The old granary building on the downtown Bellingham waterfront may be too costly to rehabilitate, officials with the Port of Bellingham and the city of Bellingham said during a May 3 meeting on the status of the redevelopment of the former Georgia-Pacific mill site.

It could cost up to $14 million dollars to handle structural problems and deal with mold and infestation in the Waterfront District landmark, said port environmental programs director Mike Stoner.

With costs that high, getting the granary back in shape would not be financially viable, Stoner said.

Officials planned to preserve and renovate the building as a homage to the city’s industrial history. They now say the granary should come down, and its salvageable materials should be put to use elsewhere.

“We’ve all come to the realization that it just won’t work for adaptive reuse,” Stoner said. “I’m sure people are going to mourn the loss of that structure.”

The revelation came during a joint session of the Bellingham city council and the port commission, where Stoner, along with Ted Carlson, director of the city’s public works department, and Tara Sundin, a city planning special projects manager, presented proposed updates to the master plan for the waterfront redevelopment project.

City council member Jack Weiss said port officials should see if there’s a private company that would be willing to spend the money to bring the building back to life.

Stoner acknowledged Weiss’ suggestion, but said the excessive costs of renovating the structure really put the “writing on the wall.”

“We feel we’ve really given it all the opportunity it could have for adaptive reuse,” he said.

In addition to the granary, other major proposed changes included delaying the relocation of the railroad tracks that run through the area, changing the planned use of the site’s log pond area from mixed residential and commercial use to light industrial use, and postponing the planned construction of a new downtown marina until other phases of the redevelopment are complete.

Carlson said moving the rail tracks, which run through the center of the site, would have to wait due to funding constraints.

The plan is to move the rail, operated by Burlington Northern Santa Fe LLC, to the eastern edge of the area, which would eliminate several street crossings and reduce on-site conflicts with the redevelopment.

In 2010, officials estimated the relocation would cost $15 million, but Carlson said they had been unable to secure funding.

Stoner said officials would have to find ways to begin early development with the railroad in its current location.

“We had to adjust to the reality that the railroad relocation probably won’t happen for quite some time,” Stoner said. “We’re really trying to find good solutions with the railroad in its current location, but we’d like to see that railroad moved.”

In the log pond area, Sundin said they planned to keep the site open to light and marine industrial use to focus on waterfront job development.

“It’s going to help the community retain some good tenants in this area,” Sundin said.

Officials are in the midst of finalizing the master plan for the redevelopment project.

The city and the port plan to hold future public meetings to gather feedback.

The city council and port commission will together adopt a final plan, which could potentially happen by 2013.

Bellingham Mayor Kelli Linville said a major effort through the entire process was to be transparent on the potential costs and benefits of the redevelopment.

“We are going to continue to use facts and information to present decision points to you,” she told city council members and port commissioners.