For example, the city's obligation to build Granary and Bloedel avenues is envisioned as beginning no later than Sept. 30, 2017 - but only if the port succeeds in getting a developer to sign the dotted line on a project at the northern end of the waterfront site. Construction of the Commercial Street segment has a similar requirement rather than a fixed date.
Other major street projects have similar development triggers. Port Executive Director Rob Fix said the idea is to help the city avoid "stranded investments," sinking millions into projects but waiting years for private, tax-paying development.
That was always a risk for the city under previous planning concepts that attached dates to each major city investment.
"The city preferred phases based on success of development, rather than a series of years," city planner Sundin said.
Bottom line: Real waterfront development won't begin until people with private investment dollars are on board.
Fix said the port expects to get an early reading of the prospects for that in the next few weeks. The port is already seeking letters of interest from developers who want to get involved in the 10-acre parcel closest to downtown, in and around the Granary.
"I think there's a high level of interest in that section of the development," Fix said.
The port is working with Heartland LLC of Seattle, under a $75,000 contract, to help recruit developers for waterfront projects. Heartland principal Matt Anderson said the prospects will be good if the port and city can provide developers with a high level of certainty about environmental cleanup, land-use regulations and street construction.
"Those are the kinds of things that will set this project apart," Anderson said. "This is going to be a very attractive offering for a variety of different types of developers. ... When the private market sees public agencies working together, that's when they really do start to perk up."
Anderson sees potential for construction of apartments, offices, retail and perhaps a hotel.
While Mayor Linville's team has reached agreement with Fix and port staff on key planning and street construction issues, those agreements still face public scrutiny and review by port commissioners and City Council in 2013.
Not long after the port acquired the G-P site, former Port Executive Director Jim Darling predicted that the planning work would be complete by the end of 2006. But hopes for speedy redevelopment evaporated quickly when the real estate boom collapsed and port and city officials found themselves at a near-impasse on planning issues.
Linville acknowledged public frustration but said the port and city are now in a position to begin to deliver. Although major new developments are still a few years in the future, Linville and port officials hope to be able to offer new waterfront access opportunities by the end of 2013 - most notably a walkway along the breakwater of the old G-P treatment lagoon that the port still hopes to convert to a marina someday.
"I don't like to promise things I don't think I can do," Linville said. "This set of documents promises things I think we can do."
Reach JOHN STARK at email@example.com or call 715-2274.