Find Local Events (pick a date)
 
Browse Boulder real estate by neighborhood, school and zip code along with other homes for sale in Colorado on COhomefinder.com
Browse Boulder real estate by neighborhood, school and zip code along with other homes for sale in Colorado on COhomefinder.com.

 

 

 

 

 

 

 
Home / Articles / News / News /  Anatomy of a mistake
. . . . . . .
Give Through iGivefirst
Thursday, April 12,2012

Anatomy of a mistake

City’s August 2000 purchase of Valmont Butte was flawed on multiple levels

By Joel Dyer, Jefferson Dodge and Elizabeth Miller

The circumstances surrounding the city of Boulder’s purchase of Valmont Butte are suspect, at best. At worst, fraudulent.

The purchase was supported by information that was either intentionally misleading or woefully incomplete. Not only was the deal brokered by a private third party, which is rare itself, but the full, sordid history of the contaminated property appears to have been hidden from city council, and perhaps certain city staff members.

Piecing together the truth about who knew what, and when, is a challenge, especially considering that the past 12 years have left gaps: faded memories and shoddy record-keeping.

We do know that the Valmont Butte Corporation paid $700,000 for the 103-acre property in 1994, then turned around and sold it to the city six years later for more than $2.5 million.

We have also demonstrated in this series that the condition of the property, as represented to city and state officials by that corporation, turned out to be either inaccurate or based on assumptions that proved false. For one thing, it turned out that there was groundwater at the site, despite the Environmental Protection Agency’s mishandled attempts to dig monitoring wells in the mid-1980s. And contamination had, indeed, left the property, in the form of polluted tailings pond water being pumped for decades into adjacent Public Service Company lakes (which drain into Boulder Creek), airborne contaminants blown both north and south by the wind and, by all appearances and according to statements by property owners and even a belated confession by a state official, groundwater migrated northward into residential drinking water wells.

Longtime mill operator Tom Hendricks says the Valmont Butte Corporation used a front-loader to cover over a couple of lead pits, of which there seems to be no written record. In fact, it appears that neither the EPA or the Colorado Department of Public Health and Environment were even aware that Allied Chemical’s Valmont Butte site was not only a fluorspar mill, but also a lead and zinc operation which has, to this day, never been addressed or remediated.

Even one of the city’s own attorneys acknowledges that the Valmont Butte Corporation did not do an adequate job of capping the primary tailings pond at the site.

Still, the Valmont Butte Corp. convinced the CDPHE that it had done enough remediation to warrant the termination of the radioactive materials license that had been active at the property for nearly 30 years.

When the state lifted the radioactive materials license and approved covenants for future use of the property, it cleared the way for city officials to begin coveting the parcel as the future home of a firefighting training center and a biosolids processing facility (a place where the city’s human waste could be converted into agricultural fertilizer).

An apropos use for what has turned out to be a crappy deal, especially for the taxpayers who are left footing the bill for a property where remediation is now costing the city at least as much as the original purchase price.

* * * *

Boulder Weekly asked city council members who were serving at the time of the purchase to reflect on the decision. Their responses ranged from spotty recollections to realizations that buying the property was a mistake, and that the council wasn’t given all of the material it needed to make an informed decision.

Several say they don’t recall much, if any, discussion about the acquisition.

“I would have probably been relying on the agenda packets for information,” says Don Mock, who served on the council in 2000.

If that’s the case, he and other council members who said the same thing didn’t know much about the site’s contamination history. The five-page memo that apparently served as the council’s only background on the property primarily discusses the need for a biosolids treatment facility and new firefighter training center, and the desire to preserve a small portion of Valmont Butte as open space. It goes into detail about why the site would be ideal for the aforementioned purposes, why it was a good deal (75 cents per square foot for the “usable” portion of the property) and how the purchase would be funded.

