As expected, everyone was polite and smiley when David Moseley, the new leader of Washington State Ferries, addressed the Bainbridge Island City Council on Wednesday. Word has it that Moseley is more attuned to public needs than the usual suspects running the system. Nevertheless, simmering just below the surface was the residue of a deep-rooted quarrel between the city and WSF regarding the ferry system’s Eagle Harbor maintenance yard.

A slight crack in their genteel demeanor occurred, however, when most of the six councilors present (sans Debbie Vancil) mentioned the maintenance yard and the city’s desire to have a haul-out facility on 2 1/2 acres of land that many islanders believe WSF misappropriated from the city. Moseley assured council members that he would address the issue, then quickly moved on.

But that’s exactly what WSF leaders have been doing since 1995, when WSF exercised its power of eminent domain to condemn about an acre of land that it had leased to a boat-yard operator.

The city lays claim to the land on the southwest end of the yard because of a restrictive use covenant issued by the state Shoreline Hearings Board in 1974. As a condition of allowing construction of the Harbor View condominiums, the land (Area A) was dedicated to be either a marina and/or a commercial boat facility. In 1995, the city and WSF entered an agreement that an acre of the land would be leased as a community boat yard for a minimum of 20 years. (The area had been a boat yard since 1986 and such a facility is even more coveted now since there are thousands of boat owners in the area).

This action occurred when WSF sought shoreline permits from the city for use of an acre of filled land that was created when the EPA capped contaminated sections bordering the yard as part of the Wyckoff Superfund project. But the deal was off when WSF condemned the land.

Ah, but the plot thickens, not unlike the sludge on the bottom of Eagle Harbor. WSF wants to spend millions to modernize the yard. The first of four proposed phases involves replacing 81 pilings, and WSF filed for a shoreline development permit with the city in 2006, requesting an exemption from a complete environmental impact statement. The city denied the exemption because of the potential of stirring up the contaminated harbor floor, but WSF won an appeal and was granted “lead agency status” for the piling repairs.

The Superior Court judge ruled that the proposed repair/maintenance plans did not pose an environmental threat and the city expects to issue an shoreline exemption letter (not a permit) within the next two weeks. But the ruling did not address the environmental impact of the work-yard practice on Eagle Harbor and Puget Sound. Significantly, however, it also determined that the proposed maintenance actions with the current permit is separate from any proposed expansion, such as the building of a four-story, 49,000-square-feet warehouse on the 2 1/2 acres in question.

In other words, since the pilings project is a stand-alone undertaking, the city interprets it as allowing it to review any future WSF permit (expansion) as being subject to SEPA – without further court challenge. And, unsurprisingly, there remains a critical connection between Area A’s legal status and WSF’s expansion plans: Without those 2 1/2 acres there probably isn’t enough room to expand as planned. What happens if expansion doesn’t occur?

In response to an islander’s letter to Gov. Christine Gregoire late last year, Assistant Attorney General Deborah L. Cade offered with a legal opinion that refuted the city’s stance. First, she said that the property is still part of a Superfund site and use of it is subject to the terms of a federal judge’s consent judgment, which limits the property to industrial uses only. One could counter, however, that any haul-out yard is an industrial facility. Secondly, she argued, that the 1995 condemnation terminated all interests in the property, including the 1974 covenant.

In other words, screw you, City of Bainbridge Island.

In the future, however, the bully will have to come to the city demanding permits. What then?