Little Town Locked In Feud With Corps That Moved It

NORTH BONNEVILLE, Skamania County - You could be excused if you called it North Bonneville State Park.

A manicured entrance gives way to a grove of Douglas fir. Identical shake roofs top official buildings. Through the trees to the west ripples the wide pewter surface of the Columbia River.

But the town of North Bonneville is no park. Nor is it as serene as the landscape suggests.

Last month, it became the first city in the state's history - and the ninth in the nation - to declare bankruptcy.

North Bonneville, population 425, simply has been unable to rise above two of America's most powerful forces: small-town politics and the Army Corps of Engineers.

The city and the corps disagree about a contract that governed the 1970s relocation of the entire town to make way for the expansion of Bonneville Dam. A kettle full of lawsuits has boiled down to one simple court judgment: The town owes the government $365,181.32.

That's more than 10 times the city's annual tax income.

"What it got down to was, there was no give on either side - the town or the corps," says John Baxter, 71, owner of a storage business in the new town. "The people got caught between 'em."

Twenty years ago, residents here became famous for their insistence on being moved downriver as a unit when the corps expressed its desire to build Powerhouse No. 2 at the dam. The old town site would be bulldozed and flooded in the process.

"The idea of relocating a whole city sounds good," said Charles Pinnell, a U.S. attorney who has worked on the case for more than a decade. "But, when you get down to the nitty gritty of it and the way the relationships worked out, it was anything but easy, as evidenced by the fact that litigation continues 20 years later."

Still, the corps' project manager says the corps would do it all over again, if given the chance. "There was a lot of difficulty and a lot of hard feelings," says Norm Tolonen, "but that shouldn't stop us from proceeding with this sort of project if it came up again."

The original deal looked good on paper. First, the government would buy more than 400 acres two miles downriver for the new town. The corps would buy out homeowners in the old town, then sell them residential lots at the cost of unimproved land in the new town. The corps would make similar arrangements with the old town's businesses.

The federal government might also convey to the city enough land so North Bonneville could grow to its "optimum town" limits, a community of 1,500.

But problems arose soon after the 1975 contract was signed.

The corps sold many residential lots but it refused to convey commercial lots. Disputes had arisen in part over how much the city would pay the corps for such land, so the corps said "no deal." Businesses were bought out but had no place to relocate. The merchants either left town with their relocation money or went out of business.

Of the 758 residents eligible for relocation, 360 did so.

The town claimed breach of contract and the legal tug of war began. In all, 18 lawsuits have been filed back and forth.

Last summer, in a suit filed in 1980, U.S. District Judge Jack Tanner ordered the city to pay the corps the $365,000.

Tanner's order stemmed from a 1987 U.S. Claims Court decision in the case. The $365,000 is equal to the amount the corps paid to maintain and operate new municipal facilities such as street lights and the sewer system.

City officials note that the federal government, not the city, still owns much of the North Bonneville - its streets, sewers, bridge, open space. City Councilman Pollard Dickson believes to accept those would be to say the government did what was required.

The city appealed Tanner's order but filed for bankruptcy.

Since Chapter 9 of the revised Bankruptcy Code took effect in 1979, nine of the nation's cities or towns have declared bankruptcy. The most notable case took place last summer when Bridgeport, Conn. - in hock for hundreds of millions - filed to reorganize.

Dickson stands on a sidewalk amid the giant firs that surround City Hall. In this "central business district mall," there are no businesses.

"This should be downtown," says Dickson, stretching out his arms. "We had 47 businesses in the old town and not one of them survived to the new town."

After the disagreement over commercial-land prices, the corps tried to be relieved of its obligation to convey lands to businesses that were to make the little downtown buzz. In 1976, the federal government also repudiated the portion of the contract that would have allowed the town to acquire the "optimum town" acreage.

Court records show that the government never interpreted the 1975 contract as requiring it to convey the land. Officials further believed they could reserve it for other government uses. So, they conveyed part of the "optimum town" acreage for a wildlife refuge, and used some of it themselves to dump construction waste from the powerhouse project.

The contract also states a community center was to be built. It never was.

The relocation's price tag once was announced at $2 million - to accomplish the traditional buyouts the corps has done in countless communities. So far in North Bonneville, the corps says it has spent more than $30 million.

Privately, some officials acknowledge that the corps was under political pressures in the 1970s - the decade of the energy "crisis" - to get the new powerhouse built, so it tried to satisfy the town's numerous demands.

The government also has argued that the city was too optimistic in its projections for its growth. That's why many of the new town's home lots remain unsold, the government has said. Of course, Skamania County's economy, with an unemployment rate of more than 20 percent and a depressed logging industry, also has something to do with it.

The city may have been outgunned over the years, but it has been far from innocent.

It established a business-and-occupation tax specifically to earn income from the powerhouse contractors. It did not de-annex the powerhouse construction site until years after the project was finished and collected taxes on the site even when the town had for all practical purposes moved.

Certainly Dickson, who has worked in several planning posts for the town, has been the most influential personality, from the North Bonneville side of the conflict. Given that, it's natural that he is not universally loved.

There's even a local term for the minutiae-oriented philosophy espoused by Dickson, 51, a land-development and planning consultant. "Pollardism," it's called.

Pollardism, with its strict adherence to the letter of the contracts with the corps, also affected how the new city was to look.

"I always felt he wasn't willing to relent," said the Rev. Tom Payton, pastor at the Community Church and a former Planning Commission chief. "I think the corps has been more than fair with the town, despite the fact that they may not have lived up to every jot and tittle of the agreement."

But Dickson's obsession also has worked to the advantage of North Bonneville. Many residents got brand-new houses, and the town has a new city hall and fire station. The town is so attractive that a Portland developer would like to build a $22 million conference center here.

"Without Pollard, we would never have had a town," says resident Beverly Christiansen. "None of us knew what to do, or how to fight."

Some residents believe compromise has been possible but not adequately pursued.

"As far as that $365,000, the government could forgive that," says Baxter, the storage-center owner. "And the council could forget some of these little things. Christ, how many years is this going to go on? Think of all that paper that's been wasted on these lawsuits!"

Pinnell, the U.S. attorney, says that while the North Bonneville debt may not seem large, it's the government's responsibility to pursue what it is owed. "As a practical matter we pursue all sorts of debt cases - student-loan cases, tax cases," he said.

The corps is finally left with the irony that Powerhouse No. 2 has never lived up to electricity-generation predictions. Accompanying structures to protect migrating salmon never worked.

So, since the powerhouse opened in 1983, it usually has operated only half-days for six months out of every year.