BY BRIAN McGILLIVARY
TRAVERSE CITY — Demolition is expected to begin soon to make way for the long-delayed Hotel Indigo, but the bayfront project turned up significant evidence of pollution that concerns some county officials.
Ground-water testing at the site of the proposed four-story boutique hotel on the corner of Hall Street and Grandview Parkway discovered high levels of cyanide that officials believe is migrating onto the development site.
The problem: officials said they don't know where the contamination plume originates or where it's going.
"I can't just cross my fingers and hope it's not reaching the bay," said Jean Derenzy, Grand Traverse County's deputy director of planning and development. "We don't know who the responsible party is, but based on the proximity to the bay I really need to know where that source is ... and cut it off."
County officials already knew petroleum products and solvents contaminated the soil beneath three buildings slated for demolition to make way for the hotel. Discovery of the groundwater cyanide problem added almost $700,000 onto the project's cost, and boosted the total price of environmental cleanup and remediation to $1.5 million.
It was another snag in a project that's taken over two years to launch.
'Excited beyond belief'
"I think at times you get a little discouraged, but the county stayed right with me and the Traverse City State Bank stayed right with me and we got it worked out," said Jeff Schmitz, the hotel project's developer. "We're just really, really grateful for all the city and the county (have) done for us getting us through the brownfield process.
"We're excited beyond belief to get this thing going now," he said.
Demolition should begin within the next two weeks, and definitely before the end of December, he said.
County brownfield officials arranged for a $620,000 loan through the U.S. Environmental Protection Administration to address the groundwater pollution. The money will pay to pump out and treat groundwater during construction of the building's foundation and underground parking garage.
That money also will cover the cost to install a liner — similar to those used in landfills — to protect the building from groundwater toxins.
But the federal money doesn't clean up the pollution or prevent it from reaching West Bay.
"I'm now going back to the EPA asking for some supplemental funding to identify the source," Derenzy said.
Old gas plant the culprit?
The likely suspect in the cyanide pollution is adjoining property to the east on Hall Street that is now occupied by The Candle Factory. That business did not create the toxin, but the property and land to the south once hosted a manufactured gas plant that was operated by the Traverse City Gas Company, said Dave Van Haaren of AKT Peerless, the hotel project's environmental consultant.
"We can't confirm it came from that site, but it's likely," Van Haaren said. "Cyanide contamination is commonly associated with manufactured gas plants."
Manufactured gas mainly was produced from coal and was used for heating, cooking, and lighting.
The Traverse City Gas Company began operations in 1901. Monroe-based Michigan Gas Utility acquired the Traverse City operation in 1929, according to the company's website.
The company converted its entire system to natural gas in the early 1950s.
But state officials have doubts Hotel Indigo site contamination comes from the old gas plant.
Water flows north toward the bay, and the contamination plume would have to be unusually widespread to reach the hotel site to the east, said Amy Rivest, a geologist with the Michigan Department of Environmental Quality.
Several years ago the state required Michigan Gas Utility to remove soil contaminated with tar and a gas holding tank from behind the remaining building. But contamination and a buried concrete gas holding tank remain beneath The Candle Factory.
Wells were sunk on the property and across Grandview Parkway at the Open Space to test the groundwater for cyanide every two years.
Results from those test wells in 2010 were below the state threshold for cyanide to be a risk for aquatic organisms in the bay, Rivest said. But levels beneath the hotel site are significantly higher and could pose a potential threat.
"We're not ruling out the gas works site as the source," Rivest said. "We just don't know."