COOS BAY — The Coos Historical & Maritime Museum can resume raising money for a new facility on the Coos Bay waterfront.

Delayed for nearly a year, the museum’s fundraising campaign got welcome news Tuesday when the city’s Urban Renewal Agency agreed to pay the Department of State Lands $25,000 to clear the title on property proposed for the development.

The agency’s decision was unanimous, though three members — John Muenchrath, Stephanie Kramer and Mark Daily — initially argued against accepting the offer. They suggested the city would make it harder for private landowners to get a fair deal from DSL in the future.

“It is setting a precedent,” Kramer said. “It’s a matter of principle and I still can’t go along with it.”

The agreement ends a more than year-long standoff between the city and the Department of State Lands that halted fundraising and led to questions about landownership on the Coos Bay waterfront.

The main dilemma was a question about historically-filled wetlands. In the Oregon Revised Statues, all underwater property is owned by the state. Should it be filled, the property owner must buy the land from the state. Much of downtown Coos Bay falls into this category, including the property proposed for a new museum. As it turned out, an inventory found that DSL had claims on about 15 acres of Coos Bay, about a tenth of what city leaders first thought. But the 4-acre property designated for the museum was included in that 15 acres.

The city purchased the land, which is located at the north end of Front Street, from Coos County in 2003.

 The $495,000 transaction was made through a quitclaim deed, which left open the possibility a cloud could exist on the title. When museum representatives approached DSL in 2007, the state agency claimed the entire property for its own. Coos Bay officials said the state initially asked for about $1.2 million to clear the title.

In response, the city hired an attorney, who had previously served as head of the DSL. City officials spoke with state representatives and the director of the DSL, Louise Solliday. They called the governor. They argued the project would help improve the tax base, provide better education to the area’s children and spur development. At the same time, the city wanted to make sure other property owners with clouded titles could resolve their problems. 

Solliday came back to the agency with an offer in early August asking for $25,000. The DSL reduced its price based on property taxes paid by previous owners, the potential educational use of the property, its benefit to the public and improvements made to the site.

Although the DSL’s asking price was far less, city officials didn’t want to pay anything. In their letter to the state, Coos Bay officials said they can produce a chain of title to the 1870s, when the land was filled and purchased from the state.

Coos Bay Mayor Jeff McKeown initially held out hope that Gov. Ted Kulongoski might intercede on the city’s behalf. But after a conversation with Kulongoski’s chief of staff, McKeown gathered there would be no further reduction. Land sales support the common school fund, another constituency Kulongoski and the DSL have to consider in addition to the residents of Coos Bay.

“If we accept this offer, we will have the goodwill of the governor and DSL staff,” said McKeown. “Then, we dig in our heels and say we need a global fix.”

Attorney John Whitty, who is volunteering with the museum and a member of its fundraising committee, said the group has already raised $3.8 million for the museum. The museum was ready to approach foundations, and state and federal agencies for grants, he said, but was repeatedly told it wouldn’t get anything with a clouded title. So the museum stopped its fundraising efforts until the land issue was resolved.

“We really need to have this happen so we can get on with our fundraising,” Whitty said.

All the agency members expressed frustration with the DSL, though to varying degrees. Michele Burnette, who saw the Coquille Indian Tribe go through similar hurdles in trying to clear title on its waterfront property, was resigned to paying something.

“I don’t believe we can go any farther,” she said. “As much as I hate to do it, I think we should bite the $25,000 bullet.”

Daily and Muenchrath both argued the state was taking advantage of a city trying to spur development.

“It’s extortion. I don’t know how else to put it,” Daily said. “If we pay it, (DSL) is going to do this to the next guy and the next guy and the next guy.”

“I think this is terrible what the state is doing here,” said Muenchrath. “Here they are holding us for ransom and holding up one, or perhaps two developments. I think that’s dreadful.”

Chairman Jon Eck noted the city would pay far more than $25,000 in attorney fees should the matter go to litigation. And he said that with a 6-percent inflation rate, the projected $8 million cost of building the museum goes up by $460,000 every year.

A crowd of about 15 museum supporters waited until after 10 p.m. for the agency’s decision and applauded after the vote.

“We will do our best to make you proud,” said Teri Whitty, a member of the museum’s board of trustees.