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Fired Port Director gets into sand and gravel business

Jul, 24 2008

Sinking business rises from the sand
Controversy surrounds former Port director Peter Gearin’s new venture

(Astoria, Oregon)  --  A new business started by former Port of Astoria director Peter Gearin is resurrecting a failed effort by the ports of Astoria and Portland to market the mounds of sand on Rice Island, the Columbia River dredge disposal site once known for its oversized Caspian tern colony.

Gearin, who was fired by the Port Commission last year amid accusations of mismanagement, launched Rice Island Partners LLC shortly after his dismissal.

The corporation has state approval to remove sand and gravel from Rice Island and sell it for a profit, though it has not applied for permission to build an unloading dock.

The business has raised eyebrows among Port insiders, who question whether Gearin should be laying claim to a project that once promised a payoff for the Port.

Gearin represented the Port on a team of three government agencies tasked with marketing Rice Island sand in 2003. The team looked at the possibilities of selling the sand to construction companies as a base for making concrete and to the Seattle and San Francisco airports as fill for runway expansion projects.

Though the team never secured a marketing deal, some suspect Gearin used his position as Port director to set up a private business deal for himself.

"It didn't pencil out for being a good project for the Port of Astoria," said Port Commissioner Bill Hunsinger. "It seems sort of strange that all of a sudden it pencils out when he does it for his own company. ... He had some pretty private information that the taxpayers paid for."

Gearin declined to be interviewed for this story, citing a lack of trust in the newspaper. Federal authorities are conducting a criminal investigation into his role in the Port's 2005 dredging violation, which cost the Port $800,000 and has not been settled.

Opportunity knocks
Located across the shipping channel from Astoria near Altoona, Wash., Rice Island is loaded with 40 million cubic yards of dredge material taken out of the Columbia River by the U.S. Army Corps of Engineers, and it's nearing capacity.

The idea of selling the piled dredge spoils on the island was first floated in 2003 in the bistate community governance program Oregon Solutions as a way to clear more upland storage space for the massive channel deepening project and ongoing maintenance dredging on the lower river.

"We don't have a lot of places left where we can put anything," said Steve Purchase, assistant director for the Oregon Department of State Lands. "There's only a couple allowable areas, and Rice Island is pretty close to being full."

So Oregon Solutions organized a three-member steering committee to explore the idea of selling the excess material to increase Rice Island's storage capacity. Gearin was tapped as the director of the Port of Astoria to sit on the committee, as were representatives from DSL and the Port of Portland.

"This was a good news project because everybody came together to work on a common problem," said Purchase. "Each group had expertise to bring to the table. The ports had contacts state doesn't have. We own the property. We own the material. It seemed to be a good way to help everybody achieve their goals and keep the ports operating and viable."

'Easier said than done'
As the island's owner, DSL would collect royalties for the state's Common School Fund from the sale of the stored dredge material.

To make a profit off the sale of sand, the ports would have had to find a buyer willing to pay more than the royalties owed to the state. But, at least initially, profits weren't the true goal of the project.

"The motivation for us was the placement of dredge material on Rice Island," said Port of Portland Executive Director Bill Wyatt. "We're very dependent on the dredging of the river. Rice Island is running out of room as a depository for new material, and it's not easy to find new ones."

Over time, the steering committee laid the groundwork for making the Rice Island sand "market ready," launching the initial planning, permitting, contracting and regulatory actions.

They determined the unloading facilities for the project would cost $2 million to $3 million; they hired a market analysis, collected public input and found potential uses for the sand in airport runway expansion projects in San Francisco and Seattle.

Finding a market for the sand was "easier said than done," said Wyatt. Clean, sandy material can sometimes be used to make concrete, but the Rice Island sand didn't qualify because it had too much salt in it.

"The conclusion was there probably wasn't a great market for the sand," he said. "But if you placed it in water, it would be good fill for building runways."

But the runway project deals fell through, and the committee's efforts stalled.

"We tried for quite a while to market that area and have not been successful," said Purchase. "The cost of transporting that material to San Francisco, Seattle or Alaska was prohibitive for most companies."

Gearin steps in
After his dismissal from the Port in February 2007, the pieces of Gearin's Rice Island venture fell into place rather quickly, according to documents acquired by The Daily Astorian through a public records request.

By May 2007, Gearin had registered Rice Island Partners as a new business along with two Portland-area businessmen, Ken Leahy and Gerald Bell. That month, the Port of Portland and Port of Astoria withdrew their applications to market the Rice Island material, and DSL offered Rice Island Partners a sand and gravel removal permit to do the work.

Gearin's company proposed removing and transporting 100,000 cubic tons of sand per month initially, with operations growing over time to 300,000 cubic tons monthly.

According to documents, the project required a pier to allow material to be loaded onto barges. Later, the material would be loaded onto a deep-draft "mother ship" for transport.

Purchase said he knows Gearin's company has been lining up buyers, though he doesn't know where. Wyatt said he'd be surprised if Gearin had found a distant market for the sand, given the cost of transporting such heavy material.

DSL offered Gearin the permit he needed to remove sand and gravel from the island in May 2007, three months after Gearin was fired from the Port. But it required a $153,000 bond to ensure royalty payments, which was never secured.

Clatsop County issued a development permit to allow the company to remove and ship sand from the island, but the permit needs to be reviewed before unloading facilities can be built. So far, Rice Island Partners has not submitted a request to build.

In May, DSL proposed a sand and gravel removal permit with a $20,000 bond. Gearin has not yet accepted.

The Daily Astorian


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