MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressee and authorized recipients. Any unauthorized disclosure, distribution, or copying is strictly prohibited.
TO: Angela Fontaine, Responsible Partner, Real Estate Practice Group, Calderwood & Harkness LLP
FROM: Grace Nakamura, Lead Associate, Real Estate Practice Group, Calderwood & Harkness LLP
DATE: April 14, 2025
RE: Title Review Summary — Pump Station Easement Parcels, Lower Nooksack Pump Station Network
CLIENT: Cascadia State Infrastructure Authority ("CSIA")
MATTER NO.: 1030-00003
PROJECT NO.: CP-2025-NPS-004
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I. Executive Summary
The purpose of this memorandum is to summarize and analyze the preliminary title commitment reports received from Cascade Basin Title Company (title officer: Diane Ashworth, 119 East Magnolia Street, Bellingham, WA 98225) for all privately held parcels required for the acquisition of permanent and temporary easements in connection with the Regional Flood Resilience and Stormwater Management Program — Lower Nooksack Pump Station Network (the "Project"). The Project, undertaken by our client, the Cascadia State Infrastructure Authority ("CSIA"), involves the construction and operation of four pump stations and an approximately 6.2-mile interconnecting force-main pipeline network within Whatcom County, Washington.
Five privately held parcels have been reviewed, held by two landowners: Veldkamp Family Holdings LLC, a Washington limited liability company ("VFH"), which owns three of the five parcels; and Dunlap Creek Ranch Inc., a Washington corporation ("DCR"), which owns the remaining two parcels. All five title commitments were dated in early April 2025 and received by our office in anticipation of the preparation and delivery of good-faith offer letters, which are currently targeted for delivery to both landowners on April 21, 2025.
One additional parcel — Pump Station No. 4 ("PS-4"), Parcel No. 380221-005700, located along E. Smith Road — is already owned in fee simple by CSIA and does not require any easement acquisition. A brief confirmation of CSIA's title to that parcel is included in Section III.C of this memorandum for completeness.
Overall Assessment. Title is insurable on all five privately held parcels, subject to the Schedule B exceptions identified in the respective title commitments and the curative actions recommended herein. No title defects have been identified that would prevent the acquisition of permanent and temporary construction easements from either landowner. However, several matters require prompt attention and resolution before the targeted closing date of August 15, 2025. The most significant of these are: (1) the need to obtain partial release or subordination agreements from the agricultural lenders holding deeds of trust on both the Veldkamp and Dunlap Creek properties; (2) the requirement to confirm compliance with the governmental infrastructure carve-out provision contained in the agricultural conservation easement encumbering the Veldkamp property; (3) a delinquent property tax balance on one of the Dunlap Creek parcels; and (4) several utility easement overlap issues that require survey confirmation and potential coordination with third-party utility providers.
Compensation Summary. The combined easement compensation budget for the Project is $1,024,000, consisting of $930,000 for permanent easements and $94,000 for temporary construction easements. These figures are based on appraisals completed by Northwind Valuation Group LLC (Jocelyn Trueblood, MAI) dated March 14, 2025, with the exception of the Dunlap Creek pipeline corridor compensation, which is pending a supplemental linear-foot valuation.
Title Insurance. Title insurance endorsements will be required at closing for each easement interest. Specific endorsement recommendations are detailed in Section V of this memorandum. All endorsements should be ordered through Cascade Basin Title Company in coordination with the survey delivery schedule from Ironclad Surveying & Land Services LLC.
This memorandum is organized as follows: Section II describes the scope and methodology of our review; Section III provides a parcel-by-parcel title analysis, including a detailed discussion of each Schedule B exception and recommended curative actions; Section IV addresses cross-cutting title issues and risk assessment across all parcels; Section V sets forth recommended title insurance endorsements; Section VI contains a comprehensive action list with responsible parties and target dates; Section VII addresses budget and cost implications; and Section VIII provides concluding recommendations.
II. Scope and Methodology
In preparing this memorandum, we undertook the following review and analysis:
1. Preliminary Title Commitments. We reviewed the preliminary title commitments issued by Cascade Basin Title Company for each of the five privately held parcels. These commitments were prepared by Diane Ashworth, title officer, and cover the proposed permanent pump station and access easements, temporary construction easements, and permanent pipeline corridor easements to be acquired by CSIA. Each commitment was reviewed for Schedule A vesting information, proposed policy amounts, and all Schedule B requirements and exceptions.
2. ALTA/NSPS Survey Data. We cross-referenced the title commitments against preliminary ALTA/NSPS survey data provided by Ironclad Surveying & Land Services LLC (Karen Whitfield, PLS, 4850 Cordata Parkway, Suite 110, Bellingham, WA 98226). Ironclad has prepared draft survey plats for each easement area and has provided preliminary legal descriptions for each proposed permanent and temporary easement. These surveys remain in draft form and are expected to be finalized by June 1, 2025. We reviewed the draft surveys for the purpose of identifying potential conflicts between existing recorded easements shown on the title commitments and the proposed CSIA easement footprints.
3. Whatcom County Public Records. We reviewed Whatcom County Assessor records and Whatcom County Auditor records for each parcel, including recorded documents referenced in the title commitments (deeds of trust, easements, and other instruments), tax assessment and payment histories, and parcel mapping data. These records were accessed both online through the Whatcom County public records portal and, where necessary, through direct requests to the Auditor's office.
4. Entity Verification. We confirmed vesting information for each landowner entity against Washington Secretary of State filings. Both VFH (a Washington limited liability company) and DCR (a Washington corporation) are confirmed to be in good standing and current on their respective filing obligations as of the date of this memorandum.
5. Phase I Environmental Site Assessments. We reviewed the Phase I Environmental Site Assessment ("ESA") reports completed on January 22, 2025, by Pinnacle Geotechnical & Environmental Consulting Inc. (Dr. Raymond Ostrowski, PE) for each of the parcels under review. The purpose of this review was to identify any environmental liens, activity and use limitations, or other environmental conditions that could affect title. No recognized environmental conditions ("RECs") were identified on any of the five privately held parcels or on the CSIA-owned PS-4 parcel. No environmental liens or institutional controls were disclosed.
