Port of Grays Harbor

Commission Meeting

April 11, 2017

The Port of Grays Harbor Commission Meeting for April 11, 2017 was called to order at 9:02 a.m.

Molly Bold, Westport Business Manager, led the meeting in the Pledge of Allegiance.

Those in attendance at the meeting were as follows:

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
Marisa Yauch - Executive Administrative Assistant
Alissa Shay - Manager of Business Development
Shannon Anderson - Business & Trade Development Asst.
Seth Taylor - Marine Terminals Manager
Kayla Dunlap - Public Affairs Manager
Lisa Benn - Accounting Manager
Janet Blackmun-Johnson - Accounting Specialist
Aric Cleverly - Finance Administrative Assistant

Rob Bearden - Westport Mayor
Alan Richrod - Aberdeen City Council
Arnie Martin - GH Audubon
Linda Orgel - CCH
Randy Ross - Grays Harbor County Commissioner
Ryan White - PGH
Dave Haviland - Jodesha
Shelli Hopsecger - CCAI

Items discussed and action taken where required is as follows:

1. By motion made by Commissioner Pinnick, seconded by Commissioner Thompson and unanimously approved, the Commission adopted the Minutes of March 9, 2017 Regular Commission Meeting as recorded in the Minutes Book No. 20 on pages 75 through 85 inclusive.

1. By motion made by Commissioner Pinnick, seconded by Commissioner Caldwell, the Commission unanimously approved for payment those Payroll Vouchers issued March 20, 2017 and April 5, 2017, ACH/Wire Transfers No. 99900827 through and including No. 99900839 and General Disbursement Vouchers No. 93687 through and including No. 93905 for payment in the amount of $2,289,542.43.

1st Quarter SBP Agreements and Leases
Alissa Shay reported on the various leases and agreements that have been put in place since the beginning of the year. There have been a number of training operations as well as film and photography agreements with a wide range of businesses.

Pasha Automotive Services has expanded operations from the Port Marine Terminals to include space at SBP. They are currently leasing a 9,600 sq. ft. warehouse for office needs as well as over 50 acres of land for automotive operations. Due to large agreements with Overstock.com and Fuller Hill Development Co. made in late 2016, some tenants are in process of moving to comparable spaces within the park. The Satsop crew has been working diligently to get these smaller business moved to similar spaces with little business disruption.

Public Information Report
Kayla Dunlap reported on the upcoming 4th grade tours that will be held the last two weeks of May and first week of June. About half of the 4th grade classes in the county are scheduled at this time and we will continue to reach out to the teachers. Community tours of SBP and the Marine Terminals are underway. Dates and times have been published for interested parties and reservations may be made by calling the Port offices.

The Port continues community outreach presentations with each City Council group throughout the year. April 20th will be a presentation for Westport, May 24th in Aberdeen and July 10th in Oakville.

Legislative budget sessions continue and the Port stays in close contact with the Coastal Caucus in hopes to be allocated the $2.5 million dollars anticipated towards dredging of the Westport Marina. Staff and Marina users plan to visit the legislature on Thursday, April 13th in continued support of their efforts.

Vessel Activity
Leonard Barnes reported for March 2017 the Port handled seven deep water vessels and one barge which resulted in 159,363 MT of cargo. YTD the Port has handled 565,524.521 MT of import/export cargo. Total ship calls for 2017 have been 28 deep water vessels and two barges.

Mr. Barnes stated that cargo levels are higher this year than they were at this time last year. They have been handling over-high over-wide cargo and Willis Enterprises had a ship at Terminal 3 recently. AGP has six ships scheduled for May which is a strong month.

Commissioner Pinnick asked if Pasha has been handling Nissan automobiles lately. Mr. Barnes stated that they have been going south to the Port of L.A., but we may see some overflow if volume is high. PGH has nothing scheduled at this time, but that can change quickly.

Commissioner Pinnick asked about logs. Mr. Barnes stated that we have been getting steady loads of logs in and he anticipates we may have a log ship in at the end of April or early May.

Public Comment:
Arnie Martin of Hoquiam wanted to thank the Port for the continued support they have provided for the Shorebird Festival. The Festival will run May 5th through 7th and all are welcome to attend the banquet.

Action Item No. 1
Leonard Barnes reported on an amendment to Lease Agreement No. 1043, Viking Automatic Sprinkler Company. Staff would like to amend Paragraph 3, “Option to Renew”.

This company leases 564 sq. ft. in the Port’s main building for storage and distribution of equipment used in fire protection systems. This lease was originally signed in April 2007 and was amended in 2013 to extend for two additional 2-year lease options. Viking is requesting a second amendment to add two additional 2-year options which will extend their lease term to March 31, 2021. No other changes will be made on this lease.

Motion to Authorize the Executive Director to amend Lease Agreement No. 1043, Viking Automatic Sprinkler Company, was made by Commissioner Pinnick and seconded by Commissioner Thompson. Motion passed with a vote of 3-0.

Action Item No. 2
Mike Johnson reported on the authorization to proceed with 2017 Pilot Boat Maintenance.

Annual maintenance to the PGH Pilot Boat “Chehalis” is planned for April 17th through May 1st, 2017. Due to vessel schedules and weather constraints no annual maintenance was performed in 2016 so this is a bi-annual service plan which is more extensive. The boat will be hauled out for out-of-water maintenance to The Shipyard, LLC to perform dry dock operations. Many updates will be performed including sandblasting and painting in addition to rebuilding the engine which will be performed by engine repair expert, Don Fowler. The current engine has reached an approximate expectation of hours and the rebuild will allow reliability and safety in the coming years.

