Smoking Gun: Fraud and Deception

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Mon, Nov 18, 2013, 2:18 pm  //  Guest writer

Someone pulled the wool over this community's eyes by fudging the costs on the ASB marina option by over $20mm

Submitted by Doug Karlberg.

Abraham Lincoln said, “Public sentiment is everything. With public sentiment, nothing can fail. Without it, nothing can succeed.”

The Port of Bellingham has lost the public’s sentiment, and it must be regained. The dysfunction at our port has festered far too long. The public owns the port, but for decades only two commissioners and a loyal staff have controlled it.  The public needs to retake control of the port.

The port’s narrow and self-centered outlook endangers the future of our waterfront and desperately needed jobs that it can support.  The port, with the city’s help, wants to sell real estate instead of promote jobs and is now poised to wreck our capacity to support good paying jobs for the foreseeable future.

We can fix this, but first a stroll down memory lane to understand how we got here.

Our port tends to have commissioners for life. This wasn’t always true, but since the mid 1950s, commissioners have tended to remain in office for long, long times, decades in many cases. It may just be human nature, but when people remain in public office too long there can be negative effects.

The Port of Bellingham was for years the Port of Zuanich (44 years) and Asmundson (35 years).  Then it became the Port of Walker (21 years) and Smith (16 years). With a three person commission, any two commissioners can effectively control our port.

Port meetings are held during weekday work hours so the public hardly ever attends.  A chronic lack of public perspective feeds a creeping imperialistic control of this public founded and funded organization. Under the three-commissioner system, two port commissioners can do whatever they want.  Theoretically, they constitute a quorum and should not meet to discuss port business without public notice. In practice, the efficiency and lack of debate attendant to the execution of the port’s business belies their attention to these details. Staff comes and goes, but all know who has the power at the port, and who not to cross.

Secure in their incumbency, the port commissioners decided in 2004 to condemn and seize Georgia-Pacific’s (G-P) treatment lagoon (the ASB) for the “public purpose” of a marina for large yachts. This seizure fractured the community.  G-P was long a mainstay of the local economy and a major employer.  Even though they were obviously winding down the operation, many felt that such heavy-handed treatment was unwarranted and unwise. The ongoing tissue operation and the co-generation plant were still using the ASB.  What were these facilities expected to do?

Equally important, for nearly ten years G-P along with 14 agency stakeholders had been negotiating a robust clean up of the waterfront. G-P’s scientists, the Department of Ecology (DOE), the Environmental Protection Agency (EPA), Wildlife, Fisheries, environmental groups and others had worked cooperatively to come up with a plan that all agreed on, one which would have cleaned up the waterway completely.

G-P was anxious to start the clean up, get it done, and sell the land.

It was a serious clean up plan supported by all who had studied and worked for years to develop and compare nine remedial alternatives (archived page with some bad links). The DOE and EPA were willing to sign off. This was not the design of a bunch of Southside carpetbagger greenies, as Port Commissioner Smith enjoyed characterizing them.

In just one month, the port flushed ten years of hard work down the toilet and adopted a plan that accomplished the least possible clean up. The most affordable way to clean up the contaminated sediments next to G-P was to store the dredge spoils in the ASB. Any large clean up requires a disposal site, but the port seized G-P’s intended disposal site for a marina. The years-long good faith effort, ready for signatures, was junked because the port wanted a yacht basin to complement the upscale condos they envisioned for the waterfront.

The shipping channel would no longer be cleaned up.  Under the port’s plan the channel would be abandoned and ‘capped’, reducing its depth. This channel extended from the full depth of Bellingham Bay, past the port’s International Shipping Terminal, along much of G-P’s length, to the shoreline at the Waterfront Tavern and the Granary Building, where Citizens Dock once stood. This channel has been used for commerce extensively since Bellingham was founded. After capping, the channel will be limited to small craft and kayaks.

How polluted is the Whatcom Waterway? It is bad. Everything from the pulp mill site drained into the shipping channel for decades. The fishing fleet used to moor boats in the channel for a couple of days before hauling out for bottom work.  The toxins would kill everything growing on the hull, making cleaning easy. I wouldn’t eat any of the fish out of the shipping channel, even after it is capped. This channel will probably need permanent signs warning against fishing, crabbing and clamming.

