Signal Hill Auto Center Mired in Past : Urban planning: A 35-acre complex of car dealerships is designed as the centerpiece of the tiny town’s new commercial life. But the oil city’s history keeps oozing up to spoil things.

In this tiny city, one of the major tasks of the last quarter-century has been moving away from a heritage as an oil boom town toward an economic base of homes, shops and regional retail outlets.

But as city officials have pushed the transformation, they have learned at least one thing: It’s not easy to escape your past.

The lesson has been learned many times during the development of the Signal Hill Auto Center, a proposed 35-acre conglomeration of six car dealerships designed to be the centerpiece of the city’s new commercial life.

In rushing to meet deadlines this year and next to prepare the Auto Center for its tenants, the city’s contractors have uncovered thousands of tons of soil contaminated with oil, gasoline, diesel fuel and more volatile compounds. State law requires that the properties--centered on the corner of Cherry Avenue and Spring Street--be cleaned before development can proceed.

The cost to clean property for just the first three dealerships, once estimated at well under $1 million, is now expected to cost $6.1 million. Another $6 million will probably be spent to clear the remaining properties.

While the auto showroom of C. Bob Autrey BMW & Mazda is already rising at Cherry and Spring, other construction has been slowed by the soil cleanup. Oil-soaked earth has been so difficult to remove on one eight-acre parcel that the city has postponed by four months delivery of the land to a key automobile dealer, M.F. Salta Co.

And cleanup costs could jump still higher, as the county Department of Health Services begins a review of soil contamination and cleanup that could end in an order for sampling of ground water beneath the site. No one knows how much that could cost.

“We never thought we would run into as much contamination as we have on Cherry Avenue,” Signal Hill Mayor Louis Dare said. “There is concern. We haven’t reached a point yet at which the project is not going to happen. . . . It’s just getting to the point now where (the cost of cleanup) is beginning to hurt.”

The city is eagerly awaiting the opening of the half-dozen dealerships that are supposed to produce $2 million a year in sales taxes and $100,000 more a year in property taxes.

The sales taxes will be used immediately by the 2.25-square-mile city for construction projects and improved city services, Assistant City Manager Tim O’Donnell said.

But the unexpected cost of soil cleanup has reduced the amount the city has to spend on other redevelopment projects, such as improving roads and storm drains and attracting even more development, he said.

Car dealers are also eager to begin construction of their new showrooms. Mike Salta, who plans to move his two dealerships from Long Beach to the eight acres on the corner of Cherry and 28th Street, was originally promised that he would get the property this month. But the city got Salta to agree to postpone delivery of the parcel until Dec. 1 so it could finish trucking away the contaminated soil and replacing it with “clean” dirt.

Salta faces a time crunch because he has already sold his property on Long Beach Boulevard, and the developer who bought it is eager to move onto the land, O’Donnell said. Another city official, who asked not to be named, said Salta is “not a happy camper” because of the delays.

Salta denied this week that he is upset. The car dealer said he is trying to complete an agreement with the city that would give him his property earlier, at a reduced price, if he completes grading himself.

“Everybody is ready,” Salta said. “The sooner, the better.”

City officials had hailed agreements of the last 20 months that lured Salta and five other Long Beach dealers to the Auto Center, just south of the San Diego Freeway. The agency bought land and prepared it for construction, using property tax money generated by earlier city redevelopment work.

Only when soil sampling and excavation began did the impact of Signal Hill’s past as an oil boom town become clear.

The hillside overlooking Long Beach Harbor bristled with so many oil derricks in the 1920s and ‘30s that observers could not decide what it resembled more: a pincushion or a porcupine.

In those days, before toxic testing and environmental impact reports, oil workers simply disposed of contaminants by digging holes and pumping the waste back into the ground.

Some 36,000 tons of contaminated soil has already been trucked away from Auto Center properties for disposal, according to reports by the city’s environmental consultant. An especially saturated two-acre parcel contains 87,500 more tons of soil contaminated down 100 feet and more.

It would cost up to $20 million to remove that soil, so the city has instead proposed capping the property with a parking lot for Salta and other dealers and installing a $1.5-million system of wells and a vacuum to remove volatile vapors from the ground. The proposal has been approved by the South Coast Air Quality Management District.

The plan is only one of the new technologies that the city has tried. “We are the guinea pigs,” City Atty. David Aleshire said, “and we have had several rather sad experiences.”

Perhaps the saddest involved the cleanup of a one-time oil tank farm near the intersection of Spring and Gardena Avenue. The city wanted the property for a Mack Truck dealership, which was being moved off its original home on Cherry Avenue to make room for Salta.

Before Mack Truck could move across town, however, the city had to remove several tanks from the Gardena property and clean and grade the soil.