6. FEMA Floodplain Analysis. We coordinated with Rafael Dominguez, Working Associate, who has conducted a FEMA floodplain overlay analysis for the PS-1 and PS-2 parcels. Both parcels are located within a FEMA-designated Zone AE 100-year floodplain, with a Base Flood Elevation ("BFE") of 62.5 feet NAVD88. This designation is reflected as a standard Schedule B exception in the title commitments for those parcels.
7. Cultural Resources Surveys. We reviewed the Phase I Cultural Resources Survey completed on February 10, 2025, by Pinnacle, which identified a pre-contact archaeological site (45WH-1287) near the PS-3 location on the Dunlap Creek property. While not a recorded title encumbrance, this finding is noted by the title company as an informational exception and has implications for construction scheduling and monitoring requirements.
All documents reviewed are referenced throughout this memorandum and, where applicable, are attached as exhibits or available for review in the electronic matter file maintained on the firm's document management system.
III. Parcel-by-Parcel Title Analysis
A. Veldkamp Family Holdings LLC Parcels
Vesting Information (All Three Veldkamp Parcels). The following vesting and entity information is common to all three Veldkamp parcels (Parcel Nos. 380219-401200, 380219-401201, and 380219-401203):
• Record Owner: Veldkamp Family Holdings LLC, a Washington limited liability company ("VFH")
• EIN: 91-3487562
• Registered Agent Address: 2240 Meridian Street, Bellingham, WA 98225
• Managing Member: Hendrik "Hank" Veldkamp
• Other Members: Anneke Veldkamp-Ross; Willem Veldkamp
• Counsel: Bridger Hollis & Pratt LLP, 300 Prospect Street, Suite 600, Bellingham, WA 98225 (Nadia Sorensen, Partner; Tyler Fong, Associate)
Vesting in VFH is confirmed by a statutory warranty deed recorded under Whatcom County Auditor's File No. 2018-0704932 in the records of the Whatcom County Auditor, by which the Veldkamp family members conveyed their respective interests in the subject property to VFH as part of an estate planning reorganization. Title to the approximately 187-acre agricultural parcel has been vested in VFH since July 4, 2018, with no subsequent conveyances of fee interest reflected of record.
Washington Secretary of State records confirm that VFH is in good standing, is active, and was formed on June 12, 2018, under UBI No. 604-237-891. The most recent annual report was filed on June 12, 2024. The firm's operating agreement has not been provided to our office; we have requested an extract or certification of relevant provisions through VFH's counsel at Bridger Hollis & Pratt LLP ("BHP"). As discussed below, satisfactory evidence of Hendrik Veldkamp's authority to execute conveyances on behalf of VFH is a Schedule B-I requirement for title insurance purposes.
1. Parcel No. 380219-401200 — Pump Station No. 1 (PS-1). a. Property Description
Pump Station No. 1 ("PS-1") is proposed to be located on a portion of Parcel No. 380219-401200, situated at or near the intersection of River Road and Slater Road, Whatcom County, Washington. This parcel forms part of the approximately 187-acre agricultural property owned by VFH along River Road. The property is currently used for crop farming, predominantly blueberry and raspberry cultivation, and is classified as agricultural land for property tax purposes under the Whatcom County current-use classification program.
The proposed easement area for PS-1 encompasses approximately 2.3 acres and will accommodate the permanent pump station facility, an associated equipment pad, an electrical service connection area, and a permanent access road connecting the pump station to River Road. In addition, a temporary construction easement will be required over a portion of a 3.1-acre total temporary easement area shared across all three Veldkamp parcels. The temporary construction easement will be utilized during the construction phase for equipment staging, material storage, and construction vehicle access.
The permanent easement value for PS-1 has been appraised at $345,000 by Northwind Valuation Group LLC (Jocelyn Trueblood, MAI, appraisal dated March 14, 2025). The temporary construction easement for all Veldkamp parcels combined has been appraised at $62,000. The Northwind appraisal was prepared in accordance with the Uniform Standards of Professional Appraisal Practice ("USPAP") and the Uniform Appraisal Standards for Federal Land Acquisitions ("Yellow Book") as required by CSIA policy.
b. Schedule A — Vesting and Interest
The Schedule A of the title commitment for Parcel No. 380219-401200 confirms the following:
• Type of Interest: Fee simple
• Record Owner: Veldkamp Family Holdings LLC, a Washington limited liability company
• Effective Date of Commitment: April 3, 2025
• Amount of Proposed Easement Policy: $345,000
The commitment proposes to issue an ALTA owner's policy of title insurance in the amount of $345,000, insuring the interest of CSIA in the proposed permanent pump station and access easement to be acquired from VFH.
c. Schedule B — Part I (Requirements)
The Schedule B-I of the title commitment sets forth the following requirements to be satisfied before the policy will be issued:
(i) Recording of the easement instrument conveying the permanent pump station and access easement from VFH to CSIA, in form satisfactory to the title company, in the records of the Whatcom County Auditor.
(ii) Payment of the title insurance premium and all applicable fees to Cascade Basin Title Company.
(iii) Delivery of satisfactory evidence of LLC authority, including either a certified copy of the operating agreement of VFH or a managing member certification, confirming that Hendrik "Hank" Veldkamp is duly authorized to execute conveyances, easements, and related instruments on behalf of VFH, and that no consent of the other members (Anneke Veldkamp-Ross or Willem Veldkamp) is required — or, if such consent is required, evidence that it has been obtained.
(iv) Payment of all real property taxes and assessments through the date of closing.
(v) Release or subordination of the deed of trust described in Exception 2 below, insofar as it encumbers the 2.3-acre permanent easement area.
d. Schedule B — Part II (Exceptions)
The following exceptions appear on the Schedule B-II of the title commitment for Parcel No. 380219-401200 and will remain as exceptions from coverage under the proposed policy unless removed by curative action or insured over by endorsement:
Exception 1: Real Property Taxes and Special Assessments. General real property taxes for the current tax year (2025), which are a lien not yet due and payable, and any special assessments levied by Whatcom County or any special purpose district, including but not limited to Whatcom County Flood Control Zone District assessments. Our review of Whatcom County Assessor records confirms that all real property taxes on this parcel are current through tax year 2024. There are no delinquent balances. The 2025 taxes will be prorated or adjusted at closing as appropriate.
