LOTT authorizes takeover of Deschutes Valley holdings by City of Tumwater

The LOTT Clean Water Alliance’s Deschutes Valley holdings, once envisioned as the proposed site of a reclaimed water plant, is being sold to the City of Tumwater in a $3.19 million agreement. 

Resolution 25-003, approved by the LOTT Board of Directors during its meeting on Wednesday, Aug. 13, authorizes Tumwater’s acquisition of the 45-acre Deschutes Valley site in six installments scheduled to run until 2030. 

In the public hearing preceding the board’s vote, Finance and Administration Director Justin Long said LOTT purchased the parcels on Capitol Boulevard, which were part of the former Olympia Brewing Company grounds. The properties were acquired in two transactions in 2011 and 2012 for $4.5 million. 

“Original plan was to put a reclaimed water plant on this site,” said Long, pointing out the wastewater mainline runs beside the property. 

He noted not long after the purchase, floodplain rules were changed. The new standards meant the land had to be raised 6 feet with added dirt, which drove up construction costs. 

Long added later adjustments to population growth forecasts from the Thurston Regional Planning Council further undermined the need. 

“That in turn led to our 2050 system plan negating the need for a plant in this location, because we had sufficient capacity using the Budd Inlet treatment plant,” he said  

According to LOTT, the 45-acre site holds warehouses and additional industrial buildings. The land has been used intermittently for public events and training. 

Tumwater has relied on the site for event parking during its Fourth of July celebrations and the Artesian Brewfest, while law enforcement and Intercity Transit have conducted training exercises on the grounds. 

However, for LOTT, holding the property generated recurring costs for security contracts, stormwater charges to the City of Tumwater and staff hours for maintenance. 

Long said with rising costs and no utility purpose, retaining the site was no longer practical. 

Demolition costs 

The boiler house, described by Long as “probably more hazardous than it is anything and useful at least,” became a great factor in setting the sales price. It has also been marked for demolition and is under sale. 

Engineering firms and contractors previously estimated demolition expenses ranging between $645,000 and $1.2 million. 

“Obviously, from our standpoint, LOTT, we like that lower estimate, and the City of Tumwater liked the higher estimate,” Long remarked. 

The contract established $645,000 as the baseline, with Tumwater covering that portion. LOTT committed to reimbursing up to $225,000 if removal costs exceeded the baseline, but stayed under $870,000. Any demolition expenses beyond that level fall to Tumwater. 

Five other smaller buildings on the site are also scheduled for removal, with costs projected at $62,000. The demolition costs were factored into the adjusted sales price. 

In addition, the contract acknowledges decades of industrial use at the site and the potential for undiscovered contamination. 

To address the issue, LOTT agreed to set aside $300,000 for possible environmental cleanup reimbursements to the city. Together with the boiler house fund, the mitigation total is $525,000. 

The agreement specifies Tumwater must complete demolition and remediation work by Dec. 31, 2030, to qualify for reimbursement, and requests must be submitted by June 30, 2031, with full documentation. 

LOTT has 45 days to release reimbursements once costs are verified. Long said the deal splits the risks between the two sides since the property has been industrial land for decades. 

Resolution 25-003 establishes the mitigation fund and authorizes the sale, noting parcels #09470003000, #09470021000 and #09470045000 were declared surplus in June 2024. 

The resolution cites a March 2024 appraisal valuing the property at $3.9 million, but acknowledges that additional work is required to mitigate prior industrial use. 

The final purchase price of $3,192,670 reflects those deductions. 

Installment plan

In the real estate contract to be signed by Executive Director Matthew Kennelly for LOTT and Mayor Debbie Sullivan for Tumwater, the city will pay six installments of $572,193.11 each. 

The first payment is due at closing on Sept. 15, 2025, with the remaining payments scheduled annually through Sept. 15, 2030. 

The plan carries 3% interest, equal to LOTT’s earnings in the Thurston County investment pool. The total repayment including interest amounts to $3,433,158.65, with $240,488.65 in interest spread over six years. 

The contract allows Tumwater to prepay at any time without penalty. 

In case of late payments, interest accrues daily at a rate of 0.00821% until payment is made. No late fees were added, and no default rate was imposed. 

According to Long, ownership will also remain with LOTT until final payment is made, and the Statutory Warranty Deed is delivered. But Tumwater will assume responsibility for all property taxes, assessments and utilities after closing. 

Another term protects LOTT’s infrastructure, with Tumwater agreeing to give easements for free if new lines need to cross the land. 

“We negotiated with the city to allow us to have easements if we need them in the future for either wastewater lines or reclaimed water lines,” Long said.