The only section that even mentions possible contamination simply outlines development restrictions placed on the property by the state and Valmont Butte Corporation, including the need to keep radon gas levels from exceeding EPA guidelines. There is a brief description of the property’s milling history, a passing acknowledgment that there were “tailings containing naturally occurring radioactive materials” and an assertion that the primary tailings pond had been “capped and stabilized.”

No mention of the city dumping truckloads of radium-contaminated soil at the site in 1971. No mention that this act most likely had put the city on the hook for at least a portion of the ultimate cleanup cost of the site, whether it owned the property or not. No mention of contaminated drinking wells north of the property. No mention of millions and possibly billions of gallons of polluted tailings water having been pumped into Public Service Company’s lakes over a 30-year period. Not a word about how the property had missed being added to the EPA’s Superfund National Priority List by less than a point. In fact, the council wasn’t even told that at the time it was asked to buy the property, the Valmont Butte site was listed in the EPA CERCLIS Superfund database, meaning that the agency could reassess the site at any time and demand millions or even tens of millions of dollars worth of remediation.

Surely the council was told at least some of this critical information that was known to staff prior to the purchase. Unfortunately, the city’s records department was unable to find any mention of Valmont Butte during the months leading up to the purchase in any agendas or minutes from council study sessions, advisory groups, boards or commissions.

And the first three of the four audio cassettes used to record the Aug. 15, 2000, city council meeting where the purchase was approved are mysteriously missing from the records department. Not that they would have contained any discussion of the decision, since the Valmont Butte purchase was listed on the “consent agenda,” which is a collection of items that the council votes to approve as a package because they are perceived to be of little or no consequence, requiring only a quick rubber stamp by council.

Finally, a Boulder Weekly search of the city’s computer files turned up a passing reference to a proposed biosolids composting operation in the April 17, 2000, minutes of the city’s Water Resources Advisory Board. And there was a short discussion of the purchase by the Open Space Board of Trustees at a meeting held six days before the council vote. According to minutes from that meeting, Wally Cameron, real estate manager for Open Space and Mountain Parks (OSMP), didn’t mention contamination at the site. Board member Chris Mueller asked about public use of the area, and Cameron replied that “it does not lend itself to much use, and no trail is planned,” according to the minutes.

Most citizens who spoke during the comment period that followed expressed concerns about the fire/public works uses proposed for the land. One speaker, fourth-generation Valmont resident Leann McGinty, told the board she was “concerned about using Valmont as a dumping ground,” adding that “the water has been contaminated over the years, and is no longer drinkable.”

Cameron assured the speakers that there would be a public process to properly vet the proposed uses.

And that was it. All pertinent information concerning the contamination at Valmont as known at the time and contained in the public records of the county, state and EPA appear to have been withheld from council.

* * * *

Aside from the lack of public discussion about the purchase, and the lack of information provided to council, there are other irregularities about the property’s purchase: City officials didn’t have an appraisal done on the property, and they had a third party, Western Disposal, negotiate the deal with Valmont Butte Corporation.

Former city staff members involved in the transaction say it was common to not have an appraisal done before buying property, because the open space department had an entire division devoted to real estate acquisition and assessing the value of parcels of land.

As for having a third party like Western negotiate the Valmont purchase, former city attorney Joe de Raismes denied that it ever happened.

“That would not be right,” he said.

“Western never helped us with an acquisition in my 24 years as city attorney. They may well have held an option and assigned it to us. But we do not negotiate through private entities. It was not our practice.”

But Boulder Weekly obtained a copy of an April 6, 2000, letter of intent between the city and Western. It is not an assignment of an option, it is an agreement directing Western to “undertake reasonably diligent efforts to obtain a contract for the purchase of the Valmont Property with Valmont Butte Corporation.” According to the agreement, Western would use 20-35 acres on the east end of the property for its own purposes, including the joint venture with the city to build and operate the biosolids composting facility. The agreement also refers to a 1998 letter of intent between the two parties to acquire a nearby Public Service property.

In yet another curious turn, the city records department was unable to find a copy of that agreement.

