The state auditor’s office today released its second major audit in five

The state auditor’s office today released its second major audit in five years of the Port of Seattle. The good news: The audit is nowhere near as scathing as the first, a 334-page tome on the Port’s construction projects that found that the agency broke the law and wasted nearly $100 million. The bad news: The newest, 42-page report (see pdf) found a few wasted millions in the Port’s real estate transactions. One of the most glaring errors discussed in the audit concerns the 2004 sale of Terminal 106E, a complex of two warehouses on 28 acres parcel near Diagonal Avenue and East Marginal Way. An appraiser valued the property at $27.7 million. The Port lowered that price by $4 million to reflect improvements that the buyer said it would have to do. And then the math got funny. Port staff accidentally subtracted that price break a second time. Whoops! The Port needlessly gave away an extra $4 million. The following year, the Port bought an old steel plant near the Magnolia Bridge for $5.5 million. The audit says the agency acted without fully assessing environmental concerns. The buildings were contaminated with asbestos and the land with PCBs, and the Port never ended up going through with a development project it has planned for the site. Even today, it sits unused aside from a few small tenants, says Port spokesperson Charla Skaggs. She insists, however, that the project fell through not because of contamination but the recent collapse of the real estate market. The audit identified other problems, including the use of outdated market data that caused the Port to set some lease rates too low, and incomplete or inaccurate data given by staff to commissioners. The report recommends that the Commission assert direct control over real estate transactions, just as it did over construction projects after the last audit in 2007. Skaggs says the Commission will discuss that possibility at a meeting on January 11th. Despite the negative findings, Skaggs says she sees the audit as an affirmation of changes already made at the Port to improve management and accountability. The Port has done some major housecleaning in the past few years: hiring a new CEO, firing managers and conducting its own internal probe of fraud (although as Rick Anderson reported earlier this year, the Port rehired a company that refused to cooperate with its investigation). In order to look more closely at its real estate deals, it created a new division for just that purpose, according to Skaggs. Indeed, the audit does give the Port some credit. Its deals in later years have been far better than the earlier ones, according to the report. Shrewd negotiating–and the advice of the auditor’s office, which had already started working on this audit– allowed the Port to chop $25 million off the price of an old rail line on the Eastside that the agency bought from Burlington Northern late last year. The previous sale price of $107 million had been based on a pre-real-estate-crash appraisal from four years ago.