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Port Memo Addresses Marina Fraud Allegations

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A recent Northwest Citizen article by Doug Karlberg, asserting that the port tampered with consultant data to make the ASB facility the least expensive option for a marina, caused quite a stir. (See Smoking Gun: Fraud and Deception, from November 18, 2013). The article contained a chart reflecting the adjustments to the consultant’s cost data.

Several citizens, most prominently Bob Burr, made repeated requests before the Bellingham City Council and the port commission for a public explanation of this suspicious-looking action. The requests were first made before the city and port approved the waterfront district sub area plan (December 2nd and 3rd respectively), which included plans for a marina on the ASB site. No official explanation was provided to the public before the waterfront plan was enacted.

Recently, Bob Burr received a response from Mayor Linville in the strange form of an internal port memo, dated December 11, 2013. The memo, written by Mike Stoner, environmental director, to Rob Fix, port director, references the Northwest Citizen article and attempts to defend the port’s conduct. While I am glad that at least some explanation was eventually obtained, it should have been issued for public release prior to enactment of the waterfront plan.

A copy of this internal memo, which includes a copy of the consultant’s report, may be found here.

Analysis of Port Memo

The memo substantiates Mr. Karlberg’s claim regarding revisions to consultant data. The memo concludes that “it is clear that there were a number of significant changes made to the [consultant's] report between the client review draft and the final work product.” However, Mr. Stoner asserts this was not inappropriate because the port commonly requires its consultants to provide a draft of their work product before the final report is issued.

According to Mr. Stoner, this occurs because consultants want to confirm that the assumptions in their work product are accurate and the port wants to make sure the final product is within the appropriate scope of review. This is certainly legitimate. What is not legitimate, however, is the timing of the port’s review. This type of review should occur before the consultant performs the work. There is a big difference between a consultant’s proposed work plan, and the completed work product.

Here, the port reviewed the consultant’s work after was it complete, but before the final report was published. Mr. Stoner asserts this is standard agency practice, intended to create “a high quality and usable product.” Perhaps this is true, but it raises credibility concerns with the consultant process.

The internal port memo explained why adjustments were made to the marina cost estimates for the ASB site, and the crux of the explanation involves the determination of liability for site remediation and cleanup. This is the justification for significant revisions to cost for dredging/disposal (draft: $23 million and final: $0) and property acquisition (draft: $.8 million and final: $13 million).

Mr. Stoner alleged that at the time of the 2004 consultant report, Georgia Pacific was responsible for the cost of site remediation under the Model Toxic Control Act and its NPDES stormwater permit. The evidence to support this claim is a “very public discussion under the multi-agency Bellingham Bay Demonstration Pilot.” According to Mr. Stoner, the contractor incorrectly attributed the cleanup costs to the port, and the adjustment for dredging/disposal reflects the correction.

Mr. Stoner also claims that property acquisition costs were revised to reflect the fact that the port would be purchasing the ASB property at fair market value after BP cleaned it up. The total cost for the ASB site was estimated at $50.7 million in the consultant’s draft and at $33.9 million in the final report, which is a difference of about $17 million. The dredging and property purchase adjustments account for $11 million dollars, which still leaves about $6 million dollars in unexplained adjustments.

Analysis of Consultant’s Report

The port memo includes a copy of the consultant’s final report, which is attached in support of Mr. Stoner’s explanation. (See pages 13-17 of report.) I reviewed the report, and it does not support the facts alleged by Mr. Stoner. The consultant report states as follows:

The ASB site, along with adjacent waterway areas, is part of the multi-agency effort to address cleanup of historic contamination problems in Bellingham Bay. The effort also includes a mix of stakeholders, property owners, and procedural options. How land acquisition, cleanup costs and procedural options are negotiated or agreed upon is still being clarified through that effort. For purposes of this survey, it is assumed that the Port would acquire the site at the recently appraised value of $0.65 per square foot and the enclosing rubble wave barrier would be acquired at the cost of building a new wave barrier if that improvement did not exist.