Exception 2: Deed of Trust — Evergreen Agricultural Credit Association. Deed of trust in favor of Evergreen Agricultural Credit Association, as beneficiary, recorded under Whatcom County Auditor's File No. 2019-0511847, securing a revolving agricultural line of credit in the original principal amount of $1,200,000. The deed of trust encumbers the entirety of the approximately 187-acre VFH property, including Parcel Nos. 380219-401200, 380219-401201, and 380219-401203. The trustee named in the deed of trust is First Pacific Title Company of Washington. The current outstanding balance on the line of credit is unknown and has not been disclosed by VFH or its counsel.
This exception is material because, absent a partial release or subordination, any easement acquired by CSIA would be junior to the lien of the deed of trust. In the event of a foreclosure by Evergreen Agricultural Credit Association, the senior lien could extinguish CSIA's easement interest. Accordingly, a partial release of the 2.3-acre PS-1 easement area from the lien of the deed of trust — or, alternatively, a subordination agreement by which Evergreen Agricultural Credit Association subordinates its lien to CSIA's easement interest — must be obtained as a condition precedent to closing.
Exception 3: Agricultural Conservation Easement — Whatcom County Land Trust. Agricultural conservation easement held by the Whatcom County Land Trust, a Washington nonprofit corporation, recorded under Whatcom County Auditor's File No. 2014-0389214, encumbering the entire approximately 187-acre VFH property. The conservation easement restricts subdivision of the property, conversion of agricultural land to non-agricultural uses, and construction of non-agricultural structures and improvements.
Notably, the title commitment reflects that the conservation easement instrument includes a carve-out provision permitting governmental infrastructure improvements, provided that the aggregate footprint of such improvements occupies no more than five percent (5%) of the total acreage of the encumbered property. Based on the 187-acre total property size, the 5% threshold equates to approximately 9.35 acres. The combined VFH easement areas for the Project include: PS-1 permanent easement (2.3 acres), PS-2 permanent easement (1.8 acres), and the pipeline corridor permanent easement (acreage to be determined upon finalization of the pipeline corridor width and routing). It is critical that the combined permanent easement acreage across all three VFH parcels be confirmed to fall within the 9.35-acre threshold. Additionally, the specific language of the carve-out provision must be reviewed to determine whether the carve-out is self-executing or whether written consent from the Whatcom County Land Trust is required.
We have not yet obtained a full copy of the recorded conservation easement instrument. A request has been submitted to Cascade Basin Title Company for a legible copy of the complete instrument, and we anticipate receipt by April 18, 2025.
Exception 4: Utility Easement — Greaves Corporation. Existing 30-foot-wide utility easement in favor of Greaves Corporation for electrical transmission purposes, recorded under Whatcom County Auditor's File No. 2003-0227485, running along the western boundary of the parcel. The preliminary survey prepared by Ironclad Surveying & Land Services LLC indicates that the Greaves Corporation easement does not overlap with the proposed PS-1 pump station easement footprint. The nearest point of the PS-1 easement boundary to the PSE easement is approximately 85 feet, providing adequate separation. No curative action is required with respect to this exception, though it should remain as a standard exception from coverage.
Exception 5: Whatcom County Road Right-of-Way. Whatcom County public road right-of-way along River Road and Slater Road frontages, of variable width (typically 30 feet from the centerline of each road). This is a standard exception for parcels abutting county roads and is not expected to affect the proposed easement footprint, which is set back from both road frontages. No curative action is required.
Exception 6: FEMA Flood Zone Designation. The parcel is located within a FEMA National Flood Insurance Program designated Zone AE, 100-year floodplain, with a Base Flood Elevation of 62.5 feet NAVD88. This designation is based on the current effective FEMA Flood Insurance Rate Map ("FIRM") panel for this area of Whatcom County. The title insurer includes this as a standard informational exception. As noted above, the PS-1 pump station has been designed with a finished floor elevation of 65.0 feet NAVD88, providing 2.5 feet of freeboard above the BFE. While this designation does not constitute a title defect, CSIA should ensure that appropriate flood insurance coverage is obtained for the pump station facility upon completion of construction, and that all construction activities comply with Whatcom County floodplain development regulations.
Exception 7: Rights of Tenants or Parties in Possession. Rights of tenants or parties in possession of the property, including any agricultural lessees. VFH operates an active blueberry and raspberry farming operation on the 187-acre property, and it is unknown at this time whether any portions of the property — including the proposed PS-1 easement area — are subject to agricultural lease agreements with third parties, or whether seasonal farmworkers or other parties may occupy structures on the property. This exception must be addressed through an affidavit from VFH confirming the absence of tenants or parties in possession of the proposed easement area, or, if tenants exist, through the execution of tenant estoppel certificates and subordination agreements.
Exception 8: Standard Survey Exception. The standard printed survey exception, excepting from coverage any facts that an accurate survey of the property would disclose. This exception will be deleted upon receipt of a completed and certified ALTA/NSPS land title survey from Ironclad Surveying & Land Services LLC and endorsement of the survey by the title company. The final survey is expected by June 1, 2025.
e. Curative Actions Required
The following curative actions are required or recommended with respect to Parcel No. 380219-401200 before closing:
1. Deed of Trust Partial Release or Subordination. Obtain a partial release or subordination agreement from Evergreen Agricultural Credit Association releasing the 2.3-acre PS-1 permanent easement area from the lien of the deed of trust recorded under Auditor's File No. 2019-0511847. This is a condition precedent to the issuance of an owner's policy of title insurance that does not except the deed of trust from coverage with respect to the easement area. The partial release should be in recordable form and should be recorded concurrently with or immediately prior to the recording of the CSIA easement instrument. We recommend that Calderwood & Harkness prepare a form partial release agreement and transmit it to VFH's counsel at BHP (Nadia Sorensen) for coordination with the lender.