It has been determined that a search for a new pilot boat will begin even in light of these upgrades. The boat in use was built in 1958 and though in good condition it is nearing the end of its useful life. This process will be very specific to meet Port needs and may take a few years to find the right boat. There is currently no timeline for acquiring a second boat, but staff would like to begin the process before the matter becomes urgent.

Repairs for this year’s scheduled work are estimated to be approximately $86,000.00 and funds will come from the Pilotage Budget.

Commissioner Pinnick asked if all of the work including the engine rebuild will be done while the boat is out of the water. Mr. Johnson stated yes; all of the work is planned for completion during these two weeks.

Commissioner Pinnick inquired about large vessels coming in while our pilot boat is out of the water. Mr. Johnson stated that we plan maintenance time around having fewer vessels in the two week period. Vessels that do come in will be brought in by our pilots who will board by helicopter as is the case in extreme weather.

Motion to Authorize the Executive Director to proceed with 2017 Pilot Boat Annual Maintenance, was made by Commissioner Pinnick and seconded by Commissioner Caldwell. Motion passed with a vote of 3-0.

Public Comment:
Mayor Rob Bearden commented on the approval of the Pilot Boat repairs. He is the Pilot Boat Captain and was thankful for these safety upgrades.

The New Normal: Sustainable Growth for the Marine Terminals Division
Shelli Hopsecger began the workshop with a review of the marine terminals. Shipping is a major component of PGH; a smaller port with big impacts. The growth of the Port has been exponential, when examining the numbers, the same business which was achieved in all of 2007 is now being reached in one quarter of 2017. This has resulted in increased tax revenue which benefits the community. There are different thresholds of cargo handling; growth in these numbers increases opportunities for grants which may provide help with investment in rail and highway infrastructure.

Gary Nelson mentioned the balance of priorities on maintenance and safety. In 2011 the Port experienced a peak of investment in the rail system. This large investment will be paid off until approximately 2030, but is a great asset to tenants looking to do business here.

We have set a new baseline of 2 million MT annually which results in 20 million in annual revenues. Most of the Port’s existing customers have room for growth, but these increases are driven on their business needs which the Port does not have control over.

Mr. Nelson mentioned the importance of community support which comes with good planning and impact mitigation. With strong infrastructure the Port can handle more cargo. At this time it does not make sense for the Port to take on additional infrastructure debt if what we have is not being used to capacity. Our facilities are currently operating at about 25-30 percent of capacity, so there is room for growth in all operations.

Commissioner Pinnick inquired about capacity of cargo once the navigation improvement is completed in the channel. Mr. Barnes replied that in some cases we will be able to load the vessels to a higher capacity, but that also depends on where the ship will be delivering the goods. There are draft issues at some of the ports in the Pacific Rim countries where goods are being delivered.

Gary Nelson acknowledged the importance of Willis Enterprises for the Port. This has been a big win which has helped Cosmos Specialty Fibers and other businesses in the area.

Ms. Hopsecger mentioned we are looking for the second youth in the marine terminals. We are in a position to grow from our current level of expected cargo to a new expectation of normal as we have capacity for this growth.

As issues have come up through the years, PGH has come up with solutions to get through and get to a better position in the long run. When it was difficult to attract pilots to drive boats in Grays Harbor the Port we worked to create its own pilotage district to solve the problem. With two pilots employed by PGH, vessel traffic is met in a timely manner and there is availability to increase these vessels quite drastically before the need for a third pilot. The expansion of Port Industrial Way was another area where improvements have accommodated the increased truck traffic, while creating a mixed use road for walking and biking in the community.

Tenant partnerships continue to be an important part of business. Keeping those strong relationships increases the likelihood of large investments. Commissioner Caldwell commented on the fact that when he meets with our various tenants they often refer to the PGH family; as Port relationships remain strong.

Mr. Barnes mentioned that the Port has had difficult times throughout the years and these are the situations that define the character of the Port. Every day there are challenges and opportunities which must also be weighed to ensure profitability in making the ship work and keeping the customer happy. The best way the Port balances this challenge is to stay focused on what the Port can control and not the issues controlled by other entities.

Security is a very important part of marine terminal operations. These are costs that are non-negotiable as they are regulated by Homeland Security. If a new tenant is added at Terminal 3, security improvements would be needed as it does not meet security regulations for foreign flag vessels at this time.

Ms. Hopsecger touched on the importance of policy changes at the state level. The Port does not know how the ORMA decision will affect existing vs. new tenants at this point. As information is obtained, we will do our best to help tenants in their business needs. Commissioner Pinnick mentioned the need to strive to change this unpredictability to predictability as more is learned on the regulations moving forward.

Ms. Hopsecger mentioned the importance of the deeper draft and marina dredging projects. Mr. Nelson mentioned that it is a difficult thing for many in the community to appreciate since there is nothing visual. It is crucial for the Port to retain competitive advantage with other Ports but is difficult to visually show the benefit.

There are a number of properties the Port owns that are not being fully utilized and there are a number of factors that go into expansion options. All have rail nearby and are on the shipping channel. There is existing infrastructure in place, but modifications would likely be needed in order to accommodate a new tenant in the marine terminals.

Ms. Hopsecger will be working on a draft of priorities for a new marine terminals plan. This will be a long term plan of freight planned for, and invested in over time.

The Commissioners thanked Ms. Hopsecger for a great discussion and will continue to work to try to increase capacity of cargo import and export at the marine terminals.

Gary Nelson mentioned that the Port will have the 1st Quarter Financial Review at the May Commission meeting.

There being no further business to come before the Commission, the Regular Meeting recessed at 11:28 a.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.

The Executive Session ended at 1:00 p.m. after one thirty minute extension and the Regular Meeting adjourned at that time.