Throwing monkey wrenches into the public’s clean-up plan made marshaling public support for the ASB marina critical for the port. They hired a consulting firm to study five potential sites for a future marina, including the ASB. This report was delivered to the port and released to the public in advance of the final G-P purchase decision.

However, the report was altered to mislead the public. The report rates the ASB as the most economical site.  This finding was needed to support the ASB marina plan.  It was crucial to justifying both the G-P site purchase and the condemnation of the ASB. This document is now evidence.

For a time, this file was publicly available as a Word document online.  It included embedded Excel object information.  The document’s description of each site includes an embedded Excel spreadsheet table.  If you have MS Office, you can double click on any table in the Word document and a spreadsheet will open in Excel.  The Excel file includes tabs for all five sites.  In four of these tables, the ASB tabs are identical and show costs of $50,731,417. However, the Word document table for the ASB lagoon shows costs of only $33,939,485. It is clear that the Word document description of the ASB site was altered after the authors embedded the Excel information.  The Excel object information shows the ASB site having the highest costs. The document is a proverbial “smoking gun.”

The $21,612,932 discrepancy in favor of the ASB site, in favor of this whole unsavory waterfront boondoggle, is at least misleading and probably fraudulent. I contacted port staff for an explanation and they refused to respond.  However, the online edition of the Word document immediately disappeared from their website.   But not before I saved a copy!

(Note: Changing tabs with the table open in Excel can alter your copy of the document if you save the changes. To preserve the document, simply don't save changes.)

Today, searching for “marina site survey” returns a single, unsearchable PDF:  The minutes of the May 19, 2009 port commission meeting in which a Mr. Stahl reports that “the Makers 2004 Bellingham Bay Marina Site Survey identified the ASB as the preferred location for a marina within Bellingham Bay.”  That is not true.

These behaviors evidence a pattern of deception underlying the very essence of the waterfront plan we just adopted. This is categorically unacceptable for a public agency.  It is illegal behavior that should be punished. It is cause to reconsider the entire waterfront plan before plunging the public into incomprehensibly expensive commitments.

The report includes another doozy.  The consultant states that North Puget Sound will urgently need 3,100 new marina berths by 2010. Nearly four years after this dire prediction we know the prediction was bunk. Demand for yacht moorage dried up when the economy tanked.  Building the marina will obligate Whatcom County taxpayers to repay nearly half a billion dollars.  Would you bet a half billion that four hundred 60-100 foot yachts will want to come to Bellingham?

The marina study ignored other obvious factors. The Lummi Nation is planning a marina. Their location is closer to the northern San Juans and especially better for many fishers, most of whom are already weary of the port.

Mucking out the ASB is estimated to cost $43 million. The port is desperate to justify this expense to build a breakwater worth maybe $6 million.  Alternatively, we could fill the ASB and sell the land for $10 million. We could actually clean up rather than cap the waterway and retain options for both commerce and safe fishing on the new waterfront.  It would save millions in disposal costs and millions more not constructing an unneeded marina.   But the port and city have worked together to hide the true costs from the public by concealing the marina in the No-Action alternative and by evidently falsifying crucial data.  Even the DOE (document linked below) originally commented that the port’s strategy, “deprives the public and other interested parties of the opportunity to have meaningful input to the complete planning and development process.”  That has proven true.  It has allowed the port to bamboozle its citizens and the city while crafting their vision out of whole cloth.

Meanwhile, Greenberry last year leased 10+ acres from the port and spent $200 million locally. Even the port’s phony inflated numbers would require 20 years for the ASB marina to generate that much economic impact, using four times the area (37 acres) – if there were enough mega-yachts to fill the slips. 

We seriously need to pull the plug on the port’s corrupt waterfront plan and make immediate changes to bring the public back into this process. Port meetings need to start happening in the evening when people can attend, like city and county council meetings.  The commission must be expanded by two at-large positions to increase candidate access and reduce entrenched incumbencies.  When agencies lie to their constituents, it is time for radical action.  Investigating this fraud is the place to start.  Who falsified these records?  Who helped?  On whose orders? It's deposition time!

