Chemicals discharged from the back of a dry cleaning business in Bend caused $100,000 in damages to a neighboring building owned by the city, which spent another $50,000 to evaluate the chemicals.

That’s the conclusion made by city of Bend investigators after they found liquid had been pouring from a pipe behind Mirror Pond Cleaners onto a nondescript beige building on its south side, possibly for decades. The building, which is owned by the city and used for storage, is known as the Annex and is separated from Mirror Pond Cleaners by a 12-inch gap. After testing, the liquid was found to contain dry cleaning solvent.

Details of the discharge are described in a July 27 internal memo from the city of Bend to council members.

A lengthy investigation that included ground and air testing showed that the level of contamination was not significant enough for a remediation project and the city can continue using the building for storage. But the value of the property is diminished.

The Annex, located at 745 NW Bond St., has been used for storage but could be converted into office space, the memo said. It currently holds boxes of documents piled in a stack and a jumbled collection of office furniture.

No lawsuit will be filed against the drycleaners, partly because of the costs of litigation, city officials said in the memo. The city was also concerned a lawsuit would put Mirror Pond Cleaners, a family-owned company, out of business. Denied insurance claims also figured into the decision-making process.

Timeline of events

Grant Burke, the city’s facilities director, was the first to notice something was wrong when he observed pooled water in the space between the Annex and the dry cleaners in February 2020. Grant noticed that the brick exterior of the Annex has significant degradation, according to the memo.

Grant probed further and noticed that Mirror Pond Cleaners was discharging dry cleaning chemicals, including Perchloroethylene, from a pipe. The business was informed of the discharge and told by the city that the fluid had been coming out of the drycleaners onto the Annex.

Deterioration of the brick exterior on the Annex was apparent, said Michael Selkirk, associate city attorney for the city of Bend, but it was not clear if that was caused by the dry cleaning liquid or rain and snow.

The discharge may have been going on “for decades” according to correspondence between the city and Mirror Pond Cleaners reviewed by The Bulletin, although the amount of time is unconfirmed.

Shortly after being informed of the discharge, Mirror Pond Cleaners rerouted the pipe to a utility sink. Steps were taken to preserve the integrity of the Annex while environmental consultants investigated the area for ground contamination.

Shortly after being informed of the discharge, Mirror Pond Cleaners rerouted the pipe to a utility sink, according to an email from Steele Associates Architects, the City’s architectural consultant. In April 2020, investigators noted that the pipe had been connected to a volatilization system on the roof of the building.

The levels of contamination in the air and soil did not rise above those allowed by the Oregon Department of Environmental Quality for the current occupational uses, so no immediate remediation was required, according to the memo.

The consultants found that one soil sample rose above the state’s permitted levels for long-term residential use and remediation may therefore be required if the Annex is redeveloped into residential uses.

Groundwater of low concern

The risk to groundwater appears low. A letter from PBS Engineering and Environmental Inc., which conducted on-site testing, reports that the average depth to groundwater in the Bend area is expected to be greater than 300 feet below ground. No documented drinking water wells are located on the Annex property or in the immediate vicinity of the Annex.

Testing was done up to five feet below ground and showed most of the contamination was contained to soils near the surface.

Remediation costs were estimated at $100,000.

The incident was not the first time Mirror Pond Cleaners had been found to be releasing contaminants. In 2005, the business was fined $6,124 by the Department of Environmental Quality after it was found to be mishandling cleaning chemicals. The amount was later reduced to $1,147 after the owners agreed to invest in more advanced washing machines.

Beverly Brewer, the owner of the business, said in an email that she was unaware of the most recent internal memo issued by the city and did not offer a comment on the overall matter.

New recommendations

Instead of filing a lawsuit against the drycleaners, the memo recommends the city continue using the Annex for storage until it can sell the building and nearby City Hall. This sale is being considered as part of the city’s plan to relocate City Hall to the Bend Central District.

Selkirk said the city is following the recommendations listed in the memo.

“I don’t know when we might sell the City Hall complex or the Annex,” said Selkirk. “The property has not been put on the market.”

If and when a sale does eventually occur, the city will turn over its findings related to the contamination and the appraisal, said Selkirk. At that time the city and the prospective buyer can negotiate the value of the property.

While remediation isn’t needed as long as the building serves as a storage facility, if the use changes, and there is a residential component in a new building on the site, remediation may be triggered, said Selkirk.

“We did two or three years of work to try to figure out what happened, how bad is it, could it affect the uses of the building now and could it affect its uses later. We ultimately determined that if it sells to somebody who wants to redevelop it as residential they may need to do that remediation,” said Selkirk. “But we don’t know what it is going to be used for if it is redeveloped.”

Third-party experts were hired to detect if there was any pollution in the environment near the building, said Selkirk. Their reports indicated the contamination was confined to the Bond annex building, he said. Testing in other areas surrounding the property was not carried out.

“We did the due diligence to make sure there wasn’t a bigger problem and we didn’t get any indication that there was,” said Selkirk. “Based on our expert reports we did an amount of investigation that we needed to do to make sure there was not an environmental hazard.”

Denied claims

Denied claims are part of the reason why litigation is not going forward.

The city’s property insurance carrier said the city would have trouble proving the damage was caused by the liquid discharge and not from the severe winter weather experienced in the years prior to the discovery. The cleaners’ insurance carrier denied the claim for the same reason.

Meanwhile, the city’s pollution insurance carrier denied coverage for the contamination claim because the pollution did not rise above allowable levels for the current occupational use, and there was no coverage for the cost to remediate in the event the site was redeveloped for residential use in the future.

The drycleaners’ insurance carrier denied the city’s claim because it does not have pollution coverage.

Litigation plans shelved

The city manager and its attorney’s office declined to file a suit to recover the investigation costs and compensation for the diminished value of the property.

Litigating the contamination claim would be a long, drawn out and expensive process, and will require hiring outside counsel to handle the claim, according to the memo.

“In addition, there is no guarantee of success in court,” the memo states.

“Even if the city does succeed, there is a likelihood that it will put the Cleaners out of business since the Cleaners is not insured for the damage. The Cleaners has been family-owned and operated in Bend since 1992.”

There are no additional costs between now and the potential sale because remediation is not required for current occupational uses.

“If and when the city sells the annex and neighboring City Hall properties, the city can then negotiate to allocate remediation costs between it and (a) future buyer depending on the nature of potential development,” the memo states.

It adds that such an arrangement could result in a loss of approximately $150,000 to the city but such a loss is “relatively small” compared to the $8.5 million valuation of the City Hall property (in 2020 dollars) and “does not justify the burden and expense of filing affirmative litigation, and will not risk putting a local, family-owned dry cleaner out of business,” the memo states.

Perchloroethylene, also called Tetrachloroethylene, is widely used for drycleaning fabrics and metal degreasing operations. The primary effects from long term inhalation exposure are neurological, including cognitive and motor neurobehavioral performance, according to the environmental protection agency. Studies of people exposed in the workplace have found associations with several types of cancer including bladder cancer, non-Hodgkin lymphoma and multiple myeloma. The EPA has classified the chemical as likely to be carcinogenic to humans. The agency adds that new drycleaning technologies and practices introduced over the past couple of decades resulted in substantially reduced occupational exposure.