PORT ANGELES —The Port Angeles City Council, facing a balloon payment of $1 million in 2021, agreed last week on terms for selling a prime downtown parcel to the Lower Elwha Klallam Tribe for $950,000 —the deal includes $300,000 cash and $650,000 in credit — so the tribe can build a four-story waterfront hotel.
“This leaves a net purchase price of $300,000 to be paid at closing by the tribe to the city,” according to the term sheet the council approved Tuesday that is a prelude to a purchase and sale agreement.
The remainder of the purchase price consists of a $650,000 environmental-cleanup credit that the tribe and city have agreed the tribe will need to remove polluted soil from the 0.8-acre site in the 100 block of East Front Street and make it suitable for development.
The City Council on Tuesday spent five minutes discussing the sale. Councilman Michael Merideth sought assurance that the council would review the agreement “prior to submitting it or assigning it to the tribe.”
Councilwoman Cherie Kidd said Thursday the council has discussed the sale of the property “at length in the course of executive sessions.”
It was purchased in 2006 during negotiations by city and Clallam Transit officials to build The Gateway transit center next to and east of the hotel site.
“The whole thing, to use a modern term, has been a big, hot mess for years,” Kidd said.
The $1 million balloon payment “has been hanging over our head,” she added.
“This eliminates that huge liability, which is important.
“This is actually a win-win, for us and the tribe, in many ways.”
The 2017 assessed value of the property was $856,014.
The city purchased the property 14 years ago from Richard and Francis Niichel for $1.2 million, according to county records.
The parcel stretches from East Front north to East Railroad Avenue and lies about 50 feet south of the Strait of Juan de Fuca and Port Angeles Harbor.
Located at the site are a Budget and Avis rent-a-car business, the Dungeness Line Seattle-bus-shuttle service, Harbor Art Gallery, Cock-A-Doodle Doughnuts, and the Larry Winters garage, currently used for vehicle storage, will be razed for the hotel.
The hotel annually will generate $1.9 million in wages through 55 to 70 new, mostly seasonal jobs, and $1.1 million in vendor fees, tribal Enterprise CEO Michael Peters said.
Peters said the tribal council on Thursday unanimously approved the same terms for the purchase and sale agreement that City Council members unanimously approved Tuesday at their own regular meeting. Mayor Sissi Bruch, a tribal planner, recused herself.
City Manager Dan McKeen was authorized to use those terms as a basis for negotiating a final purchase and sale agreement that the city and tribal councils will approve at an upcoming joint meeting, likely on March 26, McKeen and Peters said.
Kidd she anticipates City Council approval.
“I don’t see any reason it won’t go smoothly,” she said.
The tribe will spend “in the range of $20 million” to build the 86-room hotel, which should be completed by mid-2020, Peters said Friday.
It will include a swimming pool, two restaurants, and a three-story parking garage with up to 150 non-public spaces for patrons and employees.
Construction will include pile-driving into the waterfront fill.
Peters said the tribe will release a project timeline by the beginning of April.
Peters said cleanup will include the removal to an off-site location of about 2,000 tons of contaminated soil.
The City Council declared the property surplus last year before determining that the tribe’s proposal for buying it best met the council’s criteria for a suitable buyer.
Requirements included parking availability, “which has been a concern of the downtown,” and the project’s overall impact on the downtown, McKeen said at Tuesday’s meeting.
“During the tribe’s due diligence with the property, contamination was noted on the property that would require considerable mitigation at a considerable or significant cost,” he said.
“The pricing structure takes into account the fair market value of the property as well as the estimated cost of the cleanup.”
A key factor in the City Council selecting the tribe was the hotel’s potential positive impact on downtown, City Attorney Bill Bloor said Friday.
Former Mayor Karen Rogers, who was on the council in 2006, said Friday that purchasing the property back then avoided extended litigation with the Niichels, who also owned property that was purchased for the transit center.
“It was time to get our shovel in the ground, or we would lose all that grant money,” Rogers said.
“It gave us the opportunity, for first time in over 20 years, for something new to be downtown.”
Under the terms of the agreement approved Tuesday, the tribe assigns the city “all claims the tribe would have for cleanup contributions against the former owners of the property, Richard and Francis Niichel (the ‘Niichels’) and the prior owners and operators of the property.”
Bloor said the city is investigating whether to try to recoup the value of cleanup costs that will be part of the sale.
“The value of the property was diminished as a result of the contamination,” he said.
“We didn’t do it.
“Somebody else is potentially liable for that.
“I can’t say anything more than that.”
The Niichels could not be reached for comment Friday.
According to a “Site Characterization Report” prepared for the tribe by Olympia-based Associated Environmental Group LLC, cleanup at 111 E. Front St. and 110 E. Railroad Ave. will include removal of three storage tanks that can hold 10,000 gallons of gasoline, 500 gallons of used oil, and 500 gallons of diesel.
“The tanks will be decommissioned via chemical or oxygen displacement methods and then cleaned to be later removed,” according to the report.
AEG will install two deep well points to remove contaminated groundwater.
It will be pumped for pre-treatment into two 20,000-gallon on-site tanks, filtered through sands and carbon, and tested before being discharged into storm or sewer systems.
Excavation will be 10 feet deep near East Front Street and 7½ feet near the north side of the property in the area of East Railroad Avenue.
“The predominant soil type at the site and vicinity is mapped as ‘Beaches,’ 1 to 5 percent slopes,” the report said.
“A typical soil profile of the Beaches Unit is very fine to medium grained sands with shells.”
The state Department of Ecology will require at least four consecutive quarters of monitoring to ensure contaminants are below cleanup levels outlined in the state Model Toxics Control Act.
AEG has budgeted for eight quarters of monitoring.
Tank removal, excavation, dewatering and site restoration is estimated to cost $509,000, of which $362,500 is for removal of petroleum-contaminated soil, according to the report.
Compliance monitoring and reporting for eight wells will cost $40,000.
AEG, which will do the cleanup, estimated the cleanup price tag will be $609,000.
Peters said the tribe has spent almost $100,000 aboe that amount over the last nine months to determine the scope of contamination.
Peters and city Community and Economic Development Director Nathan West said two different environmental cleanup companies, AEG and a consultant hired by the city, agreed that $650,000 for cleanup was a valid estimate.
Peters said the total was “a good middle point to work for” to ready the site, as the report says, for “complete site redevelopment.”
Kidd said she was looking forward to that day.
“I’m delighted it’s going to turn into something absolutely beneficial and good for downtown,” she said.
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at [email protected].