2. Conservation Easement Carve-Out Compliance. Obtain a full copy of the recorded conservation easement instrument (Auditor's File No. 2014-0389214) and confirm that the governmental infrastructure carve-out provision permits the proposed CSIA easement without further consent from the Whatcom County Land Trust. If the carve-out requires written consent, or if the combined VFH easement acreage approaches or exceeds the 5% threshold, written consent from the Land Trust must be obtained prior to closing.
3. Tenant/Occupancy Affidavit. Obtain an affidavit from VFH (executed by Hendrik Veldkamp as managing member) confirming that no agricultural tenants, lessees, or other parties are in possession of the 2.3-acre PS-1 permanent easement area and the associated temporary construction easement area. In the alternative, if tenants are identified, obtain tenant estoppel certificates and subordination, non-disturbance, and attornment agreements from each such tenant.
4. LLC Authorization Documentation. Obtain a certificate of the managing member of VFH or a certified extract of the operating agreement confirming that Hendrik Veldkamp has the authority to execute easement conveyances, deeds, and related instruments on behalf of VFH without the requirement of additional member consent, or, if additional consent is required, evidence that such consent has been obtained. This documentation must be in form satisfactory to Cascade Basin Title Company.
2. Parcel No. 380219-401201 — Pump Station No. 2 (PS-2). a. Property Description
Pump Station No. 2 ("PS-2") is proposed to be located on a portion of Parcel No. 380219-401201, situated along River Road approximately 0.6 miles north of Ten Mile Road, Whatcom County, Washington. Like the PS-1 parcel, this parcel is part of the approximately 187-acre agricultural property owned by VFH along River Road. The proposed permanent easement area for PS-2 encompasses approximately 1.8 acres and will accommodate the pump station facility, associated equipment and appurtenances, and a permanent access road.
The permanent easement value for PS-2 has been appraised at $270,000 by Northwind Valuation Group LLC (Jocelyn Trueblood, MAI, appraisal dated March 14, 2025). As noted above, the temporary construction easement for all Veldkamp parcels has been appraised at $62,000 in the aggregate.
b. Schedule A — Vesting and Interest
The Schedule A of the title commitment for Parcel No. 380219-401201 confirms the following:
• Type of Interest: Fee simple
• Record Owner: Veldkamp Family Holdings LLC, a Washington limited liability company
• Effective Date of Commitment: April 3, 2025
• Amount of Proposed Easement Policy: $270,000
The vesting is identical to that described above for PS-1, and the same statutory warranty deed (Auditor's File No. 2018-0704932) is the basis of VFH's record title.
c. Schedule B — Part II (Exceptions)
The Schedule B-II of the title commitment for Parcel No. 380219-401201 contains the following exceptions:
Exception 1: Real Property Taxes and Special Assessments. General real property taxes for the current tax year (2025), not yet due and payable, and any special assessments. As with the PS-1 parcel, all taxes on this parcel are current through tax year 2024. No delinquent balances exist.
Exception 2: Deed of Trust — Evergreen Agricultural Credit Association. The same deed of trust described in Exception 2 for the PS-1 parcel (Auditor's File No. 2019-0511847, original principal amount of $1,200,000) encumbers this parcel as well. A partial release or subordination agreement is required for the 1.8-acre PS-2 permanent easement area. The analysis and recommendation set forth above for the PS-1 parcel apply with equal force to this parcel.
Exception 3: Agricultural Conservation Easement — Whatcom County Land Trust. The same agricultural conservation easement (Auditor's File No. 2014-0389214) encumbers this parcel as part of the 187-acre VFH property. The governmental infrastructure carve-out analysis described above for PS-1 applies. The PS-2 easement area of 1.8 acres must be counted together with the PS-1 easement area (2.3 acres) and the pipeline corridor easement area in determining compliance with the 5% threshold (9.35 acres).
Exception 4: Irrigation District Easement — Whatcom County Irrigation District No. 7. Existing 20-foot-wide irrigation district easement in favor of Whatcom County Irrigation District No. 7, recorded under Whatcom County Auditor's File No. 1997-0142836, running along the eastern portion of the parcel. The Ironclad preliminary survey indicates a potential overlap of approximately 0.15 acres between this irrigation district easement and the proposed PS-2 pump station easement footprint. This overlap requires further investigation and resolution.
If the overlap is confirmed, several options exist: (a) the PS-2 easement footprint could be adjusted to avoid the irrigation district easement, if the pump station design permits such adjustment; (b) CSIA could enter into a coordination or accommodation agreement with Whatcom County Irrigation District No. 7 permitting the pump station improvements within the overlapping area, subject to protections for the irrigation district's infrastructure; or (c) the irrigation district easement could be relocated, with the consent of both VFH and the irrigation district, to a new alignment that avoids the pump station footprint. We recommend that Rafael Dominguez coordinate with Ironclad to finalize the survey and confirm the extent of the overlap, and that we then engage directly with the irrigation district to determine the appropriate resolution.
Exception 5: Whatcom County Road Right-of-Way. Whatcom County public road right-of-way along River Road frontage. Standard exception; no curative action required.
Exception 6: FEMA Flood Zone Designation. Same Zone AE, 100-year floodplain designation as PS-1 (BFE = 62.5 feet NAVD88). Same analysis applies. The PS-2 pump station is designed to the same 65.0 feet NAVD88 finished floor elevation.
Exception 7: Rights of Tenants or Parties in Possession. Same analysis as PS-1. VFH must provide an affidavit confirming no tenants or parties in possession of the proposed PS-2 easement area, or appropriate tenant subordination documentation must be obtained.
Exception 8: Standard Survey Exception. Same as PS-1; to be deleted upon receipt and endorsement of the final ALTA/NSPS survey.
d. Curative Actions Required
The following curative actions are required or recommended with respect to Parcel No. 380219-401201:
1. Deed of Trust Partial Release or Subordination. Same as PS-1. The partial release from Evergreen Agricultural Credit Association must cover the 1.8-acre PS-2 permanent easement area. We recommend that the partial release for all three Veldkamp parcels be consolidated into a single instrument if the lender will agree to that approach.