Perhaps the most unusual aspect to the April 6, 2000, agreement is that it says if both the Public Service and Valmont properties are contracted for purchase, the city can choose which of the properties it wants.

Western Disposal President Gary Horton tells Boulder Weekly that he primarily worked with de Raismes on the agreements. In the late 1990s, Horton explains, his company and the city were both looking for land. Western needed open areas to store materials such as downed tree branches, and the city was looking for a new home for Eco-Cycle. He says Western took the lead in pursuing deals for the Public Service and Valmont properties because of a feeling that Western could negotiate a lower purchase price. (After all, Western is a private entity, not a city with a large budget.) According to Horton, the tactic may have saved Boulder some money when it came to Valmont.

“I think we bought that property for a million less than he was asking for,” Horton says, referring to the late Tim Smith of the Valmont Butte Corporation. (His brother, Tony Smith, did not return calls from Boulder Weekly.)

When it was time to choose between Valmont Butte and the Public Service parcel at 2655 63rd St., the city selected Valmont, and Western took the Public Service land, giving up its claim to the eastern part of the butte. According to Horton, the fact that the city was potentially liable for dumping radioactive soil at Valmont Butte in 1971 was widely known at the time.

“If I knew it, it was pretty common knowledge,” he says.

In fact, the covenants attached to the property in 1999 describe the 1971 dumping, even though it says the pit was placed in the primary tailings pond and capped, one of several inaccuracies in the document.

But the knowledge of that contamination may have played a role in why the city chose the Valmont site. After all, if it was already responsible for some of the pollution, the city “didn’t worsen their position by buying it,” Horton explains, adding that city officials were under the impression that the property had been properly remediated. “They had a letter from the state saying they had done what they needed to do.”

He adds, “About the decision about who got which piece of land, I think the city chose the butte, and they did so because of their previous contributions to the tailings on the site.”

De Raismes has a different version.

He says he had no knowledge of the city’s 1971 contribution to the site’s contamination.

“I don’t personally recall anything about the city dumping radioactive soil,” he tells Boulder Weekly. “Why would you even have radioactive soil? We don’t have any radioactive things. I don’t know anything about it.”

When informed of Horton’s recollection, de Raismes continues, “That’s his perception. I don’t have that perception, or not, I just don’t know. I don’t actually share Gary’s view about that, but that’s just my personal view.”

When asked about city officials’ knowledge of the extent of contamination at the site, de Raismes says, “I do remember discussion on the necessities of remediation. … I remember that somebody, not me, studied and decided, obviously, in retrospect, in error, that it was not a significant risk because it had already been remediated. Certainly liability was one of the issues considered.”

He says city officials knew that the city would be at least partially liable for cleanup at the site, solely due to the fact that it was buying the property, not because of any past dumping there.

“Everybody knew we would be on the hook for future remediation,” de Raismes says. “That’s just the way the law is. You can’t fix that. When you buy land, you take on a portion of the liability, as a potential liable party. And so, a judgment had to be made about how significant that danger was, compared to our desire for the land.”

He acknowledges, however, that city officials were under the mistaken impression that the primary tailings pond had been properly capped. De Raismes says he recalls discussing “that there was radioactive soil from the mill which was covered over by an impermeable clay cap, and therefore had been found to be fully remediated by the state. Obviously, that was not true, because later this prairie dog infiltration was discovered. I know that the city worked hard at it. Whether they did enough work is easy to question, in hindsight.”

When asked why the city council would be asked to approve the purchase more than a month before an environmental assessment was completed, de Raismes says that more important than the timing of the council vote would have been to ensure that the assessment was done before the closing.

“It would be crazy to do it any other way, frankly,” he says.

According to the city’s own timeline, the purchase of the site was completed on Aug. 28, 13 days after the council’s vote. The county assessor’s office shows deeds for the property dated Sept. 5 and Sept. 6.

The environmental site assessment was not completed until Sept. 18.

