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Fuel tanks raise financial issues for Royal City

Mar. 11—ROYAL CITY — A pair of underground tanks are causing some financial headaches for the city of Royal City, the council heard at its March 5 meeting.

"When the city purchased the Grant County property that's adjacent to (City Hall), it came with underground storage tanks for gas and diesel, and they're large," said Public Works Director John Lasen. "They used those tanks not just for the people that operated out of that barn, but for all of southern Grant County services. They're 4,000 gallons apiece. They're far bigger than we would ever use."

The tanks, located in the southeast corner of the City Hall property, are attached to fuel pumps that look like a gas station, and travelers have sometimes mistaken them for a gas station, Lasen said. They were installed in 1999 and were still there when the city bought the property in 2003. The county had its fuel vendor empty the tanks at that time, removing everything they could but leaving a residual amount that couldn't be extracted.

"Given the amount of money and effort it takes to keep those licensed and insured, and inspection costs and so on and so forth, by the time you spend all that money, even buying in bulk, you're not going to save a thin dime," Lasen said. "It's better to continue using the fueling system that we have, which is buying local."

Council Member Rick Kannely asked if it was possible to put something in the tanks that would neutralize the residual fuels and render them harmless, but Lasen said that wasn't possible. The city has been maintaining the licenses and insurance as required by law, he said, but when the city changed insurance programs last year, the tanks weren't covered.

"As a result of that, we've been looking into insurance and all the insurance companies have come back with a laundry list of things that they want, that they will then use to decide whether they'll underwrite the insurance for us," Lasen said. "We've had some response in what costs could be ... I don't think it's going to be cheap."

Removing the tanks would be a convoluted process, Lasen said, including a lot of soil testing and analysis. The highest estimate he had gotten for the cost of removal would be $63,000.

City Finance Director Janice Flynn said she had spoken to a few insurance agencies about the cost of covering the tanks. The amount of testing the city would have to pay for in order to maintain the insurance would be high, and have to be paid out every few years, she said.

"(One provider) said 'If we give you a policy, it will be at least $15,000, with a million-dollar deductible,' which is useless," Flynn said.

"Let's see," Kannely said, making weighing gestures, "$63,000 or $1 million."

"I looked into, and talked with (City attorney) Katherine (Kenison) too in regards to self-insuring and different options, and I don't think any of them are gonna work for us," Flynn said. "There are too many strings attached now through the state. If you want to self-insure, you have to have tangible assets of $10 million in your financial statements, you have to have already been registered with the SEC and other entities. It's just not feasible, it's not realistic."

"We have applied for some residual ARPA funds that Grant County had (to remove the tanks)," Lasen said. "And we may be successful with that. They may not give us what we applied for. We applied for $80,000. But if they're inclined to negotiate with us and can offset our costs, by all means, we'll want to do that."

Council member Hector Rodriguez asked if the tanks could be sold after they're dug up to recoup some of the cost of removing them.

"These are documented tanks that the state knows we own," Lasen said. "If we have somebody just arbitrarily come in and dig them up and charge us $80,000 to do that, and they disappear, we're going to have hell to pay with the state of Washington."

"DOE has a very strict regulatory program for decommissioning (underground storage tanks)," Kenison said. "We do not want to do anything outside of that."

"The one thing I don't like about insurance companies is they might say, 'Yeah, we'll take your $10,000 this year for a policy,' and then next year, it's 'We're gonna take $50,000 or drop it' and you get to start it all over again," Lasen said. "Quite frankly, the tank system is just not worth that headache to staff, or to elected officials for that matter."

"Well, to have the liability of $1 million and have to buy insurance and have to license and have to test does not sound logical to me," Kannely said. "I mean, that sounds like we are rolling dice. Because if those things were to explode and wipe everything out, well, we'd cover the first million, and then people can just come in and take over Royal, because that's going to hurt us."

Mayor Michael Christensen tabled the matter until the next council meeting so Lasen could get more specific figures for the cost of removal.

Joel Martin may be reached via email at jmartin@columbiabasinherald.com.