Port of Bellingham could sign deal March 31 to start rebuilding waterfront

A view of the Bellingham waterfront with the Granary Building on the left.
A view of the Bellingham waterfront with the Granary Building on the left. THE BELLINGHAM HERALD

The Port of Bellingham Commission could decide Tuesday, March 31, whether to sign what port staff say is a milestone deal to start rebuilding part of the city’s waterfront.

The proposed agreement with Dublin-based Harcourt Developments includes roughly 19 acres at the northwestern corner of a contaminated section of Bellingham waterfront that was once home to the Georgia-Pacific Corp. pulp, chemical and tissue operations that shut down in 2007.

In two special meetings, one starting at 3 p.m. and one at 6 p.m., people will have their last chance to comment on the proposed deal, which can be viewed at portofbellingham.com/524/Waterfront-District.

So far, the port has put a net $23.5 million into roughly 187 acres along the waterfront, which includes the 19 acres in the deal, according to accounting numbers compiled by port staff.

As of the end of February 2015, accounting showed the port had spent more then $54 million on planning, maintenance, design, demolition, insurance, environmental cleanup planning, and program costs. At the same time, it had received more than $30 million back from environmental grants, an insurance policy, leasing some of the land, third-party cleanup payments, and the sale of the Cornwall Beach site to the city.

Port Environmental Director Mike Stoner and Executive Director Rob Fix said the port should start to see more money back on that investment as state Model Toxics Control Act grants and insurance money reimburse cleanup costs, and more parcels are leased or sold, such as those covered in the potential agreement with Harcourt.

“As we move down the road here, that deficit number will go into the black fairly soon, especially as we start to sell property to Harcourt,” Stoner said.

Once the deal is signed, Harcourt will have two weeks to put down $200,000 for the Granary Building, which will need to be redeveloped by 2019. Aside from the Granary and one other building, the schedule of development will be subject to market conditions.

The deal outlines plans for the rest of the roughly 19 acres to be sold in parcels as projects are proposed by Harcourt, at a price of $20 per square foot, an amount port staff say was fair based on appraisals of the contaminated brownfield site. The value per square foot would go up 3 percent per year.

The agreement allows for Harcourt to either lease the land or purchase it through deals financed by the port.

When asked if the deal would help the port at least break even on the waterfront redevelopment, Fix said he couldn’t answer.

“I don’t pretend to know how much that land will be sold for,” Fix said. “I don’t suspect we’re going to make or meet the original forecasts that were done in 2005, in part because of changes in zoning.”

For example, a piece of the waterfront just south of the 19 acres were originally planned to be zoned for mixed use, which would allow for businesses or industries that don’t require being on the waterfront, but that area is actually zoned industrial, which would still allow for offices, storage, public buildings, restaurants, bars and other options. Mixed-use land can be sold for a higher price per square foot, Fix said.

For some who worked for years to plan for redevelopment of the Granary Building, parts of the deal seemed frustrating.

John Blethen, who with James Willson presented a plan to buy the Granary for $225,000 in July 2013, said he was annoyed by what seemed to be a sweetheart deal.

“I can tell you we would have had the building up and running by now, and I can tell you our deal wasn’t contingent on spending more than $6 million on building Granary Avenue,” Blethen said in reference to $6.5 million set aside to build the entrance road into the waterfront site, as laid out in a master waterfront plan signed by the port and city.

“That avenue is basically going to service one owner,” Blethen continued, acknowledging, “I guess I’m just not the beneficiary — it depends on which side of the table you’re sitting on.”

Fix said Blethen would have been offered the same benefits as Harcourt under the master plan finalized in December 2013.

Giving the first major developer the chance to build the entrance to the waterfront site will make for a more consistent product that blends with the rest of the site, Fix said.

“I think it’s a question of should you take $25,000 more to do the Granary as a one-off,” port spokesman Mike Hogan said. “There are tremendous advantages to having Harcourt, that has that experience and investment capital, be engaged for that entire 19 acres. Overall, it outweighed doing the project as a one-off, and it brought more to the table.”

Cat Sieh, a member of Save the Granary, an ad hoc group of citizens who rallied for the building, said she thought it was good to see language in the development agreement that protects and prioritizes the Granary.

“It’s been a long fight to prevent that from being torn down, and a relief to see it off the chopping block,” Sieh said. “I would have liked to have seen a stricter completion deadline than 2019. It seems achievable, seeing as back when the port was looking for developers, we had two ready to go on that building.”

Fix said that regardless of what critics said, he thinks the deal is the best option for the port.

“It’s important for readers (of The Bellingham Herald) to know the port values putting this land back to use,” he said. “That means getting back to work and getting jobs on the properties. Without it, I think we’d be facing a brownfield site with no redevelopment.

“Dollars are a very important consideration ... but it’s certainly not the only factor here,” he continued. “One of the factors is putting the land back to work.”