Waterfront Marina Study Reflects Port’s Heavy Hand

Wendy Harris is a retiree who comments on development, mitigation and environmental impacts.

Two weeks before the Bellingham city council and the port commission approved the Waterfront District Sub Area Plan,1 allegations were made that the port tampered with data regarding development costs for its preferred waterfront marina site. Despite the seriousness of these allegations, supported by credible evidence, the city council and the port commission dutifully moved forward under the short schedule created by the city and port administration, and the waterfront plan was approved.

This issue was first raised on November 18, 2013, when the Northwest Citizen, a local citizen blog, published an article by Doug Karlberg. The article asserts that the results of a 2004 survey of six potential marina sites, used to justify the port purchase of Georgia-Pacific (G-P) property, were rigged. Karlberg claimed that the report results were adjusted to make the Aerated Stabilization Basin (ASB) the least expensive, and therefore, the favored marina site.2

The marina had a long history of controversy predating Karlberg’s claim. It was believed by many that the port purchased G-P primarily to develop a marina, and derailed a protracted multi-agency/stakeholder negotiation that would have resulted in a higher standard of cleanup than what is currently proposed.

Against strong public objection, a marina was included in every version of the waterfront plan. As part of an environmental review of the waterfront, it was also included in each alternative development proposal, including, most inappropriately, a “no action alternative.” There was strong public advocacy to utilize the ASB for other purposes, including stormwater management, a hazardous waste repository, a public park and a habitat restoration area.

It was not unreasonable, therefore, for Bob Burr, former city council candidate, and other members of the public, to ask the city council and port commission to address the Karlberg allegations before enacting the waterfront plan. Instead, the port was never held accountable, at least not publicly.

About two weeks after plan enactment, Mayor Linville sent an email to Bob Burr, attaching a copy of an internal port memo dated December 11, 2013, subsequent to the date the waterfront plan was approved. The memo, from Mike Stoner, environmental director, to Rob Fix, port director, was drafted specifically to address the Northwest Citizen article, so it is troubling that it was never released to the general public.

The memo prepared by the port contains justification, but lacked credibility. The memo can be found at http://nwcitizen.com/pdfs/2013/NWCitizenArticle-memo-response12-11-13.pdf.

The “Smoking Gun” Discrepancy

The results of the 2004 marina site survey were released to the public. The report listed the ASB as the least expensive site for marina development. Karlberg exposed the fact that an Excel Spreadsheet was embedded within the report. The Excel figures increased the cost of ASB development by $21.5 million dollars, making it the most expensive site to develop.

The port admits that “it is clear that there were a number of significant changes made to the [consultant’s] report between the client review draft and the final work product.” 3 But the port denies that it improperly influenced the marina survey results. It alleges that the adjustments were the result of the consultant’s inaccurate conclusions.

The Port Review Process

According to the memo, the port commonly requires its consultants to provide a draft of their work product before the final report is issued. Stoner states that the marina report followed the port’s standard review process, intended to create “a high quality and usable product,” and that Karlberg does not understand this process.

It is alleged that the process exists because “consultants want to make sure that the assumptions in their work product are accurate.” And the port wants to make sure that “the consultant deliverable is consistent with the scope of work, and that the conclusions are based upon accurate and complete data.” Here is the problem: assumptions come at the beginning of a project and conclusions come at the end of a project. The port is asserting that they are handled together as part of the same review process.

A review of the consultant’s work plan proposal is entirely proper. It is in the interest of both parties to ensure that the contract terms are clear, and that the consultant is working from valid assumptions and addressing the relevant issues. But this is something that would occur at the beginning of the contract, before the consultant begins the project analysis.

The review in this case occurred at the end of the process, after the consultant completed his analysis and provided his conclusions. The timing of this review suggests less of a confirmation of the consultant’s work plan and more of a modification of the consultant’s results.

Dredging

Mr. Stoner states that at the time of the 2004 consultant report, Georgia Pacific was responsible for the cost of site remediation under the Model Toxic Control Act and its National Pollutant Discharge Elimination System (NPDES) stormwater permit, and that this cost included dredging the ASB. Therefore, it was “assumed” that the ASB would be acquired after GP ceased operation and the ASB was fully cleaned. The evidence to support this claim is a “very public discussion under the multi-agency Bellingham Bay Demonstration Pilot.”

According to the port’s memo, the consultant did not understand the assumptions so apparent to the port, and “incorrectly” attributed the dredging costs to the port. After the port identified the error, the consultant made a $23 million adjustment to the Excel schedule and revised the final report to reflect this correction.

Although the consultant changed the cost estimate for the dredging, he does not adopt the same facts as the port. The final report, attached to the port memo, does not reflect the port’s preposterous claim that “public discussion” created a multimillion dollar liability for GP. Instead, the report notes that, pursuant to the Bellingham Bay Pilot Demonstration Project, “the extent and cleanup in the ASB and adjacent waterway areas, along with the cost and funding issues, are still being defined.”

While the consultant attributes cleanup costs to the Bellingham Bay Pilot project, he never specifically states that all of the ASB dredging is attributable to cleanup. For example, the report indicates that 370,000 cubic yards of material would need to be dredged from the basin floor for a marina and that other dredging and disposal will be required (depending on the marina concept selected) to create an access channel to the ASB.

Finally, the consultant does not share the port’s assumption that the ASB would be fully cleaned before purchase (something that has still not happened 10 years after port purchase). The final report states that “the process of remediating the ASB site is tied to discontinuing its use by Georgia Pacific and the potential coordination of its shutdown process with the Bellingham Bay project.”

Property Acquisition

Mr. Stoner also asserts that the property acquisition costs were revised to reflect the fact that the port would be purchasing the ASB property at fair market value after GP cleaned it up. It is never explained why the consultant had incorrect information regarding this matter.

In contrast, the consultant’s report indicates that land acquisition negotiations and agreements were “still being clarified.” The consultant notes that “for the purpose of this survey, it is assumed that the port would acquire the site at the recently appraised value of $0.65 per square foot...” This strained language does not support the port’s position. Instead, it reflects assumptions, pursuant to port directive, that are applicable only to the marina survey.

Finally, the port memo covers only two issues, the dredging and the property acquisition, which accounts for only part of the cost adjustments made between the consultant’s conclusions and the final report. About six million dollars in adjustments still need to be explained.

Summary

The explanation of marina site cost adjustments provided by the port is not credible. The review of facts and assumptions occurred too late in the review process and is not supported by the consultant’s report. The explanation was never officially released to the public and was provided only after the city and port enacted a waterfront plan that included the marina. The city council and the port commission failed in their public responsibility by approving the waterfront plan without an open review and resolution of this matter.

1. The Bellingham City Council approved the waterfront plan on December 2, 2013 and the port commission approved the waterfront plan on December 3, 2013.

2. Smoking Gun, Fraud and Deception, November 18, 2013 by Doug Karlberg, posted on Northwest Citizen at http://www.nwcitizen.com/entry/smoking-gun-fraud-and-deception.

3. A copy of the port’s memorandum is available at http://nwcitizen.com/pdfs/2013/NWCitizenArticle-memo-response12-11-13.pdf