State buys polluted parcel; taxpayers stuck with cleanup bill

Taxpayers are underwriting the cleanup of a contaminated piece of land in west Vancouver to make way for a railroad improvement project.

The total cost, including earthwork and remediation, could come to $1 million.

The 2½-acre property along Fourth Plain Boulevard had been the site of a metal scrap yard originally established in 1946.

Metal scrapping ended after a raid by environmental regulators in late 2006.

The raid at 1701 W. Fourth Plain Blvd. targeted a hulk-hauling operation owned by Dick Henderson. Henderson, who was leasing from property owner Cliff Koppe, removed items such as leaking barrels that were deemed an imminent hazard to the environment. Later, Koppe hired an environmental remediation company to clean out oil-soaked trenches and dry wells.

But residual contamination — metals, petroleum and polychlorinated biphenyls, or PCBs — remained embedded in the soil.

State regulators did not force a deeper cleanup, figuring the tainted soil presented no immediate threat to the environment and that cleanup would occur when the property ultimately changed hands. It’s a common strategy for contaminated sites throughout the state, because landowners are usually motivated to clean up contaminated properties before selling.

“It’s difficult to get a loan on contaminated property,” said Pete Kmet, a senior environmental engineer for the state Department of Ecology’s toxic cleanup program. “Banks don’t want to be stuck with a contaminated property, and … even if you sell it as a contaminated property, you’re not off the hook.”

Koppe, however, said he had no immediate plans to unload the property.

Koppe, 71, said his father purchased the property in 1946 and soon turned it into a metal scrapping business. Koppe himself operated a metal recycling business for many years, but later turned it over to a hulk-hauling tenant after becoming a partner in the Pacific Coast Shredding operation that opened at the Port of Vancouver a decade ago.

Koppe said he was considering using the property on Fourth Plain for a mini-storage business when he was approached by BNSF Railway.

The railroad, acting in concert with the Washington Department of Transportation, identified the property as a parcel that could be useful in a major railroad improvement project. The $150 million project — funded by state and federal transportation dollars — is designed to alleviate chronic rail congestion in Vancouver. Koppe’s property would accommodate a new set of auxiliary tracks, allowing freight and passenger trains to speed through the Vancouver yard on a track currently used as a siding. Ultimately, the DOT anticipates railroad improvements in Vancouver and throughout Western Washington will enable the state to improve the frequency and on-time performance of Amtrak passenger service.

No discount on price

Acquiring the Koppe property was seen as a small but necessary piece toward that much larger goal.

The contamination did not faze transportation officials, said David Smelser, rail projects coordination manager for the DOT.

“We purchase those types of properties all the time, and typically the property value decreases by the remediation cost,” he said.

That didn’t happen in this case.

An appraisal report, provided to The Columbian by the DOT, valued the property at $510,000 after excluding a portion used as an easement by a business north of Fourth Plain Boulevard.

Koppe got $500,000 for the property.

State transportation officials say they knew that the underlying soil was tainted by a half-century of petroleum and metals residue. In fact, the state Department of Ecology placed the property on its Hazardous Sites List following the raid by state and city environmental regulators in late 2006. However, the appraisal provided to the newspaper made no reference to the contamination.

In fact, in boilerplate language, the appraisal firm specifically ruled it out.

“The value conclusions in this report are predicated on the assumption that there is no such materials on or in the property that would cause a loss of value,” it stated.

In fact, the property had a sizable environmental liability.

A spokesman for BNSF Railway, which now holds title to the property, said the railroad and the DOT were fully aware of the contamination. Yet the state ultimately agreed to bear the cost of cleanup because this particular property was considered crucial to the overall $150 million rail improvement project.

State officials said they considered segregating the property with a retaining wall to minimize environmental remediation, but that would have been even more costly than hauling away all of the tainted soil. And the Fruit Valley neighborhood would have been left with a contaminated piece of ground.

So taxpayers are stepping up.

“We came to an agreement on the best overall plan to accommodate rail,” BNSF spokesman Gus Melonas said. “It works operationally, but it is also a benefit to the neighborhood and community.”

Substantial cost

The state agreed to pay up to $1 million for BNSF to remediate the environmental hazard and clear the top 8 feet of soil to bring it level to the adjacent rail yard. The soil had to be removed to clear the way for the auxiliary tracks. State transportation officials said they did not break down the estimated cost of earthwork versus environmental remediation.

However, they said the remediation cost would be substantial.

Smelser said soil samples are tested at each level of excavation, then hauled off for incineration or evaporation depending on the level of contamination.

“At some point, you dig down and get to clean dirt,” Smelser said.

Kevin Jeffers, the DOT’s project manager for the Vancouver project, said the top 6 to 8 feet of soil at the Koppe site is known to be contaminated — meaning most of it would have to be hauled away for treatment.

Excavation on the site is currently suspended until the spring.

One local real estate expert, who was not involved in the deal but, like others, asked not to be named in this story, said it appears that the state could have driven a harder bargain with Koppe based on the appraised value of the property. Even so, he said the appraised value means little if the seller isn’t motivated to strike a deal.

In this case, the state was willing to pay Koppe’s price.

“It isn’t because of an enrichment to the seller,” the expert said. “It’s because of a priority for the buyer to get something done.”

For his part, Koppe said he’s satisfied with the deal.

“Ultimately, it worked out pretty well for me having the (railroad) buy it,” he said. “They bought it, and that was the end of the story. I just think it was a good deal for everyone involved.”

Erik Robinson: 360-735-4551, or erik.robinson@columbian.com.