Port of Grays Harbor

Commission Meeting

July 11, 2017

The Port of Grays Harbor Commission Meeting for July 11, 2017 was called to order at 12:00 p.m.

The Regular Meeting recessed at 12:00 p.m.

The Board then went into Executive Session to consider the acquisition, sale or lease of real estate and to discuss with Port’s legal counsel matters relating to agency enforcement actions, litigation or potential litigation. No action to be taken during Executive Session. It was announced that the Executive Session would last one hour and thirty minutes.

The Executive Session ended at 1:30 p.m.

The Regular Meeting commenced at 1:33 p.m.

Arthur Blauvelt, Legal Counsel, led the meeting in the Pledge of Allegiance.

Those in attendance at the meeting were as follows:

COMMISSION AND STAFF
Chuck Caldwell - Commissioner
Stan Pinnick - Commissioner
Jack Thompson - Commissioner
Gary Nelson - Executive Director
Arthur Blauvelt - Legal Counsel
Mary Nelson - Director of Finance & Administration
Randy Lewis - Director of Environmental and Engineering Services
Mike Johnson - Contract & Project Manager
Molly Bold - Westport Business Manager
Leonard Barnes - Deputy Executive Director
Alissa Shay - Manager of Business Development
Shannon Anderson - Business & Trade Development Asst.
Seth Taylor - Marine Terminals Manager
Kayla Dunlap - Public Affairs Manager
Ross Read - Director of Operations
Nathan Hoover - Project Coordinator
Chris Hunt - IT Manager
Lyndsie Winter - Marketing Consultant
James Messer - Business & Operations Asst.

VISITORS
Lisa Perry - Sierra Pacific Industries
Dave Haviland - Jodesha Broadcasting
Arnie Martin - Grays Harbor Audubon
Craig Dublanko - Coastal Comm. Action Program
Russ Taylor - Citizen
Janyce Taylor - Citizen
Shelli Hopsecger - Coast Controls & Automation, Inc.
Phillip Pine - Citizen

Items discussed and action taken where required is as follows:

MINUTES:
1. By motion made by Commissioner Caldwell, seconded by Commissioner Pinnick and unanimously approved, the Commission adopted the Minutes of June 12, 2017 Regular Commission Meeting as recorded in the Minutes Book No. 20 on pages 109 through 118 inclusive.

VOUCHERS:
1. By motion made by Commissioner Pinnick, seconded by Commissioner Caldwell, the Commission unanimously approved for payment those Payroll Vouchers issued June 20, 2017 and July 5, 2017, ACH/Wire Transfers No. 99900875 through and including No. 99900887 and General Disbursement Vouchers No. 94565 through and including No. 94812 for payment in the amount of $2,303,204.83.

REPORTS:
Sierra Pacific Industries Foundation Contribution to Friends Landing Playground Project
Alissa Shay introduced Lisa Perry. Perry presented a check in the amount of $2,500 from the Sierra Pacific Industries Foundation that will go towards the Friends Landing Playground Project. Shay thanked Perry and Sierra Pacific Industries for their contribution to the project.

Update on 28th Street Landing Boat Launch Improvements Phase II Project
Randy Lewis reported that upgrades to the 28th Street Landing Boat Launch have been underway for several years. In 2011, the Resource Conservation Office (RCO) awarded us with a grant to design and permit upgrades to the boat launch.

In 2014, the Port split the project into two phases. The first phase was accomplished in 2015 under a contract with the Quigg Brothers to replace the existing boarding float, damaged sections of the launch ramp, and the wave deflector.

Phase II permits were applied for and approved in 2015 to include a wider boat launch and second float, a new restroom, paving, and lighting. There have been several delays in the federal permitting process. The original goal was to have phase II completed by July 2017, but we are now looking at June 2019. The final costs for the project will be significantly higher than the original estimate used for the grant application. The cost of the project is estimated at $1,568,486 with the Port share being $756,544.

Friends Landing Tent Campground Flooding
Alissa Shay reported that on June 24th, 2017 that we experienced flooding at the Friends Landing tent campground in sites 2T, 3T, 4T, 5T, and 10T. Tent customers in these sites woke up to water in their tents. Lake Quigg is tidal influenced, but has only been seen as an issue during the rainy season. We are taking extra precautions to watch the tides throughout the year and during extreme high tides we will not be taking reservations on tent sites that experienced this flooding.

Legislative Report
Kayla Dunlap reported that the operating budget was passed on June 30th, 2017, during the third special session.

