Local officials generally welcomed news that WSF is seriously considering moving its maintenance facility from Bainbridge to the mainland, with thoughts turning to future uses of the property.

At the same time, though, they observed that negotiations with WSF have not always gone smoothly in the past.

“This is something the community has wished for as long as I can remember,” said former mayor Dwight Sutton, a long-time champion of a plan to move the maintenance yard elsewhere.

“This could be a real asset to the community. I think there are dozens of good ideas and I’d like to see one developed.”

Mayor Darlene Kordonowy took a more cautious approach.

“We could lose some industrial-type jobs, but maybe we could have three or four times that number if a boat-building facility goes in there.”

She also expressed concerns about ferry service.

“It has helped Bainbridge Island many times having the maintenance yard here to furnish replacement boats,” she said. “If the maintenance yard is elsewhere and a boat goes down, it might take half a day to get a replacement.”

The four-plus acre parcel west of the ferry terminal and the Eagle Harbour Condominiums has been an industrial site for 100 years.

The Hall Brothers Shipyard was located there at the dawn of the 20th century.

WSF bought the property in the 1960s, then expanded it in the 1990s by dredging contaminated spoils from the bottom of Eagle Harbor and adding to the land area.

Seven years ago, the state condemned land next to Waterfront Park that had been used as a bulkhead operation and boat haulout facility. Although WSF agreed to help replace the haulout facility, they could never come to terms with a private operator for a lease.

“They owe us a boatyard,” Sutton said.

WSF has agreed to make a portion of the property available for a yard, Sutton said, but they have demanded full market-rate rent based on the land’s highest and best use. City administrator Lynn Nordby said the city interprets WSF’s obligations differently.

“They have agreed to put a boatyard on the site or lease it to the city,” he said. “I think the rent they are entitled to is what a boatyard operator would pay. But they say they are required by the legislature to get the highest rent they can, and they won’t budge on that.”

Nordby said the yard prospect is one of a number of issues on which the parties disagree. Others involved the so-called “city lot,” part of the ferry terminal parking area that is leased from WSF, and issues about the ferry holding area, portions of which are on city property.

“They have us in some binds, and we have them in some,” Nordby said. “I keep suggesting we get together and work out a total settlement.”

The Eagle Harbor yard would clearly be a principal issue in any such negotiations if WSF proceeds with plans to vacate it.

Bainbridge appraiser Anthony Gibbons determined that the highest and best use of the land is for mixed use – ground-floor commercial with residential development on the north portion of the property. He estimated a value of $5.5 million purchase price, or a rental price of up to $500,000 per year.

But much depends on how the property is zoned. It is presently zoned “water-dependent industrial,” which would not allow commercial or residential use.

Moreover, the shoreline is designated as “natural” because of the proximity of the Winslow Ravine. That designation would require 200-foot setbacks, making the property essentially unusable, but Gibbons’ appraisal says the “natural” designation is unreasonable because it conflicts with present, actual uses.

Then there is the contamination problem. While the contaminated spoils were capped, there is no assurance that residential use would be allowed, WSF director of terminal engineering Russ East said.

Finally, WSF has expressed a preference for a long-term lease to generate a stream of income rather than a one-time sale, Gibbons said in his report. That might limit residential use to apartments, which have a lower value than condominiums, he said.

One big advantage of rental, though, is that WSF could hold onto its leases of state-owned submerged lands, which could dramatically expand the range of opportunities available to any user.

Nordby said the site might be suitable for a hotel and convention center. City council chair Michael Pollock said his initial thought would be for the city to lease the property from WSF and develop it.

“I would like to explore a right of first refusal that recognizes the city’s special status,” Pollock said. “We’re talking about a pretty attractive piece of real estate. It would be a nice nucleus to the whole downtown.”