145-home Birch Bay subdivision delayed by rare clause

By Oliver Lazenby

Developers Dwayne Engelsman and Chris Lilly, based in Vancouver, B.C., are working on a 145-house subdivision in Birch Bay that will cost an estimated $32 million to build. Engelsman purchased the property in 1994 and the pair began working on development in 2011. But seven years later, they still haven’t answered a simple question: to where will the toilets flush?

It’s not for lack of trying.

Engelsman and Lilly’s project, a 38-acre subdivision called Whisper Lakes, is planned for Blaine Road just south of Alderson Road. Engelsman has spent $2.2 million in permitting fees, and he said they’re ready to build 37 single-family homes, which will average about 2,000 square feet. They have all the necessary permits and approvals, except for an OK from the Birch Bay Water and Sewer District on the sewer line.

Due to the land’s slope, there are two possibilities for getting the development’s sewage to Birch Bay Water and Sewer District’s (BBWSD) main line on Alderson Road.

The first – the one in BBWSD’s comprehensive plan – is to go directly north, under a wetland and through several private properties. Two property owners told the developers they won’t allow sewer lines across their property and county council member Rud Browne said at a council meeting that using eminent domain to get sewer line through is not an option.

The second possibility is to route the sewer line to the west and connect with sewer line on the Bay Horizon Park property. BBWSD won’t approve that because of a clause in the park property’s deed that could nullify a sewer easement.

The developers are looking for a solution, but they’re running out of time – they hoped to start this year and finish the first round of houses by the end of the year.

Developers Dwayne Engelsman, l., and Chris Lilly proposed a subdivision called Whisper Lakes for the land behind them, but construction is on hold due to issues with proposed sewer lines. Photo by Oliver Lazenby

The developers prefer the option to the west; their civil engineers recommended it in 2011 because it doesn’t cross deep wetlands and would cost about one-third of the northern route, Engelsman said.

When they brought that idea to BBWSD four or five years ago, BBWSD general manager Dan Eisses said the district showed them the comprehensive plan that has the sewer line going north.

BBWSD considered the developers’ idea, however, and initially thought it could work; both routes worked with gravity to bring sewage to the main sewer line.

“We said, ‘OK, if you can get an easement through Bay Horizon Park, it’s kind of a wash for our planning purposes,’” Eisses said.

But BBWSD and the developer discovered a clause in the property’s deed in September 2017. The federal government gave that property, which was formerly the Blaine Air Force Station, to Whatcom County in the 1980s.

According to the property’s deed, if the county stops using it as a park or if the federal government decides it needs it for national defense, the federal government could take the property back and immediately terminate the sewer easement, or even tear out the infrastructure if they wanted to. BBWSD would have no right to maintain a sewer line on the property, leaving Whisper Lake and its 145 future homes with nowhere to flush their sewage.

If that happens, the sewer district would have to build a new line, which may include a pump station with two pumps and a generator, and district customers would have to pay for it. Eisses said that could cost around $1 million.

“This could be 20 or 30 years in the future, a long time after the developer is gone, said BBWSD finance director Sandi McMillan. “It’s our rate payers who would get stuck with that.”

Lilly suggested a homeowners association for the subdivision could be responsible for the cost of replacing sewer line if needed – that way 145 homeowners would foot the bill, rather than rate payers through out the district.

The sewer district won’t accept that, as those 145 homeowners could potentially have to pay thousands: $6,896 if Eisses’ rough estimate of $1 million to replace the line is correct.

So BBWSD won’t agree to the sewer line connecting through Bay Horizon Park, even if the possibility that they’d need to reroute the sewer line and stick their customers with the bill is small.

“Our housing project is being thwarted over a contingency that will never happen,” Lilly said.

Remote chance

With housing prices in Blaine in Birch Bay at record highs and inventory low, many in Birch Bay, including some BBWSD commissioners, want the houses built.

“I’ve been really excited about them coming in just because I thought this is the kind of development we need,” BBWSD commissioner Patrick Alesse said. “I don’t know if it’s a small chance or not that the federal government would take back the property, but it’s a chance and the people in the district would be exposed to that.”

Whatcom County deputy prosecuting attorney Elizabeth Gallery said the possibility that the federal government will reclaim the property is remote, “but you never know.”

Eisses agrees.

“The developer has tried to say that the federal government would never come in and try to take this property, which we don’t really have an argument against that,” he said. “But they’re asking us to sign something that says that could happen and our rate payers would be responsible. The district is looking out for the people who live in Birch Bay.”

Compromise plan

BBWSD isn’t the only group that doesn’t want to take on the financial risk of building a new sewer line if the federal government terminates the easement.

Engelsman and Lilly proposed a fix to Whatcom County earlier this year – they offered to rebuild the sewer line on the county’s Bay Horizon Park property, a gift to the county with an estimated $180,000 value. That sewer line is more than 60 years old and near the end of its life.

In exchange, they asked the county to take on the financial risk of rerouting the sewer line if the federal government takes the property back. The county hasn’t agreed to it.

That leaves the route to the north with resistant property owners.

Both Lilly and Engelsman spoke to the county council about the issue in the open comment period of the April 24 county council meeting. Councilmember Browne said the county would not condemn a property in order to get a sewer easement, something that both the county and the sewer district have the power to do.

“I’m not aware that the county has ever engaged in condemnation. Maybe that’s something you do where you’re from, but the county has never engaged in condemnation of properties to provide sewer lines,” Browne said. “I would not consider that to be an option.”

Eisses is confident that routing a sewer line to the north, as BBWSD’s comprehensive plan calls for, will work, though it could take some negotiating and will delay the project.

For now, that leaves Whisper Lakes with nowhere to flush and the developers’ hopes to start construction this year circling the drain.

“I think it’s important that Birch Bay citizens know that this lack of cooperation between all levels of government is delaying these new houses,” Lilly said.

“We have stopped spending money on this project and are now looking at other projects elsewhere. We can’t keep banging our head against the wall on this and not have any progress.”