The evolution of the waterfront plan has increasingly ignored public sentiment.  This has become a common refrain from all who have tried.  We need to back up, adopt an honest and open framework that can produce a plan consistent with public sentiment.

Without that, we cannot succeed.  On the waterfront, we cannot afford to fail.

Here is how the fudged numbers appear in the now disappeared Port Marina Site Survey document (Available for download, below)

Here's how the numbers appear in the embedded Excel object information that didn't get changed. Somebody has been very naughty!

Attached Files:

-> Read what the DOE thought of the Port hiding the marina in the No-Action plan

Related Links:

-> See the Smoking Gun for yourself (2.2MB .doc)

Alex McLean  //  Mon, Nov 18, 2013, 11:12 pm

I worry that the fanatical level of commitment the Port has for this Marina will mean that even proof of criminal conduct to finesse the deal will not distract them. They might stumble, pay a fine or confess a sin, then get right back on their favorite pet pony.

The City has proven to be utterly cowed by the Port, granting nearly everything it wishes without query or qualm.

So, then, what are the prospects for some sort of citizen initiative—a ballot or signature campaign—which might spank some sense into this intransigent public agency?

Marinas are cute. Few people actively harbor angst against them.

But I think the ugly economics of this thing, in tandem with a seemingly educated public, could help to put a stake in the vampire’s heart before it sucks millions of dollars from our wallets.

I’d like to help, in any sort of effort, because I see this aspect of the waterfront development as having way too many unintended consequences. The ripple effect of the marina, as your article points out, impacts our clean-up efforts, our local economics, and the overall flexibility of using that area for other, better, purposes which could supply us with better jobs, more recreational space, or, well, anything besides a millionaire’s parking lot surrounded by razor wire. It is not the sort of infrastructure which will buttress the living wage jobs envisioned for the Waterfront District or otherwise act as an economic multiplier for the community. The Port itself may benefit from the leases of berths—and that may be its only merit or rationale—but that is hardly a civic goal worthy of sinking millions of tax dollars into.

Thanks for the article.

Tara Nelson  //  Tue, Nov 19, 2013, 11:50 am

Agreed, Alex.

Tip Johnson  //  Tue, Nov 19, 2013, 3:43 pm

I sure would like to hear what elected officials are thinking.  Did McAuley know this was fudged?  Does Weiss think the funky numbers are OK?  Does anyone feel suckered by the Port? Will everyone look at their shoes and pray it is swept under the rug?  Who will call for an investigation? Both the Commission and the Council are so empowered.  Is there an inch of spine between them? We shall see.

George Dyson  //  Wed, Nov 20, 2013, 6:43 pm

Excellent detective work by Captain Karlberg. To fully connect the dots, you have to understand how this ties in to the other great act of malfeasance in this story, the de-authorization of Whatcom Waterway as a Federally-authorized navigation channel. When this nation was founded, its founders enshrined these navigation rights in the Constitution, specifically to preserve these precious and irreplaceable rights as a common good (and common responsibility) safe from the sort of local manipulation we have witnessed here.

When a waterway is authorized as a navigation channel, it means the Federal Government, represented by the U.S. Army Corps of Engineers (who are supremely good at doing what they are assigned to do) is responsible for maintaining the authorized depth. Why on earth would any local government, let alone a Port District chartered to promote local transportation, industry, and commerce, give up this precious privilege so coveted by all other ports? It’s like saying, “No thanks, please take Interstate 5 back, and we’ll close 3/4 of our businesses and bill the local taxpayers for maintaining a two-lane road instead.” What gives?

Here’s the deal. When the Corps of Engineers conducts maintenance dredging to maintain an authorized waterway, there is no charge to the local beneficiaries. But, if any of the dredge spoils are too contaminated for normal in-water disposal, the Federal Government will dispose of them properly as necessary, and send the bill to the liable party. In the case of the severe mercury contamination of Whatcom Waterway, there is no question as to who the liable party is: Georgia-Pacific, and their new owners, Koch Industries (known better as the Koch Brothers). This liability was not extinguished by the sale of Georgia-Pacific to Koch, or by the AIG insurance policy, or by the transfer of the property to G-P. The only way this lingering liability could be extinguished was by cleaning up the waterway to the authorized depth(s)—as G-P and Ecology had already agreed to, and as Doug so well summarizes.