2. Irrigation District Easement Overlap. Investigate and resolve the potential 0.15-acre overlap between the existing Whatcom County Irrigation District No. 7 easement and the proposed PS-2 easement footprint. If overlap is confirmed, coordinate with the irrigation district for an accommodation agreement, easement relocation, or design modification to avoid the conflict.
3. Conservation Easement Percentage Analysis. Same as PS-1. The PS-2 acreage must be included in the combined calculation.
4. LLC Authority Documentation. Same as PS-1. A single certificate of managing member authority may suffice for all three Veldkamp parcels.
5. Tenant/Occupancy Affidavit. Same as PS-1. May be combined into a single affidavit covering all three Veldkamp parcels.
3. Parcel No. 380219-401203 — Pipeline Segment (Veldkamp). a. Property Description
The pipeline corridor segment crossing VFH land is situated along River Road, Whatcom County, Washington, and forms part of the same approximately 187-acre VFH agricultural property. CSIA proposes to acquire a permanent linear easement over this parcel for the installation, operation, maintenance, repair, and replacement of 24-inch and 36-inch high-density polyethylene ("HDPE") force-main pipelines. This pipeline segment is part of the approximately 6.2-mile pipeline network that will connect all four pump stations to the Nooksack Regional Wastewater Treatment Plant outfall.
The exact acreage of the permanent pipeline corridor easement on this parcel is to be finalized upon completion of the final pipeline routing and survey by Ironclad Surveying & Land Services LLC. Compensation for this easement is included within the overall Veldkamp permanent easement compensation; the exact linear-foot acreage and corresponding appraisal are to be finalized by Northwind Valuation Group LLC in a supplemental appraisal report.
b. Schedule A — Vesting and Interest
The Schedule A of the title commitment for Parcel No. 380219-401203 confirms fee simple title vested in Veldkamp Family Holdings LLC, consistent with the vesting information described above for the PS-1 and PS-2 parcels. The effective date of commitment is April 3, 2025. The amount of the proposed easement policy will be determined upon completion of the supplemental appraisal.
c. Schedule B — Part II (Exceptions)
The Schedule B-II of the title commitment for Parcel No. 380219-401203 contains the following exceptions:
Exception 1: Real Property Taxes and Special Assessments. General real property taxes for the current tax year (2025), not yet due and payable, and any special assessments. All taxes are current through tax year 2024.
Exception 2: Deed of Trust — Evergreen Agricultural Credit Association. The same deed of trust (Auditor's File No. 2019-0511847) encumbering the entire 187-acre VFH property. A partial release or subordination is required for the pipeline corridor easement width. As noted above, we recommend that the partial release for all three Veldkamp parcels be consolidated into a single instrument.
Exception 3: Agricultural Conservation Easement — Whatcom County Land Trust. The same conservation easement (Auditor's File No. 2014-0389214). The pipeline corridor acreage must be included in the governmental infrastructure carve-out percentage calculation along with the PS-1 and PS-2 easement areas.
Exception 4: Pre-existing Underground Utility Easement — Cascade Natural Gas. Kaloreth Natural Gas Corporation pipeline easement (20-foot width), recorded under Whatcom County Auditor's File No. 2006-0298731, crossing the parcel. This easement accommodates an existing natural gas transmission pipeline. The Ironclad preliminary survey has not yet finalized the relationship between the proposed CSIA pipeline corridor alignment and the Cascade Natural Gas easement. If the CSIA pipeline routing can be adjusted to avoid the Cascade Natural Gas easement entirely, no further action is required beyond confirming the separation distance. However, if the CSIA pipeline must cross the Cascade Natural Gas easement, a crossing agreement will need to be negotiated with Kaloreth Natural Gas Corporation. Such agreements typically address construction methodology (e.g., minimum separation distances, boring versus open-cut installation), notification and inspection requirements, and mutual indemnification. We anticipate that any crossing agreement could be negotiated and executed within the project timeline, but the matter should be identified early to avoid delays.
Exception 5: Whatcom County Road Right-of-Way. Whatcom County public road right-of-way along River Road. Standard exception; no curative action required.
Exception 6: Rights of Tenants or Parties in Possession. Same analysis as the other Veldkamp parcels.
Exception 7: Standard Survey Exception. Same as the other Veldkamp parcels; to be deleted upon receipt of the final ALTA/NSPS survey.
d. Curative Actions Required
The following curative actions are required or recommended with respect to Parcel No. 380219-401203:
1. Deed of Trust Partial Release or Subordination. Same as PS-1 and PS-2. The partial release must cover the pipeline corridor easement width across this parcel.
2. Cascade Natural Gas Pipeline Crossing. Confirm through the final Ironclad survey whether the proposed CSIA pipeline routing crosses the Cascade Natural Gas easement. If a crossing is required, negotiate and execute a crossing or co-location agreement with Kaloreth Natural Gas Corporation prior to closing.
3. Conservation Easement Analysis. Same as PS-1 and PS-2. The pipeline corridor acreage on this parcel must be included in the 5% threshold calculation.
4. LLC Authority Documentation. Same as PS-1 and PS-2.
B. Dunlap Creek Ranch Inc. Parcels
Vesting Information (Both Dunlap Creek Parcels). The following vesting and entity information is common to both Dunlap Creek parcels (Parcel Nos. 380220-108400 and 380220-108401):
• Record Owner: Dunlap Creek Ranch Inc., a Washington corporation (S-corporation for federal tax purposes) ("DCR")
• EIN: 91-2198403
• Registered Agent Address: 18500 Guide Meridian Road, Lynden, WA 98264
• President & Sole Director: Garrett Dunlap
• Secretary/Treasurer: Maureen Dunlap
• Counsel: Self-represented for purposes of this transaction. We understand that DCR has informally consulted with Bridger Hollis & Pratt LLP regarding the Project, though BHP has not entered an appearance as counsel for DCR and no attorney-client relationship between DCR and BHP has been confirmed.