Mr. Stoner asserts that GP’s remediation liability was certain, and provided the basis for necessary corrections to marina cost estimates. This is contradicted by the consultant, who stated that cleanup costs are “still being clarified.” Mr. Stoner is obviously aware that “public discussions” do not create legal liability, yet this is the only evidence he cites in support of his claim.

Mr. Stoner asserts that acquisition costs were corrected to reflect the fair market value of the ASB site after GP cleanup. In contrast, the consultant’s report indicates that land acquisition negotiations and agreements were “still being clarified.” The consultant notes that “for the purpose of this survey, it is assumed that the port would acquire the site at the recently appraised value of $0.65 per square foot…” This strained language does not reflect purchase of property at a fair market value subsequent to site remediation. Instead, it reflects assumptions, pursuant to port directive, that are applicable only to the consultant’s report.

In summary, the explanation by the port is not credible. The justification provided by the port for the data adjustments is not confirmed through the consultant’s report. The explanation was never officially released to the public and was provided only after the city and port enacted a waterfront plan that included the marina.

Thanks to Doug Karlberg for alerting the public about this matter. Thanks to Bob Burr and others for raising this issue before our elected officials and demanding an explanation. Thanks to Northwest Citizen for providing a public forum. As long as our government refuses to conduct business in an open and transparent manner, we need local citizens to hold government accountable.

About Wendy Harris

Contributor • Member since Mar 31, 2008

Comments by Readers

Tip Johnson

Dec 20, 2013

Brutal analysis, Wendy, and spot on.

“Mr. Stoner alleged that at the time of the 2004 consultant report, Georgia Pacific was responsible for the cost of site remediation under the Model Toxic Control Act and its NPDES stormwater permit.  The evidence to support this claim is a “very public discussion under the multi-agency Bellingham Bay Demonstration Pilot.”“...

“Mr. Stoner’s asserts that GP’s remediation liability was certain, and provided the basis for necessary corrections to marina cost estimates.”

Oops, but then the Port pulled the plug on the “very public discussion” and in May of 2004 moved to condemn and seize the ASB, removing it from G-Ps responsibility.  So the costs should probably have gone back in back in, right?  I mean, the Makers document is dated 11/19/13, nine years after the Port took over the ASB.

It’s time for some depositions to see who is telling the truth. Will no authority step up to address this fiasco?

USC Title 18, Part 1, Chapter 47 - FRAUD AND FALSE STATEMENTS
Section 1001. Statements or entries generally (a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully - (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title or imprisoned not more than 5 years, or both.

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Wendy Harris

Dec 20, 2013

Tip, the Maker’s report is from April, 2004, but your points are well taken. It is extremely frustrating that the public has no recourse, even though concerns were raised before the port and the city approved the waterfront plan. In my mind, Stoner’s response indicates that the port engaged in improper tampering. However, please keep in mind that the information technically came from the consultant, rather than the port.

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George Dyson

Dec 20, 2013

Somewhat peripherally: a bit earlier (ca 2002?) the same consultants, Makers, were commissioned by the Port (for $50,000 as I recall) to do a conceptual study of how to rehabilitate the inner Whatcom Waterway (assuming it was cleaned up) for small craft use—effectively delivering the Downtown Bellingham short-term visitor’s marina we have all been waiting for. The results looked just wonderful—and were promptly buried from public view.

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Terry Wechsler

Dec 21, 2013

Tip, Ch. 47 expressly states it applies to crimes by federal officials. I highly doubt it has been (or could be) expanded to include acts by local officials. If you think a similar state law has been violated, you should talk to the state AG’s office.

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Tip Johnson

Dec 21, 2013

@Wendy - I guess I knew it was from before the acquisition.  So there must be a macro in the footer that changes the date, or the Port changed that too. 

All more reason for whoever is charged with investigating this stuff to start the depositions before stories are coordinated, folks paid off and evidence disappeared.

@Terry - Just saying this is criminal conduct, federally.  Don’t know who will investigate or what statutes they will cite, but I would be surprised to learn this was not illegal.

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