Centennial Extension

To: City Council

From: Ann Caley, Project Manager

Subject: BNSF Acquisition – Appraisal Contract – Centennial Trail Extension

SUMMARY: The City’s adopted Riverfront Trail Master Plan identifies the preferred Centennial Trail route through town as the out-of-service BNSF railroad route along State and Lincoln Avenues. BNSF offered their properties along this route for sale to the City several years ago. A TEA-21 acquisition grant in the amount of $450,000 has been awarded, and federal requirements regarding right of way acquisition apply, including both an appraisal and a separate appraisal review completed by state-approved appraisers. The appraisal of the proposed BNSF acquisition began last fall. The Eastman Company was selected to perform these services based upon the firm’s qualification as a WSDOT-qualified appraiser and for their experience with appraisal of railroad properties in particular. They are the firm currently appraising the railroad properties for the extension of the Burke-Gilman Trail west into Ballard (the Ship Canal Trail.) The initial proposal for services indicated a total fee for services not to exceed $20,000, with a $13,000-$15,000 range likely. Work began on the basis of a $14,000 fee. The research and evaluation process raised issues of adverse possession, condition of title, soil contamination, floodplain, and other factors affecting value. These were resolved in great detail across 24 individual parcels. They resulted in reductions in the range of 30-50% to the appraised value of those parcels which the city seeks to purchase from the railroad. The appraised value of the minimum rights necessary to build the Centennial Trail Extension initially penciled out about $1.2 million; this was reduced by this diligence to $500,000. Actual billable hours were in excess of $30,000, but the consultant requests a contract increase only to $25,000, which is $5,000 over the initial proposal. The additional reviews prompted by the effects of the various issues raised, and subsequently resolved with the aid of City Attorney Thom Graafstra, required a series of appraisals to be completed which were well outside the original scope of the project. Council approval of a total consultant services fee of $25,000 is requested as reasonable and appropriate. The thoroughness of the review will become particularly important during upcoming negotiations with Burlington Northern Santa Fe Railroad.

RECOMMENDATION: That the City Council AUTHORIZE the City Manager to execute an increase to $25,000 for appraisal services performed by The Eastman Company in the preparation of an appraisal of the BNSF properties along State and Lincoln Avenues.