Pollution still a problem after Olympia sells downtown site to housing developer

The Olympia City Council has approved the sale of a downtown property to the Low Income Housing Institute of Seattle for a proposed development.

However, the site’s contamination remains an issue, not just for the city, but for at least one neighboring business.

The institute plans to build the 43-unit Olympia Commons at 318 State Ave. NE, on the northwest corner of State and Adams streets, next to the Olympia Transit Center.

The development is intended for homeless veterans, homeless young adults, disabled residents and families with children. Construction is expected to start by the end of the year.

At Tuesday’s City Council meeting, the council agreed to sell the 0.33-acre vacant gravel lot for $100,000. The property is valued at $296,950, according to the county assessor.

In 2008, the city bought the property from the state Department of Transportation for about $1.28 million. As a condition of that sale, WSDOT agreed to use the proceeds to clean up the site, according to records.

Under the state’s ownership, the property had been the site of a testing laboratory and various machine shops. The soil and groundwater were polluted with chemicals such as lead, arsenic, vinyl chloride and an industrial solvent called trichloroethene (TCE), according to documents.

Cleanup began in 2009 under the city’s direction. City Manager Steve Hall said Tuesday that all soil has been tested and is clean, but that part of the property still has detectable levels of vinyl chloride.

News of the property’s sale to the Low Income Housing Institute caught the attention of the owners of nearby Acme Fuel Co., which also owns warehouses to the north of the property.

Pollution from the city-owned site had migrated to Acme’s property with the warehouses, said co-owner Christophe Allen and Tom Allen. The Allens told the council that Acme had sought indemnity — a legal exemption to pollution cleanup — when trying to refinance their property last summer.

The city denied Acme’s indemnity request. That’s why the Allens were surprised to learn that the Low Income Housing Institute received full indemnity for the environmental hazards on the site.

“We’ve been around here for 90 years paying taxes, giving jobs to people and so forth,” Tom Allen told the council Tuesday, “and a developer from outside the county comes and gets an indemnification just like that from the city.”

In response, Hall clarified that the city had been working with LIHI to find a suitable site for the Olympia Commons. He said it didn’t make sense for LIHI to be responsible for contamination it didn’t cause.

Hall said the city is negotiating with WSDOT to fund the remaining cleanup for the site, which includes remnants of vinyl chloride.

“Over the last eight years, we’ve used every nickel to clean up the site,” Hall said Tuesday, referring to the original deal. “While the money is gone, the responsibility for WSDOT is not.”