Vesting in DCR is confirmed by a statutory warranty deed recorded under Whatcom County Auditor's File No. 2011-0613287 in the records of the Whatcom County Auditor. The deed conveyed the approximately 94-acre dairy farm property from Garrett Dunlap and Maureen Dunlap, husband and wife, to Dunlap Creek Ranch Inc. Title has been vested in DCR since the recording of this deed, with no subsequent conveyances of fee interest reflected of record.
Washington Secretary of State records confirm that DCR is in good standing and active under UBI No. 602-871-456. DCR was incorporated on March 8, 2011. The most recent annual report was filed on March 8, 2025. Garrett Dunlap is listed as the president and sole director; Maureen Dunlap is listed as secretary/treasurer. Because DCR is a corporation, a corporate resolution or certificate of the board of directors (or sole director) authorizing the execution of easement conveyances will be required as a condition of the title commitment.
4. Parcel No. 380220-108400 — Pump Station No. 3 (PS-3). a. Property Description
Pump Station No. 3 ("PS-3") is proposed to be located on a portion of Parcel No. 380220-108400, situated at or near the intersection of Hannegan Road and the Nooksack River crossing in Whatcom County, Washington. This parcel forms part of the approximately 94-acre dairy farmland owned by DCR along Hannegan Road. The property is actively used as a dairy farm and includes a milking parlor, multiple barns and outbuildings, and associated agricultural infrastructure. The proposed PS-3 easement area is located in a portion of the property that is primarily used as pastureland, away from the existing farm structures.
The proposed permanent easement area for PS-3 encompasses approximately 2.1 acres and will accommodate the pump station facility, associated equipment and appurtenances, and a permanent access road connecting to Hannegan Road. A temporary construction easement will also be required over a portion of a 1.6-acre total temporary easement area shared across both Dunlap Creek parcels. The temporary construction easement will be utilized during the construction phase for equipment staging, material storage, and construction access.
The permanent easement value for PS-3 has been appraised at $315,000 by Northwind Valuation Group LLC (Jocelyn Trueblood, MAI, appraisal dated March 14, 2025). The temporary construction easement for both Dunlap Creek parcels combined has been appraised at $32,000.
b. Schedule A — Vesting and Interest
The Schedule A of the title commitment for Parcel No. 380220-108400 confirms the following:
• Type of Interest: Fee simple
• Record Owner: Dunlap Creek Ranch Inc., a Washington corporation
• Effective Date of Commitment: April 4, 2025
• Amount of Proposed Easement Policy: $315,000
c. Schedule B — Part II (Exceptions)
The Schedule B-II of the title commitment for Parcel No. 380220-108400 contains the following exceptions:
Exception 1: Real Property Taxes, Special Assessments, and Delinquent Taxes. General real property taxes for the current tax year (2025), which are a lien not yet due and payable, and any special assessments. Additionally, the title search reveals a delinquent property tax balance of approximately $4,800 for tax year 2024 on this parcel. This delinquent balance represents unpaid second-half 2024 taxes, which became due on October 31, 2024, and have been accruing interest and penalties since that date.
This delinquency must be cured as a condition to closing. Delinquent taxes constitute a lien against the property that is senior to all other interests, including any easement to be acquired by CSIA. If the delinquency remains uncured, title insurance cannot be issued free and clear of this exception. We recommend that the good-faith offer letter to DCR include a provision requiring DCR to bring all property taxes current prior to or at closing. Alternatively, CSIA may elect to credit the delinquent amount against the easement compensation payable to DCR at closing, with CSIA paying the delinquent taxes directly to the Whatcom County Treasurer.
Exception 2: Deed of Trust — Stonefield Bancorp. Deed of trust in favor of Stonefield Bancorp, as beneficiary, recorded under Whatcom County Auditor's File No. 2016-0427183, securing a loan in the original principal amount of $650,000. The deed of trust encumbers both DCR parcels (Parcel Nos. 380220-108400 and 380220-108401). The trustee named in the deed of trust is Pacific Northwest Title Company. The current outstanding balance on the loan is unknown.
As with the Veldkamp parcels and the Evergreen Agricultural Credit Association deed of trust, a partial release or subordination agreement is required from Stonefield Bancorp to ensure that CSIA's permanent easement interest in the 2.1-acre PS-3 easement area is not subordinate to the lien of the deed of trust. The analysis and recommendations described above for the Veldkamp parcels apply here with equal force.
Exception 3: Utility Easement — Whatcom County PUD. Existing 25-foot-wide electrical distribution easement in favor of Whatcom County Public Utility District along the Hannegan Road frontage of the parcel, recorded under Whatcom County Auditor's File No. 1988-0094213. The Ironclad preliminary survey confirms that this PUD easement does not overlap with the proposed PS-3 pump station easement footprint. The nearest point of the proposed PS-3 easement boundary to the PUD easement is approximately 120 feet. No curative action is required, and this exception will remain as a standard exception from coverage.
Exception 4: Shoreline Management Act Jurisdiction. Portions of the parcel lying within 200 feet of the ordinary high water mark of the Nooksack River are subject to the regulatory jurisdiction of the Washington State Shoreline Management Act (RCW 90.58) and the Whatcom County Shoreline Master Program. This exception is informational in nature and does not represent a recorded encumbrance against the property. However, any development activities within the shoreline jurisdiction area — including pump station construction — may require a Substantial Development Permit or other shoreline approval from Whatcom County. CSIA's project team should ensure that all necessary shoreline permits have been obtained prior to commencing construction within the shoreline jurisdiction area.
Exception 5: Archaeological Site — 45WH-1287. The title commitment notes, as an informational exception, the identification of pre-contact archaeological site 45WH-1287 near the PS-3 location, as disclosed by the Phase I Cultural Resources Survey completed on February 10, 2025, by Pinnacle Geotechnical & Environmental Consulting Inc. While the presence of an archaeological site is not a recorded encumbrance or lien against the property, the title company notes the potential for cultural resources monitoring requirements and restrictions during ground-disturbing activities as a condition that may affect the use of the easement area.
