In the face of closures and lackluster business in East County, the Port of Grays Harbor is predicting an operating loss for the Satsop Business Park in 2014, in just the second year the Port has owned and operated the facility after the Public Development Authority was dissolved.
Even as Port officials are celebrating the filming of scenes for “Transformers 4” at the Fuller Hill facility with high hopes additional Hollywood productions will turn their way, rentals continue to be lackluster, especially for larger clients, leaving numerous buildings empty.
The Pacific Mountain Workforce Development Council, a regional job placement agency had been renting office space at the business park, left its office for new digs in Thurston County recently. A buyer for the mothballed NewWood manufacturing facility at the park, has still not emerged. NewWood turned wood waste and recycled plastic into a composite wood and had as many as 150 people working for it until it ran out of money and the debt collectors came in 2011.
The Satsop site also has numerous other office spaces empty once occupied by companies like SafeHarbor Technology, and Grays Harbor County is still paying off the debt owed on an empty “spec warehouse,” which was built with the hopes of attracting a tenant that the business park could then finish its interiors to match the specifications the tenant needed. The county spent several hundred thousand dollars on the building out of its economic development fund.
BMT Northwest also recently announced it would lay off 47 workers by the end of October. The company has been building giant steel tanks out of the site’s retrofitted Turbine Building.
The Port has budgeted for Satsop’s revenues to drop from $2.8 million to $1.9 million. However, expenses for the park will be about $2.2 million for an overall expected operational loss of $240,566.
As a comparison, the Satsop Business Park is projected to gain $184,328 this year, as of September, according to Port Finance Director Mary Nelson.
Business Park Manager Alissa Shay said that the business park’s leasing revenue alone is expected to drop half a million dollars — from $1.545 million to just over $1 million. That’s a reflection of the loss of revenue from NewWood, Shay said. She noted that the current budget does not take into account the recent layoff announcement from BMT Northwest, however.
The Brown-Minneapolis Tank Co. signed a 15-year lease with the business park in 2008.
The agreement allowed BMT to pay no rent in 2008 and 2009 with rent commencing at $4,000 per month in May of 2010. The rent has stayed at $4,000 per month and was set to increase to $6,000 per month next year. The company also had to compensate for security costs at the business park and pay an annual cost for use of the barge slip.
Shay said that BMT has not given notice to the Port that it wouldn’t still pay on its lease. However, if BMT finds a way to discontinue the lease, that would mean an additional $300,000 estimated loss to the business park, Shay noted, for an overall loss at the park of more than half a million dollars.
“It’s a management decision not to budget for that,” Shay said.
Port staff are not planning to do any major cuts to services at the facility in the face of the revenue loss, according to the 2014 budget projections. Personnel will stay at the equivalent of 12 full-time employees. In fact, two half-time positions will turn into one full-time position after retirements. Supplies will be tightened down a bit and “purchased services” will drop from $781,703 to $500,363.
It’s not the first Port division to lose money. Bowerman Field in Hoquiam, for instance, has consistently lost money for the Port and the Port 2014 operating budget anticipates an operating loss at the airport next year at $164,852.
The Port commissioners said after their regular meeting earlier this month that they have no regrets about acquiring the business park.
“I don’t think this will be anything like Bowerman,” Port Commissioner Chuck Caldwell said. “I think we just need to get a handle for what direction we want to take the business park.”
Port Commissioner Stan Pinnick points out that had NewWood found a buyer or still been in business, that would have boosted the business park’s revenue and an operating loss might not need to be budgeted.
“We need to figure out how to make it work,” adds Port Commissioner Jack Thompson. “It’s still early yet. It’s kind of like a tsunami. We can’t forecast the future.” Shay said she remains optimistic.
“We just need to find the right tenants and build from there,” she said.
The 2014 capital improvement plan does call for upgrades to some of the business park’s facilities if tenants do emerge. For instance, there’s $300,000 allocated for a new roof on the NewWood building, $300,000 allocated to install sprinklers and electrical in the “spec warehouse,” and $60,000 to put a new roof on Warehouse 16.
“If they come, we’re ready for them,” Shay said. “But the Port wouldn’t spend the money if we don’t have the tenants.”