* * * *

When asked whether it was common to use a third party like Western to purchase property, former open space director Jim Crain says, “I’m really not going to comment about that particular thing, because I really don’t recall enough about it.”

He also says he doesn’t remember knowing that the property was contaminated, and declines to comment further.

Cameron, the OSMP real estate manager, maintains that city officials did sufficient due diligence before the purchase.

When asked about using Western to negotiate the deal, “we didn’t do that very often,” Cameron acknowledges. “We were worried about what it was worth, as I recall, and one of the best ways to determine the value is if a knowledgeable seller and buyer come together on a price, so that’s why we used Western.”

He adds that there was “nothing under the table or anything like that,” city officials just thought it would be best to use a third party so that they wouldn’t be accused of “sweet-hearting the deal for anybody.”

Cameron adds that city officials thought that the Valmont Butte Corp. had “capped the nasty stuff. What the city could use it for was perfect, as long as we could be convinced that it was no longer a danger. As I recall, we were convinced of that.”

He says he doesn’t recall knowing about the city’s 1971 dumping at the site, either.

“The city attorney’s office was very aware of what was going on there,” Cameron says. “We were under their guidance the whole time, to make sure we did this in a proper manner. Joe de Raismes was very aware of what was occurring there, why we were buying it, what the problems were, and what we had to do to make sure we weren’t buying a problem.

“In my opinion, we did a good job for the city users in getting that property ready to go, and it was unfortunate that it didn’t work out for those purposes,” he adds. “I remember that at the time, we were pretty certain, for what we were going to use it for, it was perfectly OK. … We investigated it, as I recall, and everyone was comfortable that what we were going to use it for was perfectly safe.”

Indeed, maybe if the city had stuck with its original plans, the primary tailings pond would have a semblance of a cap today. Plans called for constructing a building there, with much of the remainder covered in concrete for a driver training area. Some say pavement would have kept water out more effectively than the layer of various-sized rocks currently planned as a prairie dog deterrent.

Longtime Boulder Fire Chief Larry Donner, who was involved in the discussions at the time, still thinks the property would have been well-suited for a fire training center — and that project might have actually saved the city some money.

“My perspective is, had we continued with the original plan, the cost would not have spiraled, and it would’ve been a good location,” he says. “And that didn’t happen. The original plan would’ve addressed the concerns in a less costly manner.”

(The covenants on the property may have precluded the fire training center, since no water infiltration or accumulations were permitted at the site.)

Donner adds that city officials were well aware of all the contamination there, including the city’s own radioactive soils from 1971.

“We had a complete report on what was in there,” he says.

* * * *

Several former city council members contacted by Boulder Weekly now say they would have voted differently, knowing what they know now.

“I have to say, I don’t believe we were given a lot of the information about the contamination,” says Francoise Poinsatte, who was on council at the time and wonders if she missed the meeting where the deal was discussed.

But according to city records, there wasn’t one.

She says her reaction later was, “Oh my gosh, what did we do?” “I can tell you right now, I would not have voted for that purchase,” Poinsatte says. “I don’t think we had a notion … that it was even contaminated. I don’t think we would have bought something that we thought was going to be a huge headache for us down the line.”

“I really don’t remember that we were told it was a contaminated site,” says longtime council member Lisa Morzel, adding that she probably would have voted against the purchase if she had to do it over again, given the funds that the city is spending on the property. She also says any issues not being addressed by the city’s current remediation plan warrant further attention.

“There are some problems with groundwater contamination, and those do need to be addressed,” says Morzel, a professional geologist. “We’re discouraged to micromanage too much on the city council level. … But it doesn’t matter whose poop it is, it needs to get cleaned up properly. So I think not to do so is not being responsible.

“I think, if the thing is affecting properties off site, that’s a real issue,” she continues. “It’s like if you drop a piece of paper or come across a can, do you pick it up, or do you walk over it?” Former councilmember Rich Lopez explains, “If there’s a claim that the contamination has never left the property, and you subsequently discover that, in fact, it has, and you can trace it, obviously that assertion is not correct. Had we known that at the time, our actions might have been different. … We work with the information we have at the time.”