Now, when the Port of Bellingham decided to use the ASB for a marina (on the surface, exactly the kind of constructive project they should be doing) this presented a massive problem: the liability for the contamination in the waterway, that could no longer be resolved by isolating the sediments in the ASB. The only way to let G-P, Koch Industries, and AIG securely off the hook (and disguise the true cost of the “Clean Ocean Marina” to the local taxpayers) was to de-authorize the Federal navigation channel (something it takes an Act of Congress to do). The officials who pushed this through, without anything but the barest nod to public process, should be ashamed. They sold the future of Bellingham as a true working waterfront community down the river, to help further line some of the deepest pockets in history. Marinas are wonderful, and a marina in the former ASB footprint could be especially so—but the way this project was bought and paid for stinks.

Ryan M. Ferris  //  Wed, Nov 20, 2013, 8:06 pm

This is a really nice piece of explosive journalism.  Please feel free to write a few more!

Wendy Harris  //  Thu, Nov 21, 2013, 4:26 pm

Wonderful journalism! Thank you.

I also found the attached DOE comments very interesting.  The first comment, in May 11, 2007 is from the local Bellingham office, and is rather critical, as Doug points out.  They also note concerns over the lack of public process when DOE is contributing “substantial public money”, and resources, including a community liaison position to keep the public informed. 

The comment also states that “the over-water pedestrian bridge, parks, trail linkages, transient moorage floats and other related features should be evaluated” in the EIS.  This was not done, and it has had significant consequence.

For example, had the EIS included the overwater walkway, the city and port may have been prevented from building such an environmentally harmful project, and at least the public would have known about it before it was a done deal. The port may have been required to file a supplemental EIS before it dumped dioxin at the Cornwall Landfill, again quietly, and without public understanding. If parks had been included in the EIS, the city would have been more accountable for its waterfront plan changes. It would not have been so easy to reduce public parks, envisioned throughout the waterfront site, into one mega-toxic site at Cornwall, with residential and commercial development and roads.  And had trail linkages been included, we would not have a plan with fragmented connectivity.

Instead, a second DOE comment was issued on June 7, 2007, from DOE Regional Office.  It references discussion with the port.  One can infer that the port was not happy with the comment letter from the local office, and went over their head to the Regional Office and got a new letter issued, which toned down the language and eased up a little on the pressure. 

What is interesting is that the port ignored concerns from both comments in its EIS reports. For example, there is a request for consideration of shoreline use by shorebirds. Instead, the port dissuaded the largest breeding colony of Caspian terns from the waterfront without any discussion or analysis. There is request for consideration of the marina “design alternatives regarding upland habitat relative to public access.”  To this day, upland wildlife habitat has not been addressed and the conflicts between public access and habitat have been ignored.

All of this underscores the need to dump this plan and start from scratch. The waterfront plan is flawed at its very core, in ways that can not be corrected through revisions and amendments. It reflects a vision for the waterfront that is fundamentally at odds with the public’s vision.

Dick Conoboy  //  Thu, Nov 21, 2013, 5:37 pm

For those of you who might have missed the public comments at the City Council meeting last Monday, take the time to listen to Bob Burr tell the council exactly what he thinks of the council’s work on this issue.  Go to 03:00 on the video counter for Bob’s remarks. + Link

The voters missed a great opportunity when they did not elect this man to the council.

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Running update of who is filing for office in Whatcom County. Posts during day Friday and final update Friday evening.

4 comments; last on May 17, 2015

Updated:  Ski to Sea Tries to Bully Bellingham

Wed, May 13, 2015, 4:30 pm  //  John Servais

Updated | Ski to Sea race does not need to race through sensitive Chuckanut Community Forest Park for special mountain bike leg. City did not renege.

10 comments; last on May 15, 2015

County proposes free pass for vacation rentals

Sun, Apr 26, 2015, 1:05 pm  //  Guest writer

Tani Sutley writes a second article on the increasing number of vacation rentals - and the County Council bill to let them expand dramatically.

4 comments; last on May 02, 2015


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