Purchase of downtown Port Angeles property for hotel nears

PORT ANGELES — The Lower Elwha Klallam Tribe’s plans to build an 86-room, $25 million downtown hotel are back on track after a delay over assessing petroleum pollution at the city-owned site, Port Angeles and tribal officials said last week.

The tribe would buy two city-owned parcels between The Cornerhouse Restaurant and the Gateway Transit Center parking lot under terms that likely will be presented to City Council members for their approval at their regular Feb. 20 meeting, Nathan West, city community and economic development director, said Wednesday.

The tribe wants to build a four-story, four-star hotel with a three-story garage, indoor and outdoor restaurants, a 64-seat bar and space for meetings.

Businesses that would be demolished for the project are the Harbor Art Gallery, Cock-a-Doodle Doughnuts, and offices and facilities owned by Jack and Vicki Heckman for Budget Car Rental, Avis Car Rental, the Larry Winters Storage Garage and Olympic Bus Lines, which operates the Dungeness Line, a shuttle-bus company.

West and City Manager Dan McKeen have been negotiating with tribal Enterprise CEO Michael Peters on the purchase price of the property, they said last week.

Neither West nor Peters would disclose the purchase terms but sounded confident in separate interviews last week that the sale would go through.

McKeen was on vacation last week.

“We are in agreement on terms,” West said.

Peters said the tribal council will review the agreement for approval at its Feb. 22 meeting.

“We’re hoping to have a signature on a purchase and sale agreement on or about the Feb. 20 time frame,” Peters said.

In announcing plans for the project in April 2017, Peters had hoped construction would begin by December 2017.

“We feel bad we were not able to be on target with this project,” he said.

Peters said he hopes construction, which will include pile-driving to stabilize the building below the fill line, will begin by January 2019 and be completed in time for the hotel to open during summer 2019.

West said the purchase price will based on factors including fair market value, as it will reflect the cleanup cost the tribe will incur to remove petroleum-contaminated soil before construction.

“At this time we have not arrived at a specific fair market value,” he said in an email.

“That said, based on surrounding property values, an approximate fair market value would be around $1 million plus or minus a few hundred thousand.

“A challenge is the vast difference in property values within the downtown.

“This value does not account for environmental issues with the site.”

In the interview, West said “it’s only right” that the city sell the tribe the equivalent of clean parcels.

“Essentially, we would need to discount it and give them credit for any cost they would incur for cleaning up [the] property.

“It’s not that big of a cleanup from a cleanup perspective.”

Peters said testing and monitoring of the site was done to follow up on a 2004 environmental assessment prepared for the Port of Port Angeles that cited fuel-tank pollution and building materials at the site that contained asbestos.

Contaminated fill will be trucked to a treatment location, while uncontaminated fill “can be used anywhere” but will be taken somewhere that as not been determined.

“A lot of volume needs to be removed,” he added.

“There’s groundwater and soil contamination, but it’s not like there are pools of contamination down there.”

Once built, the hotel would pay property taxes but “at some point down the road, the tribe will be looking at moving this property into federal trust status,” Peters said. Then, the tribe would discuss paying fees to the city in lieu of taxes for city services, he added.

Peters said efforts will be made to time construction to have the least possible impact on downtown events and businesses.

“When we sign the document the 20th or 22nd [of February], we will publish a time line at that point,” Peters said.

“This environmental piece has been what’s been taking the longest to define.

“It’s a complicated process to define what the extent of cleanup needs to be and also the cost of it.

“It’s nothing that is going to keep us from buying the property, but it is stuff that has to be handled specially and has to be handled before we can get into construction of anything.”

In recent weeks, surveyors have been mapping out the site, and the soil has been tested to determine it can support the foundation.

“We wouldn’t be doing this part of the planning and testing and stuff if we weren’t going to buy the property,” Peters said.

“We are trying to get back on schedule.”

Tribal Chairwoman Frances Charles said building the hotel would fulfill a long-term goal of the tribe.

“It’s something that we’ve look at in different locations for awhile,” she said.

“It’s something that the economy needs in Clallam County and Port Angeles.”

Peters said room rates have not been determined.

“What we are targeting it to be is the best quality hotel in the area,” he said.

He said there is a “high need” for rooms during the peak season, from spring break through October.

“Our style of building, our style of view rooms is not something that is offered at other hotels.”

It will be built next to 17-room, The Downtown Hotel on Front Street at 101½ E. Front St.

Hotel co-owner Anthony “Butch” Hoare was OK with his pending new neighbor.

“I feel fine about it,” he said Thursday.

“We are in a different market than a high-end hotel.”

Rooms at his hotel are $50-$80 a night, some with private bathrooms and kitchens, others with shared private bathrooms.

Hoare said he even expects that some of the construction workers will stay there.

Peters said there is room in the city’s economy for both establishments.

“Both survive, without a doubt,” he said.

“We see that as, it’s got its own European style of offering for people who want to have a room in downtown,” Peters said.

“It offers a nice place to stay in the core of downtown at an extremely reasonable price.

“There will always be a market for that.”

The Cornerhouse Restaurant is located at ground level on Front Street with the Downtown Hotel above it.

Restaurant owner Shannon Reynolds was not available for comment Thursday, an employee said.

Edna Petersen is in her 19th year as owner of Necessities and Temptations gift store on the northwest corner of East Railroad just west of property that will be demolished.

The tribe’s surveyors were busy on the sidewalk outside her store.

Petersen said she is concerned about the impact of hotel construction, recalling that it was “very difficult for the store” when piles were driven for the MV Coho ferry dock.

“I have a baseline of how difficult it is for my customers when there are big trucks and the streets are blocked, and on and on it goes,” she said.

“So it’s one day at a time until we know for sure what their plans are.”

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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at pgottlieb@peninsuladailynews.com.