It's my understanding, from the minutes posted below, that the agreement stated that the Port would "pre-pay" AIG for half of the clean up costs ($20.5 million. The Port made the final pre-payment in 2006). Earlier today, it was announced that AIG is seeking a $40 billion dollar bridge loan to avoid financial doom.
(Here's an excerpt from The Port of Bellingham's Meeting Minutes held November 30, 2004 at Meridian Middle School that discusses the AIG pre-pay plan).
Frank Chmelik, the Port of Bellingham's legal counsel said, "the projected cost of the cleanup (rounded to $41 million for simplicity) is $41 million. At this time in negotiations, the City, Port and other liable parties will pay $20.5 million and the Department of Ecology Grants will cover $20.5 million. The Port will prepay AIG for half of the cleanup costs ($20.5 million) and AIG will pay the Port 50% of the actual cleanup costs up to $55 million. The Port is also working to add Environmental Impairment Liability Insurance coverage.
This will provide another $25 million in coverage above the $55 million for unknown liabilities, regulatory changes, and and third party liability. Frank said Georgia Pacific has agreed to pay the insurance premium."
The Port of Bellingham has not issued a press release regarding AIG's financial woes or the impact AIG's possible doom will have on the clean up of the former Georgia Pacific site. The Purchase and Sale Agreement limited the Port of Bellingham and the citizens of Whatcom County to one (1) and only one clean up option. For commentary on the lack of meaningful public process please see the Bellingham Bay Foundation website listed below.
Here's an excerpt from the article on AIG from the New York Times:
"The American International Group (AIG) is seeking a $40 billion dollar bridge loan from the Federal Reserve, as it faces a potential downgrade from credit ratings agencies that could spell its doom, a person briefed on the matter said Sunday night.
Ratings agencies threatened to downgrade the insurance giant's credit rating by Monday morning, allowing counterparties to withdraw capital from their contracts with the company. One person close to the firm said that if such an event occurred, A.I.G. may survive for only 48 hours to 72 hours.
A.I.G.'s sickly financial health emerged late into one of the most tumultuous days in Wall Street history. Lehman Brothers, the 158-year-old investment bank, is expected to file for bankruptcy protection Sunday night, while Bank of America has agreed to buy Merrill Lynch for $50.03 billion.
It has already raised $20 billion this year. But even that enormous capital raise may not be enough.
Though this past weekend was convened to focus on Lehman, the Wall Street chieftains who gathered at the Federal Reserve Bank of New York also pondered a solution for A.I.G. The firm had become one of the biggest underwriters of complex debt securities known credit default swaps, used as insurance for a wide range of products, including the mortgage instruments that have been the bane of Wall Street for the past year and a half."
The entire article can be read here: http://dealbook.blogs.nytimes.com/2008/09/14/aig-seeks-fed-aid-to-survive/
–Andrew Ross Sorkin and Michael J. de la Merced; Eric Dash and Mary Williams Walsh contributed on September 14, 2008.
A copy of the Port of Bellingham's Purchase and Sales Agreement can be found here: http://www.ahealthybay.org/images/documents/psa.pdf
Port minutes documenting final pre-payment to AIG can be found here: http://www.portofbellingham.com/library/files/Commission%20Meeting%20Minutes/2007%20Archive%20List%20of%20Meeting%20Minutes/2007February22Minutes.pdf
Bellingham Bay Foundation statement can be found here: http://bbayf.org/public/index.html
For more financial news and President Bush's earlier statement on the health of the financial market, please see: http://www.mortgagenewsdaily.com/index.asp