This exception has practical significance for the Project. Under Section 106 of the National Historic Preservation Act (where applicable to the Project due to federal funding or permitting) and applicable Washington State cultural resources laws, CSIA may be required to implement an archaeological monitoring protocol, an inadvertent discovery plan, and potentially a data recovery plan during construction activities near site 45WH-1287. These requirements would be established through consultation with the Washington Department of Archaeology and Historic Preservation ("DAHP") and, if a federal nexus exists, the U.S. Army Corps of Engineers ("USACE"). Pinnacle has estimated that Section 106 concurrence from DAHP and/or USACE will be obtained by approximately November 15, 2025. This timeline should not affect the August 15, 2025 target for easement execution, but may affect the December 15, 2025 Construction Notice to Proceed if concurrence is delayed.
Exception 6: Whatcom County Road Right-of-Way. Whatcom County public road right-of-way along the Hannegan Road frontage. Standard exception; no curative action required.
Exception 7: Rights of Tenants or Parties in Possession. Rights of tenants or parties in possession, including dairy operation employees who may occupy structures on the property. DCR operates an active dairy farm, and it is possible that farmworkers or farm managers reside in on-site housing or otherwise occupy portions of the property. An affidavit from DCR confirming no tenants or parties in possession of the proposed PS-3 easement area is required, or, if occupants are identified, appropriate subordination or estoppel documentation must be obtained.
Exception 8: Standard Survey Exception. The standard printed survey exception. To be deleted upon receipt and endorsement of the final ALTA/NSPS survey from Ironclad.
Exception 9: Possible Prescriptive Easement Claim. The title search notes historical use of an unpaved farm access road across the southwest corner of the parcel by an adjacent landowner (identified in county assessor records as the owner of Parcel No. 380220-108399, to the south and west). No recorded easement for this access road was found in the title records. The title examiner's notes indicate that aerial photography and historical county road records suggest the road has been in use for at least 20 to 30 years, though the precise duration and circumstances of use have not been established.
Under Washington law, a prescriptive easement may be established by continuous, open, notorious, and hostile use of another's property for the statutory period of ten years. RCW 4.16.020; Gamboa v. Clark, 183 Wn.2d 38 (2015). If the adjacent landowner has a valid prescriptive easement claim across the southwest corner of the PS-3 parcel, that claim could constitute a competing use interest within or near the proposed PS-3 easement footprint. The title commitment raises this as a potential exception from coverage.
We recommend that Ironclad conduct an on-site survey to determine the precise location and extent of the unpaved road, and that we overlay the road location against the proposed PS-3 easement footprint to determine whether any conflict exists. If the road is located outside the proposed easement area, no further action may be required. If the road intersects with or is adjacent to the proposed easement area, we recommend one or more of the following approaches: (a) obtaining a quitclaim deed or affidavit of non-claim from the adjacent landowner disclaiming any prescriptive easement rights; (b) obtaining a title indemnity from Cascade Basin Title Company insuring against loss arising from the alleged prescriptive easement; or (c) adjusting the PS-3 easement footprint to avoid the area of potential prescriptive use, if engineering considerations permit.
d. Curative Actions Required
The following curative actions are required or recommended with respect to Parcel No. 380220-108400:
1. Cure Property Tax Delinquency. Payment of the delinquent 2024 property taxes (approximately $4,800, plus accrued interest and penalties) must be made before or at closing. CSIA may elect to credit this amount against the easement compensation payable to DCR, or may require DCR to cure the delinquency as a condition precedent to the execution of the easement instrument. The good-faith offer letter should address this issue expressly.
2. Deed of Trust Partial Release or Subordination. Obtain a partial release or subordination agreement from Stonefield Bancorp releasing the 2.1-acre PS-3 permanent easement area from the lien of the deed of trust recorded under Auditor's File No. 2016-0427183. Because DCR is self-represented in this transaction, Calderwood & Harkness will need to coordinate directly with Garrett Dunlap regarding lender outreach, or alternatively, prepare and transmit the form partial release agreement to Stonefield Bancorp for processing. Care should be taken to avoid providing legal advice to DCR in these communications.
3. Corporate Authority Documentation. Obtain a corporate resolution or certificate of authority adopted by the board of directors (or sole director) of DCR, confirming that Garrett Dunlap is duly authorized to execute easement conveyances, deeds, and related instruments on behalf of DCR. Because Garrett Dunlap is the sole director, a sole director's resolution should suffice. The resolution should be in form satisfactory to Cascade Basin Title Company.
4. Prescriptive Easement Investigation. Investigate the possible prescriptive easement claim on the southwest corner of the parcel. Coordinate with Ironclad to determine the location and extent of the unpaved farm road relative to the proposed PS-3 easement footprint. If a conflict exists, obtain a quitclaim deed or affidavit from the adjacent landowner, or seek title indemnity from Cascade Basin Title Company.
5. Tenant/Occupancy Confirmation. Obtain an affidavit from DCR (executed by Garrett Dunlap as president) confirming that no tenants, dairy operation employees, or other parties are in possession of the proposed PS-3 permanent easement area or the associated temporary construction easement area.
5. Parcel No. 380220-108401 — Pipeline Corridor (Dunlap Creek). a. Property Description
The pipeline corridor segment crossing DCR land is situated along Hannegan Road, Whatcom County, Washington, and forms part of the same approximately 94-acre dairy farm property owned by DCR. CSIA proposes to acquire a permanent linear easement over this parcel for the installation, operation, maintenance, repair, and replacement of 24-inch and 36-inch HDPE force-main pipelines, forming part of the approximately 6.2-mile pipeline network connecting all four pump stations to the Nooksack Regional Wastewater Treatment Plant outfall.
