Since the Coos Bay City Hall and much of the downtown and waterfront areas used to be submerged lands, the property could be claimed by the Oregon Department of State Lands unless it was deeded away. Such land ownership problems between Oregon and Coos Bay have delayed work on the new Coos Historical & Maritime Museum on Front Street and potentially other development projects may be delayed. World Photo by Lou Sennick

Anne Donnelly knew building a new museum would probably involve dealing with a state land claim.

She just wasn’t expecting such a large one.

Confined to a cramped facility in North Bend, the Coos Historical & Maritime Museum began searching for a new home in 1999 after receiving an anonymous donation of nearly $1 million. By the time Donnelly joined the museum in 2004, a seemingly perfect location had been found at the north end of Front Street in Coos Bay. The 4-acre plot of waterfront property could easily accommodate the proposed 16,000-square-foot museum, double the size of the existing one. It has space for a plaza area and a boardwalk, with room for expansion.

Best of all, the Coos Bay Urban Renewal Agency had already purchased the land expressly to donate it to the museum.

After the city paid for the demolition of an existing structure on the property, Donnelly thought there was one last thing to address.

The dock — or more accurately, the land underneath it.

As outlined in Oregon Revised Statutes, submerged lands are owned by the state and must be leased from the Department of State Lands.

But the museum wasn’t going to be asking for much when the application was sent in May. Just a small strip of property under the dock.

“We knew the wharf was state-owned land,” she said. “Then the state came back with this kind of zinger. It’s just silly.”

Zinger, indeed.

The entire property destined for the museum was being claimed by the Department of State Lands.

But that’s not all.

Donnelly took this information to Coos Bay Mayor Jeff McKeown, who came to a startling conclusion:

If the museum land was being claimed, large swathes of downtown Coos Bay could be, as well.

Like the museum’s future home, about 275 acres of downtown Coos Bay was under water at one time, suggesting it could be the property of the state.

McKeown claims the city has a valid deed to the Front Street property. But possession of a deed is no guarantee the state won’t come calling.

Solving the problem by paying the state for the land does not appear to be an option.

Years ago, according to City Manager Chuck Freeman, the state used to ask for pennies on the dollar for such property. Now the state asks for fair market value. The assessed value of the future museum site, according to Coos County Assessor Bob Main, is $550,000. And that could just be a starting point.

“Paying the Department of State Lands is something we can’t afford,” McKeown said. “We don’t have the budget to buy our property twice.”

And judging by a letter McKeown recently sent to the State Land Board, the city has an even greater concern: postponed development.

In addition to the museum property, a mixed-use development proposed for land just north on Front Street has been delayed because of a question of land ownership. And land disputes with the state can be quite lengthy.

The Coquille Indian Tribe spent several years working with the Department of State Lands on a boundary dispute over their Ko Kwel Wharf property.

“I can sympathize with the city,” said Brett Kenney, an attorney with the tribe who was involved in those negotiations. “It’s not the personalities, not the officials that are the problem. It’s the law.”

Coquille Economic Development Corp. finished dealing with the Department of State Lands in spring 2006, after three and a half years of formal talks, Kenney said.

“That’s a long time to have development on hold.”

The potential for inhibiting development has led McKeown to request the Department of State Lands look at all its remaining land-filled property in the area — a little less than 150 acres — and develop a more streamlined method of resolving land disputes. And to clearly delineate what properties are claimed by the state. After reviewing state maps, there also is some question about ownership of locations in downtown Coos Bay, including City Hall.

“I’m comfortable we can get this resolved with the (museum) property, but we need to deal with the entire issue,” McKeown said.

In August, the Urban Renewal Agency hired attorney Martha Pagel, who previously served as director of the Department of State Lands, to help write a letter to the state. Completed earlier this month, the letter takes exception with the status quo for dealing with land claims.

“For nearly 50 years the Legislative Assembly, State Land Board DSL and upland owners throughout the state have struggled with legal and economic uncertainty regarding the ownership of waterfront lands,” the letter said. “Despite various attempts over the past decades, neither the Land Board nor the legislature has, as yet, identified the path for a fair, efficient, and comprehensive resolution. Surely, the time has come for collaborative action to address these concerns once and for all.”

Louise Solliday, director of the Department of State Lands, said state employees are reviewing aerial photographs of the area and could have an updated map completed by the end of today. Once it is compiled, members of the Land Board, which includes the governor, secretary of state and treasurer, will be brought into the fold to discuss a resolution.  

“We plan to deal with (this issue) globally,” Solliday said.

The last time a full-scale approach was taken was in the 1970s, when a blue-ribbon panel was formed to inspect the Coos River Estuary. Completed in 1973, the report identified 155 acres of filled-in land owned by the state. Some of the land has been sold to private property owners, Solliday said, but much of it is still owned by the state.

But rather than resolve land disputes following the study, the Department of State Lands opted to wait until property owners contact them. That was why the state’s claim on Front Street did not come up when the Urban Renewal Agency purchased the land.

That transaction occurred in 2003, when Coos County sold the property for about $495,000 by a quitclaim deed. The county had acquired the land after its previous owner had failed to pay property taxes. But because the county’s assessor maps did not include any state claims to the land, there was no thought of contacting the state. It was only when the city inquired about the land under the wharf that the state stepped in.

The Urban Renewal Agency’s claim to the property appears to be strong. In the letter to the State Land Board, McKeown said the city can produce a chain of title to 1874, when the state supposedly conveyed the land to private ownership.

Solliday declined to comment whether the state would claim the Front Street property, citing the ongoing re-evaluation of the area.

“I can’t tell you how much (state-owned land-filled property) is in North Bend, how much is in Coos Bay or anywhere else” until the review is completed, she said.

About a decade before the state took an inventory of state-owned filled lands in the Coos Bay area, legislation was passed to facilitate the resolution of land disputes in Astoria. But that resolution did not extend its ramifications beyond Clatsop County. In 2003, former state Sen. Ken Messerle proposed legislation that would have essentially nullified Department of State Land claims on such property. But Senate Bill 836 never got out of committee.

Rep. Arnie Roblan, D-Coos Bay, said a resolution to the problem could be completed during the February interim session, though it more likely will wait until 2009. He said one reason the issue hasn’t been resolved is because revenue generated by land sales is put into the Common School Fund, which some legislators don’t want to lose. But he agrees with the city that a new policy needs to be established.

“The issue is that people have been paying property taxes for years assuming they owned (their property) and now they are being told they don’t,” he said.

Property taxes are not a problem with the museum site, which ostensibly belongs to the city’s Urban Renewal Agency. But the confusion over  ownership has prevented Donnelly from approaching foundations to inquire about grants.

“We continue to have tremendous support from local individuals who know the situation,” said Donnelly. “But most of the larger foundations want to make sure all the ducks are in order before approving a grant. We don’t want to approach them without (the land).”

Donnelly appreciates the efforts the city has taken.

“We could sit and battle in court till the cows come home and spend more money than the project is worth,” she said. “The situation is a perfect example of why this issue needs to be addressed.”