Cleanup impasse poisons plans for key development

DAN VOELPEL; THE NEWS TRIBUNE
Last updated: September 7th, 2008 12:47 AM (PDT)

Sauro’s Cleanarama allowed used dry cleaning fluid to fall into a hole in the ground under his popular downtown cleaners for decades. Plenty of dry cleaners used to operate that way. In Sauro’s case, the stuff didn’t stay in the hole.

A recent investigation commissioned by the City of Tacoma found the fluid – known as perchlorethylene – has spread below roughly four city blocks.

Investigators found the plume’s tentacles under an adjacent parking lot owned by the U.S. Postal Service. German billionaire Erivan Haub has an option to buy that lot. He has offered to build Russell Investments a new headquarters there and on surrounding parcels he already owns.

No one wants to speculate on the record how the discovery may influence Russell’s decision, which should come within the next few months. But it’s not good news.

And it has added heightened urgency to ongoing negotiations between the City of Tacoma and Sauro’s estate that would allow the city to acquire the property and clean up its polluted plume quickly for redevelopment.

COST OF CLEANUP

That, however, isn’t as easy at it sounds.

The two sides remain chasms apart in their perspectives on the cleanup strategy, when it should happen, who should pay for it and the value of the brushy fenced pit at South 14th Street and Pacific Avenue where Sauro’s Cleanarama opened in 1961.

How far apart?

City Hall wants Sauro’s heirs to sign over ownership of the property and pay the city perhaps $1 million, which would go toward the immediate cleanup of the polluted plume.

An immediate cleanup would involve excavation of 11,000 tons of contaminated soils and trucking the most dangerous 3,100 tons to a hazardous waste landfill in Oregon. Cost? An estimated $2.07 million, according to the recent consultant’s report.

“While we want to go forward with the cleanup and get the property ready for future development, there’s a huge liability in terms of expense,” said City Manager Eric Anderson. “That liability, in our minds, is far greater than the value of the property.”

Sauro’s estate, meanwhile, thinks it can invest in a less costly – but longer-term – cleanup strategy. Installing an underground network of pumps could suck contaminants from the groundwater and allow them to evaporate. In theory, then, the excavated soils wouldn’t have to go to a hazardous waste landfill.

That strategy would cost roughly $1.85 million but take up to three years, according to the report.

“We would love to clean the property up on our schedule and, in the end, have property to develop or sell to a developer rather than sell now at a distressed price because the city wants to operate on a fast schedule,” said Mario Parisio, attorney for the Sauro’s estate.

TIMING MATTERS

That timeline, however, would throw a monkey wrench into Haub’s offer to build Russell Investments a new headquarters. Russell’s current leases in multiple downtown buildings expire in 2013, and a skyscraper construction project would take roughly four solid years of work to complete.

Sauro’s chemical plume sits under a parking lot owned by the U.S. Postal Service. Haub has an option to buy that parking lot, which he has incorporated into his Russell offer. But Haub wouldn’t foolishly close that deal until someone – like the City of Tacoma or Sauro’s estate or both – agrees to take responsibility for the underground cleanup.

However, if the cleanup coincides with construction of a new Russell headquarters, it would allow for some cost savings, because Haub’s proposal would involve excavation for at least five levels of underground parking.

Will it happen?

“The personal representative of the estate has a fiduciary responsibility to maximize the value of the assets of the estate for the benefit of beneficiaries,” Parisio said. “Just agreeing to surrender assets to the City of Tacoma doesn’t satisfy that duty.”

Who’s watching this dispute? The state Department of Ecology. The watchdog agency likely would approve either side’s cleanup strategy, said Marv Coleman, the project manager assigned to the Sauro’s case.

“Where ecology is at is just allowing them to do their negotiating and see where they come out. We’re willing to work with either party,” Coleman said.

So there it sits. Each side has the other over a barrel. The city knows if Sauro’s estate doesn’t sell now, the estate would get stuck with a contaminated white elephant and the entire future cleanup bill that goes with it.

But Sauro’s estate knows the city needs control of the property and the speedier cleanup timeline to preserve its best shot at keeping Russell in Tacoma.

“We all, as citizens of Tacoma, would love to see that part of the city redeveloped,” Parisio said, “but it’s got to be in a transaction that makes sense for both sides. We haven’t figured out where that middle ground is. But we are significantly far apart in our expectations and positions at the moment.”

To make a deal in time to save Haub’s site as an option for a Russell headquarters, City Hall may need to absolve Sauro’s estate of any claims of future liability from the old dry cleaning business.

And Sauro’s heirs should think about this: If they keep the property and clean it up on their slower timeline at $1.85 million, what will they have? A 15,000 square foot patch of downtown. If they sold it then at $100 per square foot – 10 percent more than today’s market value – they would only get $1.5 million. That means they would still end up at least $350,000 in the hole.

Let’s make a deal, folks, that’ll save Tacoma’s best chance to keep Russell Investments in town and let Pete Sauro rest in peace.

Dan Voelpel: 253-597-8785

dan.voelpel@thenewstribune.com

Originally published: September 7th, 2008 12:47 AM (PDT)