Port of Moses Lake buys land using eminent domain

MOSES LAKE — Benjamin Franklin said that nothing in life is certain except death and taxes.

However, for landowners selling their property to the Port of Moses Lake for the extension of the Columbia Basin Railroad along Wheeler Road, a quirk in the law will allow them to avoid paying real estate excise taxes.

At a meeting of the Port of Moses Lake Commission on Monday, commissioners approved the use of eminent domain — the ability of government to compel the sale of land for public purposes — as it secures property for the railroad right-of-way.

Port staff, however, made it clear that the port is not seizing anyone’s property. Under Washington Administrative Code, property sold to governments invoking eminent domain is exempt from the state’s real-estate excise tax - also known as REET.

“In order for the property owners to get out of excise tax we have to pass the eminent domain resolution,” port Facilities Director Milton Miller told commissioners. “You’ll see this for every property purchase along the rail.”

Use of eminent domain was part of a deal brokered with at least one landowner to make the deal worthwhile for him.

“It doesn’t mean that we’re using that domain, but it allows the property owner to get out of subsequent taxes because it wasn’t their choice,” Miller explained.

At their April 25 meeting, the three port commissioners voted unanimously to offer Lloyd Chew $246,000 plus closing costs for 7.7 acres north of Wheeler Road near the intersection of S. Hamilton Road and E. Industrial Street. The parcel, which the Grant County Assessor’s office valued at $379,000, is the first of what the port said will be a number of land deals to secure the railroad right-of-way.

According to Port Executive Director Don Kersey, the deal with Chew was not going to be finalized until this week, after the commission passed its eminent domain resolution.

Under the Washington Administrative Code, the current excise tax on real estate deals under $500,000 is 1.1%.

Approved in 2017, the railroad project will refurbish a portion of the existing rail line from the port south to Stratford Road and will then build a new rail line from Stratford Road to Wheeler Road, connecting the Port of Moses Lake to the Columbia Basin Railroad’s main yard in Connell. That will simultaneously bypass the line that currently winds through downtown Moses Lake. The Port has secured federal and state grants of roughly $30 million to pay for the project.

In addition, port commissioners agreed to spend $89,000 to have the Grant County Public Utility District move and raise several power lines in connection with the construction of the new rail line, as well as $272,000 with Cascade Natural Gas, which will need to dig a deep trench on the south side of a portion of Wheeler to lower its high-pressure commercial natural gas line about 10 feet deeper into the ground.

“That’s a deep trench,” said Commissioner David “Kent” Jones.

According to Miller, Cascade needs to do the work to ensure that vibrations caused by future rail traffic do not damage the pipeline.

The port hopes that the extension of the rail line will open new supply possibilities for existing port tenants and customers as well as attract new port customers. Kersey said the port hopes the extension work will be done by late 2023 or early 2024.

CLARIFICATION: Kersey later said the port has only purchased 1.55 acres of the 7.7-acre parcel, and not the entire parcel itself. “Only a 100-foot swath plus a small remnant that cannot be used,” he wrote in an email to the Columbia Basin Herald.

Charles H. Featherstone can be reached at cfeatherstone@columbiabasinherald.com.