Some suggest that city staff could have done more homework on the property.

“It’s kind of beyond the purview of council to go do that kind of due diligence, that ‘let-the-buyer-beware’ due diligence,” Poinsatte says, adding that there seemed to be some urgency about jumping on the deal, like “we have to grab it now or somebody else will get it.”

“This is one of those things that’s bothered me over the years, I have to tell you,” she continues. “Like, oh, God, we should have avoided that, and I would accept responsibility. Probably it’s a lesson that you should not get all optimistic, you have to still sit back and ask the right questions.

“It’s pretty obvious this was a case of the city not doing due diligence,” Poinsatte says, calling it a “horrible learning lesson.”

“You rely on your staff to bring forward information that’s accurate,” Lopez adds. “As a council member, you can’t go out there and dig around yourself, because A, you don’t have the knowledge, and B, you wouldn’t know what you were looking at when you saw it. You rely on your staff and the experts to bring forward information with which to make a decision.”

He stopped short of suggesting that city staff didn’t do an adequate job in this case.

“The council relies on staff to gather the information and present it and take questions,” says former councilmember Dan Corson. “Knowing what you know today, it was fraught with problems, and I think that the vote probably would have been different.”

Corson, like the others, was hazy about whether council knew about the 1971 dumping at the site.

“I don’t know what I was aware of,” he says. “I don’t think so, but I can’t tell you. I mean, I would’ve thought that it would’ve prompted questions if we had known it.”

“I’m guessing it didn’t look like a risky purchase,” Lopez says. “It didn’t seem like we were going in and buying a land mine.”

And knowing then what he knows now?

“I think we would’ve probably taken a longer, harder look at it, probably had some hearings and try to determine whether the benefits of acquiring it, albeit with all these risks and concerns, outweighed just passing on it,” Lopez says. “The problem doesn’t go away. If we contributed to the problem, we have an obligation to remediate.”

“l know we had discussions about the contamination history, and there was information presented that suggested it was unlikely to be a significant problem,” says County Commissioner Will Toor, who was Boulder mayor at the time. “Whether the information we got at that time covered everything we needed to know, it would be hard for me to answer without looking at all the information available now and seeing whether there was information that should have been available that we didn’t get. We clearly were not anticipating having to do that type of remediation, and I think if we had understood that we would have to put that type of investment into remediation, we would have been unlikely to acquire the property.”

* * * *

In 2009, when the EPA was attempting to determine who was responsible for contamination at the site, it sent a list of questions to interrogate each party that may have had a hand in polluting the property.

In their response to the EPA, city of Boulder officials opened with a long list of objections, even to the agency’s definition of simple terms like “identify” and “document” that were used in the questionnaire.

Among the questions the EPA asked the city was to “describe all investigations of the Site you undertook prior to acquiring the Site.” As they did with virtually every question, city officials began their response by reiterating their various objections, fighting tooth and nail to avoid liability for the problem they bought. Their response to that question, in part, was, “Without waiving its objections, the City states that a good deal of information about the Site and its history is publicly available and was known to the City prior to its acquisition of the Site.”

So here, when pressed, city staff acknowledge that they did know more than they revealed to council.

Today, perhaps city officials should reassess their denial-based approach and acknowledge that mistakes were made, and that contamination could indeed be spreading off the site today and in the future, as it has in the past.

And perhaps the lesson of Valmont Butte should serve as a model of how not to acquire public property.

Respond: letters@boulderweekly.com

  • Currently 3.5/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
POST A COMMENT
No Registration Required
REPLY TO THIS COMMENT

Once again: great reporting.  But it didn't pursue the trail far enough.  If Council must rely on staff, you need to chase down the city manager and staff who did such shoddy ... or perhaps deceptive ... work.  Help us make sure this kind of boondoggle doesn't happen again.

Thank you.

 

 
Close
Close