The Redevelopment Agency had to move quickly last summer or Mack Truck officials said they would leave Signal Hill for a new home, taking with them about $100,000 a year in sales taxes, Aleshire said.

The agency contracted with a Pasadena firm that said it could “clean” 12,000 tons of soil soaked with crude oil and other hydrocarbons from the old tank farm. Camay Energy Corp. of Pasadena said it would move equipment onto the property to mix the soil with water, then add chemicals that would allow it to spin the mixture, separating the oil and water.

Camay President Craig Norton said last week that his firm finished just a fraction of the job because the city vastly underestimated the concentration of the oil and failed to remove concrete and other debris that battered his soil-cleaning equipment.

Signal Hill officials said Camay simply did not live up to the contract because it could not remove enough oil from the dirt. The city canceled the contract and eventually settled its dispute with the company with a $200,000 payment.

The city then turned to another firm, Brent Petroleum of Long Beach, and another technology. Brent owner Paul Bouchard said he could truck away the contaminated soil and use it to manufacture asphalt.

Several city officials visited Bouchard’s Wilmington asphalt mill to assure themselves that the operation was legitimate, Aleshire said, because state law makes the city ultimately responsible for the disposal of contaminated soil.

The officials came away from their field trip satisfied and granted Brent Petroleum a $500,000 contract to remove the dirt, Aleshire said.

But there is no evidence that Bouchard manufactured asphalt with soil from Signal Hill--or from up to 200 other customers, according to AQMD officials.

Instead, he let the dirt sit on a lot on Coil Avenue, releasing gases into the air that contributed to ozone pollution, AQMD prosecutor Joseph Panasiti said.

Bouchard was jailed for two days last week for failing to obey a court order to clean up more than 50,000 tons of soil that he has collected.

No sanctions are anticipated against Signal Hill or others who disposed of their soil through Brent, Panasiti said.

But Signal Hill lost its race to prepare the land for Mack Truck, which announced plans to move elsewhere.

While Signal Hill has accumulated consultant reports and data on soil samples that fill several feet of shelf space, regulation of the cleanup by state and regional agencies has been negligible.

Officials with the AQMD, the state Regional Water Quality Control Board and county and state health officials have received periodic letters from city officials about the cleanup. But an evaluation of the soil removal has not been a high priority, in large part because the deposits do not appear to pose an immediate health hazard, the regulators said.

Worries about potential ground-water contamination have been mitigated by the fact that the most vulnerable underground water deposits, known as the Gage Aquifer, are not used for drinking water, said Manjulika Chakrabarti, an engineer with the regional water board.

Still, regulators said they have long-range concerns about water in the Gage Aquifer and other shallow water deposits, because contamination can eventually trickle down to the deeper deposits that supply drinking water.

For this reason, Signal Hill will probably be ordered to sample ground water in the Gage Aquifer, said Phil Kani, a hazardous-materials specialist with the county Department of Health Services.

Kani is reviewing the cleanup of the Auto Center properties and will eventually forward his recommendations to the water board. Kani said his review will take about a month.

Signal Hill officials said they will comply with an order to sample ground water, although they question the value of the testing and its potentially high cost.

City Atty. Aleshire said Signal Hill should not be held responsible for what is a regional problem: ground-water pollution caused by historic industrial pollution.

Aleshire argued that ground-water testing, which may involve drilling several wells, will not help find who caused the pollution, because there are potentially hundreds of sources. Also, many oil companies and other polluters have long since left the land.

“In the regulatory climate we are working under, you will be operating those wells perhaps for the rest of your life “ Aleshire said, so the expense could be extraordinary.

Signal Hill: After The Oil Era Phase 1: Dealerships under construction or soil being cleared. Phase 2: Future Auto Center expansion. Signal Hill was incorporated in 1924 by oilmen anxious to avoid an oil barrel tax in neighboring Long Beach. Petroleum production fell off in the 1960s because of the increasing cost of extracting crude from more inaccessible deposits. In 1974, the city formed a Redevelopment Agency to spur the growth of new businesses to replace the oil industry. The Signal Hill Auto Center is a key component in the redevelopment plan. Condominiums and houses have replaced industry as well, leading to a population boom. Area: 2.25 square miles or 1,440 acres Redevelopment Project Area: 799 Acres Current Population: 8,204 1980 Population: 5,734 1979 Median Household Income: $16,250 1990 Median Household Income: $32,321 Ethnic Makeup: 58% white, 16% Latino, 14% black, 12% other groups. Oil Wells in 1930s: 1,800 wells Oil Wells 1990: 584 active wells Source: National Planning Data Corp. and City of Signal Hill.