A capital budget was not passed due to issues surrounding a “fix” for the Supreme Court’s Hirst Decision. $2.5 million for the Westport Marina dredging project, as well as authorization of funding for RCO’s grant programs including the BFP grant that includes a sufficient level of funding for the Westport Boat Launch Parking Lot Improvements, remain on hold until the legislature can come to an agreement on the Hirst Decision and the capital budget.

The third special session comes to an end on July 20th, 2017.

Public Information Report
Kayla Dunlap reported that the Port continues outreach presentations for each city council in the county. On July 10th at 7:30 p.m., the Port presented at the Oakville city council meeting. Upcoming meetings include: Hoquiam, August 14th at 7:00 p.m. and Ocean Shores, August 28th at 6:00 p.m.

The Port has public tours scheduled for July and August.

The Greater Grays Harbor, Inc. Business After Hours will be hosted by the Satsop Business Park at 5:30 p.m., today.

Vessel Activity
Leonard Barnes reported for June 2017, the Port handled ten deep water vessels and no barges, which resulted in 237,000 MT of cargo. Mr. Barnes said that the marine terminals have continued to remain steady this summer and that the commissioners should be very proud of the work that Port employees and contractors have been doing.

Public Comment:
Phillip Pine of Elma brought up the rezone of a parcel of land in West Park at the Satsop Business Park. Mr. Pine stated that the rezone will affect the community in this area. He wanted to know how we can work together.

ACTION/RESOLUTION ITEMS:
Action Item No. 1
Mike Johnson reported on the authorization to award Contract No. 1897, Terminal Maintenance Dredging.

Annual maintenance dredging is required at the Port terminals. On May 9th, 2017 the Port commission approved a call for bids for maintenance dredging. Only one bid was received, coming from American Construction Company, Inc in the amount of $1,134,250, not including sales tax. This project will result in approximately $100,000 in sales tax for Aberdeen and Hoquiam.

Commissioner Thompson asked if they could expect a second bidder. Mike Johnson stated that a second bidder was not likely.

Motion to Authorize the Executive Director to proceed with Contract No. 1897, Terminal Maintenance Dredging, was made by Commissioner Caldwell and seconded by Commissioner Pinnick. Motion passed with a vote of 3-0.

Action Item No. 2
Mike Johnson reported on the authorization to proceed with jet array pump chamber maintenance. According to the Ports Delegation of Authority, if a construction project exceeds $60,000, commission approval is required.

The system was originally installed in 1985. In 2004, the pump chamber was refurbished, but it was found that structural components had deteriorated beyond repair. Rognlin’s was contracted to rebuild the structure, which has now been running for over 12 years.

The total cost to remove the structure, refurbish, and then return back to service is approximately $113,000. Snell Crane came in to take it out of the water and will be placing it back in the water. All maintenance will be performed by the Port maintenance crew.

Commissioner Caldwell asked if the estimate included the Port labor. Mr. Johnson said that Port labor is included.

Motion to Authorize the Executive Director to proceed with jet array pump chamber maintenance, was made by Commissioner Pinnick and seconded by Commissioner Caldwell. Motion passed with a vote of 3-0.

Action Item No. 3
Mike Johnson reported on the authorization to increase funds for the pilot boat annual maintenance project.

Annual maintenance has begun for the pilot boat, Chehalis. Expenditures are estimated to exceed the amount previously approved at the April commission meeting. During the rebuild, it was found that the pilot boat needed more maintenance and repairs than anticipated, which included three additional days of labor, increased costs for the engine rebuild, and additional funds needed for a new exhaust and heat shield wrap. The previous estimate was for $72,000, but we are now estimating an additional $37,000, totaling approximately $110,000 to complete the project. Additional funds will come from the pilotage budget.

Commissioner Caldwell asked for the date of this project, which Mr. Johnson replied with next Wednesday, July 19th.

Motion to Authorize the Executive Director to proceed with pilot boat annual maintenance with increased funds for the project, was made by Commissioner Caldwell and seconded by Commissioner Pinnick. Motion passed with a vote of 3-0.

Action Item No. 4
Randy Lewis reported on the authorization of the 2017 summer roof rehabilitation program.

Mr. Lewis said that last May we entered into an agreement with Garland DBS, Inc. under the US Communities Program to complete roof rehabilitation and replacement projects requested by the Port.

Last year the Port completed a rehabilitation project at Warehouse I, J, and the airport terminal. Leaks were also discovered at the Marine Shop, T4A Equipment Shed, T4B Equipment Shed, and a roof at the Satsop Business Park. Warehouses A and G were temporarily repaired last year, but Mr. Lewis has started working with Garland on proposals to have Warehouses A and G permanently repaired. The total cost of all repairs is approximately $313,000.