The exact acreage and linear-foot dimensions of the pipeline corridor easement on this parcel are to be finalized upon completion of the pipeline routing design and survey. Compensation for this easement is to be determined based on a linear-foot valuation from Northwind Valuation Group LLC; the supplemental appraisal is forthcoming.
b. Schedule A — Vesting and Interest
The Schedule A of the title commitment for Parcel No. 380220-108401 confirms fee simple title vested in Dunlap Creek Ranch Inc., a Washington corporation, consistent with the vesting information described above for the PS-3 parcel. The effective date of commitment is April 4, 2025. The amount of the proposed easement policy will be determined upon completion of the supplemental appraisal.
c. Schedule B — Part II (Exceptions)
The Schedule B-II of the title commitment for Parcel No. 380220-108401 contains the following exceptions:
Exception 1: Real Property Taxes and Special Assessments. General real property taxes for the current tax year (2025), not yet due and payable, and any special assessments. The title search for this parcel does not definitively confirm whether the same delinquent tax balance issue identified on Parcel No. 380220-108400 also affects this parcel. The two parcels are separately assessed by the Whatcom County Assessor, and it is possible that the delinquency is limited to the PS-3 parcel. We have requested confirmation from Cascade Basin Title Company and the Whatcom County Treasurer as to the current tax status of this parcel. If a delinquency is confirmed, it must be cured as a condition to closing under the same approach described above for the PS-3 parcel.
Exception 2: Deed of Trust — Stonefield Bancorp. The same deed of trust described in Exception 2 for the PS-3 parcel (Auditor's File No. 2016-0427183, original principal amount of $650,000) encumbers this parcel as well. A partial release or subordination agreement is required for the pipeline corridor easement width. We recommend that the partial release for both DCR parcels be consolidated into a single instrument if the lender will agree to that approach.
Exception 3: Underground Water Line Easement — Whatcom County Water District No. 13. Existing 15-foot-wide easement in favor of Whatcom County Water District No. 13 for an underground water line, recorded under Whatcom County Auditor's File No. 2001-0187542, crossing the parcel. The Ironclad preliminary survey has not yet finalized the relationship between the proposed CSIA pipeline corridor alignment and this existing water district easement. Depending on the final pipeline routing, the CSIA pipeline corridor may run parallel to, cross, or partially overlap with the water district easement.
If the CSIA pipeline corridor crosses or overlaps with the water district easement, coordination with Whatcom County Water District No. 13 will be required. Potential approaches include: (a) co-location of the CSIA pipeline within or adjacent to the existing water district easement, subject to an agreement addressing minimum separation distances, construction coordination, and mutual indemnification; (b) negotiation of a crossing agreement if the pipelines intersect at a single point; or (c) adjustment of the CSIA pipeline routing to avoid the water district easement entirely. We recommend that Ironclad finalize the survey showing the precise location of the water district infrastructure relative to the proposed CSIA pipeline alignment, and that Rafael Dominguez initiate coordination with the water district.
Exception 4: Whatcom County Road Right-of-Way. Whatcom County public road right-of-way along Hannegan Road. Standard exception; no curative action required.
Exception 5: Rights of Tenants or Parties in Possession. Same analysis as the PS-3 parcel.
Exception 6: Standard Survey Exception. Same as the other parcels; to be deleted upon receipt and endorsement of the final ALTA/NSPS survey.
d. Curative Actions Required
The following curative actions are required or recommended with respect to Parcel No. 380220-108401:
1. Confirm and Cure Property Tax Delinquency. Confirm whether any property tax delinquency exists on this parcel. If delinquent taxes are identified, they must be cured as a condition to closing under the same approach described for the PS-3 parcel.
2. Deed of Trust Partial Release or Subordination. Obtain a partial release or subordination agreement from Aldermere National Bank the pipeline corridor easement area on this parcel. The partial release should be consolidated with the partial release for the PS-3 parcel if possible.
3. Water District Easement Coordination. Coordinate with Whatcom County Water District No. 13 regarding the existing underground water line easement. Determine whether the CSIA pipeline can be co-located with, or routed to avoid, the water district infrastructure. If a crossing or co-location agreement is needed, negotiate and execute the agreement prior to closing.
4. Corporate Authority Documentation. Same as the PS-3 parcel. A single corporate resolution should suffice for both DCR parcels.
C. CSIA-Owned Parcel — PS-4 (Confirmation Only)
• Parcel No.: 380221-005700
• Location: E. Smith Road (existing CSIA right-of-way), Whatcom County, Washington
• Record Owner: Cascadia State Infrastructure Authority
• Proposed Pump Station Area: Approximately 1.5 acres within existing CSIA right-of-way
• Easement Acquisition Required: None
A title commitment was obtained from Cascade Basin Title Company for Parcel No. 380221-005700 for informational and confirmation purposes. The commitment confirms fee simple title vested in the Cascadia State Infrastructure Authority, with an effective date of April 4, 2025. The commitment reflects no deeds of trust, private easements, or other private encumbrances against the property. Standard exceptions include public road easements along E. Smith Road, utility easements of record in favor of various service providers, and general real property tax liens (which, as a governmental property, may be exempt depending on CSIA's tax-exempt status under Washington law).
No easement acquisition or compensation is required for this parcel. CSIA may proceed with the design and construction of Pump Station No. 4 under its existing fee ownership, subject to obtaining internal CSIA board authorization for the capital improvement within the existing right-of-way. We recommend that CSIA's General Counsel confirm that such board authorization has been obtained or is on the agenda for an upcoming board meeting prior to the issuance of the Construction Notice to Proceed.
IV. Cross-Cutting Title Issues and Risk Assessment
This section addresses title issues that are common to multiple parcels or that present particular risk to the Project timeline or easement acquisition strategy.
A. Deed of Trust Subordination / Partial Release
All five privately held parcels are encumbered by agricultural deeds of trust, which constitute the most common and, from a transactional standpoint, the most predictable title issue across the Project parcels:
Veldkamp Parcels (PS-1, PS-2, and Pipeline Segment). The deed of trust in favor of Evergreen Agricultural Credit Association (Auditor's File No. 2019-0511847, original principal amount of $1,200,000) encumbers all three Veldkamp parcels as part of the broader 187-acre agricultural property. The combined permanent easement area across the three Veldkamp parcels includes 2.3 acres (PS-1), 1.8 acres (PS-2), and the pipeline corridor (acreage to be determined) — a total of at least 4.1 acres for the pump station sites alone. A partial release from the lien of the deed of trust must be obtained for each of these easement areas.