April 04–After decades of efforts to clean up four petroleum-contaminated Yakima properties, the state has finally declared work completed at one site and the city is preparing to sell it.
While work remains to be done at the three other properties, more progress has been made in the two years since the city purchased the sites than in the prior two decades of trying to get Tiger Oil Corp. to cooperate in cleanup, said Valerie Bound, state Department of Ecology section manager for toxic cleanup in Yakima.
“Finally there’s a light at the end of the tunnel and I’m thrilled about that,” she said.
City officials say the joint effort with the Ecology Department shows how municipalities can help bring new economic activity to blighted and vacant properties.
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Sean Hawkins, the city’s economic development director, said the city has gotten multiple offers for two of the properties, at 1606 E. Nob Hill Blvd. and at 2312 W. Nob Hill Blvd.
“They’ve had their eyes on the property,” Hawkins said. “It took us taking that step of working with Ecology to get them cleaned up.”
When the city purchased the four properties for $1.1 million in 2014, some saw it as a bailout for Tiger Oil Corp., which closed its Tiger Mart gas stations in 2001 amid a dispute with the Ecology Department over its liability for cleanup.
Tiger Oil Corp. purchased the properties, which housed Tiger Mart convenience stores and gas stations and a bulk petroleum facility in 1987, and received a $2.7 million insurance settlement to cover remaining costs of cleanup, which was started by the previous owner.
But Tiger Oil Corp. got into a legal dispute with Ecology, arguing it already had spent more than $2 million on cleanup efforts and that actions required by Ecology were excessive.
Meanwhile, the vacant properties became targets for graffiti and other vandalism, turning them into major eyesores.
City Council members decided purchasing the properties was a better alternative than leaving the commercial properties vacant.
Money available for cleanup, including $1.8 million secured by Ecology and a $369,000 insurance trust fund the city acquired in the property purchase, was key.
Sale of the 1606 E. Nob Hill Blvd. property is expected to close in May. The property required only minimal cleanup, Ecology’s Bound said.
The sale price is $425,000, which is more than the $230,000 the city paid and above a $330,000 initial offer from Lawrence B. Stone LLC. When another party made a higher offer, the LLC raised its offer, Hawkins said.
Lawrence B. Stone, the LLC’s principal, is a Spokane-area business owner and real estate investor. His firm, LB Stone Properties Group, manages properties in Washington, Oregon, Idaho, California, Montana and Alaska. Stone is also president of SCAFCO Corp., a steel fabrication company that provides products for the agriculture and construction industries.
Neither Stone nor a representative from LB Stone Properties Group returned calls requesting comment.
Meanwhile, the city has a contract with Argonaut Investments to sell the 2312 W. Nob Hill property, which was the most contaminated of the four sites, for $300,000.
Pollution there dates to the early 1980s, when underground storage tanks leaked 20,000 gallons of petroleum into the soil and groundwater.
The Ecology Department addressed the soil contamination last year but still needs to clean up the groundwater. If Argonaut Investments buys the property, it will be expected to let the Ecology Department collect groundwater samples from the site, said Joan Davenport, the city’s community development director, who worked with state on the cleanup.
The Ecology Department would then develop and install a groundwater treatment system, Bound said. That process will take a few years, but unlike the soil cleanup it would be virtually unseen by the public.
Argonaut Investments, a real estate firm outside of San Francisco that owns and manages community shopping centers, owns the neighboring shopping center that houses a Safeway and a Rite Aid drug store.
Erinne Mickle, Argonaut Investments senior property manager who is overseeing activity at the Nob Hill shopping center, confirmed his firm’s plans to buy and redevelop the property but was unable to comment further.
Returning that property to use comes as the area has seen a surge in development in the last few years.
“There’s a lot of interest in the Nob Hill corridor,” Davenport said.
In 2014 when the city purchased the properties, Hogback Development Co. had just started work on development across the street at Nob Hill Plaza, now Rainier Square.
Construction on the former Montgomery Ward property southwest of the Tiger Oil site is to start later this year. Hogback recently purchased the property.
Meanwhile, work continues at the two other Tiger Oil sites. The Ecology Department has done a study of the 5511 Summitview Ave. site and found the contamination is unlikely to pollute groundwater.
As it has done with the other properties, the city is working with Heritage Moultray Real Estate Services to sell the Summitview property, which is across the street from the Chalet Place shopping center.
Hawkins said a resolution allowing interim city manager Jeff Cutter to sign closing documents for any offer above assessed value is to be considered at Tuesday’sApril 5 Yakima City Council meeting.
The city and Ecology have already spent more than $1.8 million on the cleanup, so additional funding is needed to start work on the final Tiger Oil site at 1808 N. First St. Bound expects Ecology will secure more money so work can start next year.
Ultimately, the city expects a reasonable return for the purchase, Hawkins said. He said the city isn’t looking to go into the real estate investment business, but is willing to consider other projects on a case-by-case basis.
“I think it’s a good case study on how you can take some of the contaminated properties and bring them back into the market,” he said.
Bound believes the partnership will help the city feel more at ease as it works with her agency on an even bigger project: cleanup of a former city landfill needed for redevelopment of the former Boise Cascade mill site.
“I think the fact that we all worked really well on the Tiger Oil project made (city officials) that much more comfortable dealing with us and vice versa,” she said.