Commissioner Thompson asked if all repairs would be completed by the same contractor. Mr. Lewis stated that Garland solicits for proposals under the agreement we have with them. Our small works roster has first priority and to date all contracted work for roofing projects has been done by a business on our roster.

Motion to Authorize the Executive Director to proceed with the 2017 summer roof rehabilitation program and ratification of the contracts entered into by the Director with Garland, DBS, Inc., was made by Commissioner Pinnick and seconded by Commissioner Caldwell. Motion passed with a vote of 3-0.

Action Item No. 5
Randy Lewis reported on the authorization to sign the project agreement if successful to the FAA for grant funding for the Bowerman Field drainage improvement project final design phase.

The original estimate for the second phase of the Bowerman Field drainage improvement project was $459,625, but that has since been reduced to $188,007. The Port share of the costs is 10%, with the FAA AIP program covering the remainder of the project costs.

Applications are coming due for the third phase of the project; to develop a final design, permitting, required plans, specifications, and bid documents.

The fourth phase will complete construction. That application will be due next spring.

Motion to Authorize the Executive Director to sign the project agreement if successful to the FAA for grant funding for the Bowerman Field drainage improvement project final design phase, was made by Commissioner Pinnick and seconded by Commissioner Caldwell. Motion passed with a vote of 3-0.

Public Comment:
Janyce Taylor of Elma stated that she has concerns with the rezone of 134 acres of land in West Park at the Satsop Business Park. She asked about our short term objective and said that this could be worse than Invenergy. She was told that Invenergy wouldn’t be louder than a refrigerator, which she said is incorrect.

1. WORKSHOP: The New Normal: Sustainable Growth for Satsop Business Park
Alissa Shay introduced Shelli Hopsecger to conduct a workshop on the Satsop Business Park. Ms. Hopsecger stated that over the course of our strategic plan we have talked about several items including: jobs, investments, and a stronger Grays Harbor economy.

Ms. Hopsecger stated that the focus today was the Satsop Business Park, and asked what role Satsop plays in the Port mission. She talked about Satsop’s utility access and unique facilities that provide space for training for businesses and public partners who utilize them to create jobs, train the regional workforce, and connect with global markets.

Ms. Hopsecger went over the 2015 goals for the Satsop Business Park established by the Commissioners and staff. Short term goals included: preserving our water rights, rezoning 134 acres of West Park, foster entrepreneurial innovation by providing space, encourage workforce and training, generate 2% growth in new revenues, create a consistent lease policy, and manage assets to maximize usage.

Ms. Shay talked about the Park’s water rights and their importance in serving current and future customers. Currently, erosion is occurring near our wells, due to the river. Infrastructure of our wells will need to be improved, which is why the Port has hired KPFF Consulting Engineers to develop a Water Plan that will provide steps on preserving and protecting this vital infrastructure.

Ms. Hopsecger asked Ms. Shay to discuss details of the County rezone hearing held in June. Ms. Shay said that the Port has requested that a 134 acre parcel currently zoned as General Development 5 be rezoned as Satsop Development District. This is the parcel purchased from Weyerhauser by the Grays Harbor Public Development Authority prior to the transfer of assets to the Port. The intent has been to have consistent zoning with the neighboring West Park.

Ms. Hopsecger outlined progress toward achieving the short-term goals. The Satsop Business Park has increased the number of leases from 46 to 53. The Raven’s Challenge brought in hundreds of people for the purpose of training. Satsop Business Park has seen an increase of 40% in operating revenues and expenses have been reduced by 2.25%.

Commissioner Pinnick asked if the Park had received anymore requests for increased forestry participation from Grays Harbor College’s new four year program in forestry. Ms. Shay responded that the contract with the college has remained the same.

Ms. Hopsecger asked us to think about our long term goals, 2018 and beyond. The Port set goals for the Satsop Business Park to expand the user base and revenues over $2M by 2018, market offices, explore fiber needs and lease renewal, partner to fund major renovations, roofs, and identify needed tenant improvements and budget for them.

Mr. Blauvelt stated that water rights are valuable to the Satsop Business Park and the additional capacity could attract potential users.

Commissioners brought up that the current waste water system could not handle industrial waste water unless pretreated. Mr. Barnes, Mr. Nelson, and Mr. Blauvelt suggested that this is true to all waste water systems and they do not believe that our sewer plant limits the potential to attract new business.

