From our archive: Port OKs G-P waterfront deal; 137-acre land transfer sets stage for development

Port of Bellingham Commissioner Scott Walker leads a toast after Port and Georgia-Pacific officials signed an agreement to turn the Georgia-Pacific property over to the Port on Jan. 20, 2005.
Port of Bellingham Commissioner Scott Walker leads a toast after Port and Georgia-Pacific officials signed an agreement to turn the Georgia-Pacific property over to the Port on Jan. 20, 2005. THE BELLINGHAM HERALD

The Port of Bellingham's three commissioners unanimously agreed Tuesday, Jan. 19 to take over Georgia-Pacific West Inc.'s waterfront real estate and the environmental cleanup responsibilities that go with it.

Port Commission President Doug Smith said the transaction may be the most important one in the history of Whatcom County, at least since the 19th century territorial treaty in which native peoples ceded control of most of the county's land.

In brief remarks before the vote, Lummi Tribal Chairman Darrell Hillaire reminded commissioners that the property they were poised to acquire had been the Lummi Nation's homeland before that treaty was signed. He said the Lummis were prepared to be part of a communitywide effort to reclaim the site for future generations.

"It's important to us, and that's why we're here," Hillaire said.

Port Commissioner Scott Walker said commissioners set the stage for the deal in May when they agreed to start condemnation proceedings on G-P's wastewater treatment lagoon, rather than see the company proceed with its plans to use the lagoon as a disposal site for tainted sediments dredged from the adjacent Whatcom Waterway.

About a month later, G-P offered to hand over all its bayside real estate if the port would take on the cleanup work.

Seven months of study and arduous negotiation followed in the wake of G-P's offer, Walker said. But Tuesday's final decision was an easy one because of the tremendous potential that waterfront redevelopment holds for the community, and because of the community's show of support for the project.

"The input from the majority is clear," Walker said. "They think that this deal ought to be done."

Port attorney Frank Chmelik presented the formal sales agreement to the commissioners in a binder about five inches thick.

"Very similar to when you buy a house," he joked. "A few more details."

Carol Stephens, G-P's senior director of corporate real estate, has signed the deal on behalf of the corporation. The formal closing is scheduled for Thursday.

The deal's approval sets the stage for a long-term redevelopment project intended to transform much of the mostly idle industrial site into a new bayside neighborhood with residences, shops, parks and offices. G-P's treatment lagoon is envisioned as a new marina surrounded by a pedestrian promenade, while the G-P tissue mill and warehouse would continue present operations.

In exchange for accepting the 137 acres at no cost, the port takes on the task of cleaning up the toxic legacy of decades of industrial operations at the site, mostly in the form of mercury contamination close to the mill site in bay sediments and in soil. The total cost of the cleanup plan is estimated at $64 million, including $40.3 million for the mill site and adjacent underwater sediments and another $23.5 million to dredge and dispose of tainted sediments inside the lagoon.

Port officials have assurances from the Washington Department of Ecology that state toxic cleanup funds, raised through a tax on industrial pollutants, will be available to pay half those costs. They also expect future moorage fees to cover the costs of cleaning up and developing the marina.

The port expects to recoup its other costs by eventual resale of much of the property to private developers.

G-P has agreed to pay a $5 million insurance premium to cover cleanup cost overruns over the next 25 years. The port has agreed to allow G-P to continue operating its tissue mill and warehouse under a lease agreement with the port.

Walker acknowledged some risk in proceeding with the complex deal, but he said the insurance policy and the months of environmental study had reduced the risk as much as possible.

"We've spent $1 million in due diligence in the last six months," Walker said. "We've drilled holes and reviewed records."

With the port in charge of the project, the cleanup will be faster and more thorough than it likely would have been under the minimum legal requirements that would have applied to a G-P-controlled cleanup process, he said.

Completion of cleanup and redevelopment plans will take years, but port Executive Director Jim Darling said officials will be looking to get some projects off the ground as quickly as possible. He mentioned redevelopment of a now vacant old building at the intersection of Roeder and Central avenues that once was a grain storage facility and was later used by G-P for tissue storage.