Pandora's Box found in Lynnwood

[Claire]
I was reading Gary Noble’s cryptic comment about the Board being well aware of the differences between the two appraisals, and a thought came to me. Is there an environmental issue at the new administration site that would cause a difference in the valuation of the property?

[Mark]
It is my understanding that while the District’s appraiser was aware that contamination may be an issue, his appraisal did not directly address contamination or its impact on valuation.

[Claire]
So, what you are saying is that on top of a difference in valuation of $2.5 million, there is a hidden cost related to environmental contamination that was not considered?

[Mark]
That is correct. Neither appraiser included environmental issues related to contamination.

[Claire]
Ok, so they came up with two different amounts on the market value. But neither addressed liability associated with the development of the site. Isn’t it part of due diligence prior to a property transaction to have at least a Phase I Environmental Assessment completed for the proposed acquisition? A bank would require this prior to financing.

[Mark]
A Phase I Environmental Assessment was performed but the site was not financed and therefore not subject to a review by a lender. This was a cash purchase and the funds utilized came from Capital Fund Reserves.

[Claire]
Did the Board see the Assessment?

[Mark]
I am not sure. I saw the assessment and I am not quite sure every aspect of its contents could be easily understood. It couldn’t just be handed to them. They would need to be walked through the document and portions would have to be explained in layman’s terms.

[Claire]
-Sigh- This doesn’t sound good. What you are telling me is that there could be Pandora’s Box when they go to excavate. I did these assessments for years and found even a good one can only hit the tip of the iceberg given the limited scope of work of a Phase I. It isn’t until you get into sampling that you figure out what the potential costs could be. Would the liability for the site be covered by the Risk Management Pool the District belongs to?

[Mark]
If the contamination was limited to one specific area on the site, I could imagine a scenario that might allow excavation and development to occur. However, everything I have seen shows that the contamination is everywhere and varies in magnitude. Regarding liability and protecting the District’s bottom line, I know the District was exploring and then eventually purchased a supplemental insurance policy to protect them from any unanticipated expenses associated with contamination. The likelihood of hitting contamination would be very high, given the nature of District activities to be placed on that site.

[Claire]
I’m shocked at what you are telling me. I’m trying to regroup here; the implications of knowing there is contamination and then purchasing a policy is less than above board. This is very, very sad. It’s scary to think of what the taxpayers might have to pay to develop the property. The increase in construction costs on contaminated soils is significant.

Where is the Assessment? Is it on file at the ESC? Is it a public document? Is it under attorney-client privilege?

[Mark]
The Assessment was provided by AMEC and is in the ESC. It is a public document and can be reviewed by anyone seeking it out. You can call the Planning and Property Management Specialist (425-431-7332) to coordinate a viewing, dependent upon approval from the public records request designee – Marla Miller.

[Claire]
Ok, I’ve already expressed an opinion about whether Marla should be the custodian of public documents, so I’m not going to repeat myself. But, if it’s not attorney-client privilege and its 90 days past the transaction, why would I or anyone else need “approval” to view it?

[Mark]
You can ask Marla why her approval is needed when you make your request.

[Claire]
Well, I now understand your passion about all of this. Not only was the market value possibly inflated, not all of the information regarding the actual development of the site may have been known or understood. I will make a records request tomorrow. I will let you know when I receive it.

[Mark]
That will be in 15 days. Talk to you then.

Fun Factoid: Claire Olsovsky is the former Loss Control/Safety Specialist for the District. She left the District shortly before Marla put this land transaction together. Claire has a Master’s degree in Environmental Health and 22 years of experience in the field. Her first site was the 93rd Street School at Love Canal and worked on the first Superfund site to be de-listed (the Wade Site, Chester, PA).