Satsop has been successful in attracting new tenants: Xpress Natural Gas, Fuller Hill, and Overstock. Xpress Natural Gas located here because of our proximity to a natural gas line. Fuller Hill saw this as a prime location because of the connection to a power grid, access to water, and the right facility available. Overstock was attracted by the workforce, premium office space, and telecommunications capacity.

Commission Pinnick asked about the status of the Satsop River well. Ms. Shay said that the Port has had meetings with the Department of Fish & Wildlife and the Chehalis River Flood Authority to discuss the well and how to move forward to protect the infrastructure. This will be a component of the Water Plan.

The contractor lease with Bonneville Power Administration that expires in 2019 was discussed. The Satsop Business Park currently leases and then resells dark fiber. When the lease expires in 2019, BPA will not be offering the legacy lease rates that we currently have, and they will convert our rates to the same rate as any other customer. The selling of dark fiber would become less important as a line of business for the Satsop Business Park.

Commissioner Pinnick asked if that would affect Overstock in any way. Ms. Shay stated that the infrastructure would stay the same, just new management. Customers would buy directly from BPA.

Mr. Nelson asked if tenants would be able to compete with other providers. Ms. Shay said that they would.

Mr. Nelson also asked if telecom would go away as a line of business. Ms. Shay said that BPA is just a small portion of telecom.

Ms. Hopsecger listed the available parcels within the Satsop Business Park, which includes the 300,000 square foot Turbine Building, the largest building in Grays Harbor. She also went through Satsop’s current zoning districts and discussed what could be placed in each zone. She asked that we think about any priorities in terms of available properties for growth.

Commissioner Caldwell said that there is a lot of promise with the various zoning districts throughout the Park.

Commissioner Pinnick said that Satsop should prioritize partnerships with existing customers to encourage expansion.

Ms. Hopsecger asked if there were any amenities needed to attract further customers, or growth amongst the current customers. It was suggested that food service would be beneficial. Ms. Shay said that Overstock has been very interested in food trucks or other food providers. She stated that there are existing facilities at the Satsop Business Park, but they are in need of significant investment by a business owner to rehabilitate them. The old Hill Top Café location currently has no equipment, and the kitchen in the S1 Building does not meet the qualifications to be considered a commercial kitchen. Ms. Shay asked if the requirements to be considered a commercial kitchen were unique in Grays Harbor. Mr. Blauvelt stated that the requirements are not unique, however for the population size it is somewhat surprising.

Commissioner Pinnick stated that he doesn’t see a lot needing to be changed. He just wants the Port to move forward with current plans.

Ms. Hopsecger said that we have now gone through each line of business focus. She plans to follow up with Mary Nelson in August in regards to financial planning. In September, a draft recap of the entire strategic planning process will be presented for Commission acceptance. This document will serve as a guide for business development.

Commissioner Pinnick asked Ms. Nelson about the status of the audit. Ms. Nelson stated that she had nothing to report at this time.

Commissioner Thompson asked how the Public Development Authority originally put a value on the assets at the Satsop Business Park and wanted to know if there would be any value to reviewing those numbers to see what the PDA had then versus what the Port has now. Ms. Nelson said that she wasn’t sure that the Port could change the asset values. She will need to evaluate the question and come back to it at a later date. Assets were reported at cost. When the Park was transferred to the Port an amount was determined, but it is unsure how those numbers were developed. Ms. Nelson said that certain assets at the Satsop Business Park are only insured up to the amount to demolish, not to replace.

NEW BUSINESS:
Gary Nelson went over dates for upcoming events.
• July 11th – Business After Hours to be held at the Satsop Business Park from 5:30 p.m. - 7:00 p.m.
• July 13th – Attending a pilotage meeting in Seattle.
• July 16th-19th – Commission travel to Saskatoon, Saskatchewan, Canada. All three commissioners will be touring the Jansen Mine. No action will be taken.
• August – WPPA Commission Seminar at Alderbrook.
• August 1st – Military Practice Response in Westport.
• August 8th – Shipping Club

Art Blauvelt reported on Lease No. 667 with Grenville Properties. Grenville Properties has asked that we authorize them to sublet to WA Tower Farms. Subletting is within their lease agreement and WA Tower Farms meets industrial use. WA Tower Farms produces cannabis. Cannabis is not a violation of federal law and is legal in Hoquiam. If something were to become illegal, the Port can cancel the lease according to the agreement.

Motion to Authorize the Executive Director to allow sublet of property within the leased space of Grenville Properties, was made by Commissioner Caldwell and seconded by Commissioner Pinnick. Motion passed with a vote of 3-0.

There being no further business to come before the Commission, the Regular Meeting adjourned at 3:45 p.m.