Port of Grays Harbor

Commission Meeting

May 14, 2019

The Port of Grays Harbor Commission Meeting for May 14, 2019 was called to order at 9:00 a.m.

Randy Lewis, Director of Environmental and Engineering Services, led the meeting in the Pledge of Allegiance.

Those in attendance at the meeting were as follows:

COMMISSION AND STAFF
Stan Pinnick - Commissioner
Phil Papac - Commissioner
Tom Quigg - Commissioner
Gary Nelson - Executive Director
Zachary Edwards - Legal Counsel
Mike Folkers - Director of Finance & Administration
Leonard Barnes - Deputy Executive Director
Alissa Shay - Manager of Business Development
Mike Johnson - Contract & Project Manager
Randy Lewis - Director of Environmental & Engineering Services
Kayla Dunlap - Public Affairs Manager
Seth Taylor - Marine Terminals Manager
Shannon Anderson - Business & Trade Development Assistant
Molly Bold - Westport Business Manager
Lisa Benn - Accounting Manager
Amy Carlson - Communications & Administrative Coordinator

VISITORS
Bob Barene - Western Steel
Bob Esposito - Citizen
Jill Rosenkrantz - Western Steel
Linda Orgel - FOGH
Lee First - FOGH
Arnie Martin - GHAS
Susan Conniry - OS City Council
Dr. Vladimir Shepsis - Applied Ocean Energy Corporation
Rebecca Chaffee - Port of Willapa

Items discussed and action taken where required are as follows:

MINUTES:
1. By motion made by Commissioner Quigg, seconded by Commissioner Papac and unanimously approved, the Commission adopted the Minutes of April 9, 2019 Regular Commission Meeting as recorded in the Minutes Book No. 21 on pages 9 through 18 inclusive.

VOUCHERS:
1. By motion made by Commissioner Papac and seconded by Commissioner Quigg, the Commission unanimously approved for payment those Payroll Vouchers issued April 20, 2019 and May 4, 2019, ACH/Wire Transfers No. 99901178 through and including No. 99901200, and General Disbursement Vouchers No. 99586 through and including No. 99925 for payment in the amount of $3,655,526.29.

REPORTS:
Legislative Update
Kayla Dunlap, Public Affairs Manager, reported that the legislature did adjourn on Sunday, April 28, 2019. The legislature increased the real estate excise tax, selected B&O taxes, the hazardous substances taxes and repealed selected sales tax exemptions. The Biennial Operating Budget increased $8 billion over the last biennial budget.

Ms. Dunlap reported on Port-related topics as well. An airport grant program was authorized and funded $5 million. WSDOT’s airport grant program was funded in the amount of $2,751,000. MTCA cleanup grant funding was modestly increased and secured at a stable amount with an inflator. A state broadband office will be set up and a director appointed by the governor. $14.44 million is available in loans and another $7.11 million in grant form to bring high-speed internet to rural areas and indian reservations. A bill was passed that allows public utility districts to produce, distribute and sell renewable hydrogen.

Campaign contribution limits did pass extending contribution limits to all port commission races and will take effect at the end of July. The per election limit for ports is $1,600 per individual donor.

The Renewable Wave Energy Project was funded at $593,000 in the Capital Budget under the Department of Commerce’s Clean Energy Transition Fund.

The Community Economic Revitalization Board (CERB) was only funded at $8.6 million. The transportation budget also sweeps $19 million from FMSIB as part of a broader program sweep to gather money to fund state culvert replacement. The Governor to review and take action on all measures. He has until May 21 to approve, veto or partially veto each bill.

Renewable Wave Energy Project Funding Update
Kayla Dunlap, Public Affairs Manager, stated that the Renewable Wave Energy Project was fully funded at $593,000 in the State Capital Budget. Dr. Vladimir Shepsis has been invited to give an overview of the concept.

Dr. Vladimir Shepsis, Applied Ocean Energy (AOE) Corporation, reports that the mission behind this project is to deliver new off-grid technology for converting ocean wave energy into a storable, transportable, and usable form. AOE technology extracts and stores ocean wave energy offshore with no hardware connection to the shoreline. It applies a conventional vessel to extract this energy and to perform all technological operations. This includes converting ocean wave energy to electricity, using electricity for water electrolysis to produce hydrogen, compressing and storing hydrogen and delivering hydrogen to the Port. The wave energy converter does not use any parts that extend into the water and are safely operated in a wide range of wave conditions.

The proposed demonstration project would happen three miles off the shoreline for four to six months and would require a small barge. This would determine the technical feasibility of AOE technology for the ocean conditions off Grays Harbor. Dr. Shepsis has proposed a set list of tasks for the project. The beginning steps would include data collection and analysis, identifying the requirements and criteria and mapping out a detailed plan. The project team would consist of Applied Ocean Energy Corporation, Foss Maritime, UMBRAGROUP, Port of Grays Harbor, Port of Willapa Harbor, Pacific County, Shoalwater Indian Tribe, and other local communities.

West Park Lane Timber Sale Post Completion Report
Mike Johnson, Contract and Project Manager, reported that logging services contract for the harvest and hauling of approximately 283.97 MBF of saw logs and 407.75 ton of pulp on approximately 20 acres was awarded to Lewis River Logging and Excavating on January 5, 2019. Logging included cutting, yarding, processing, sorting, loading, and hauling to designated destinations. A total of 74 loads were hauled to local mills. Logging operations were completed for this contract mid-February. The total net revenue to the Port totaled $135,770.33.

Public Information Report
Kayla Dunlap, Public Affairs Manager, reported that the annual city council outreach has begun with McCleary on April 24. Montesano will take place on May 24, Oakville on June 10 and Elma is to still be determined. Scheduling for the second district will begin at the end of May.

A total of over 800 students have been scheduled for fourth-grade tours that are set to begin Monday, May 20 and run through June 13. Summer public tour dates will be announced in a couple of weeks. Public tours are expected to be held in July, August, and September. Satsop is also having walking tours scheduled through October.

A ribbon cutting celebration and plaque rededication at the 28th Street Boat Launch will be held next Tuesday, May 21 at 3:30 pm. The public is invited to come and see the improvements that have been made to the facility in partnership with the Recreation and Conservation Office (RCO).

Vessel Activity
Leonard Barnes reported for April 2019, the Port had calls from 5 deep-water vessels and 1 barge, which resulted in 208,044.101 MT of cargo being handled. Year-to-date, the Port has had 25 ships, 4 barges and handled 873,938 MT of cargo.

Public Comment
Lee First with Friends of Grays Harbor inquired about the regulations in Norway regarding the off-shore barges. Dr. Vladimir Shepsis, Applied Ocean Energy Corporation could not speak to the regulations in Norway only the regulations in the United States.

ACTION/RESOLUTION ITEMS:
Action Item No. 1
Deputy Executive Director, Leonard Barnes, requested approval of new Lease No. 1156 with U.S. Army Corps of Engineers.

Lease No. 1156 would include the 7,171 square feet of the building at 105 S. Wooding Street and 9,953.42 square feet of land to be used for maintenance, parking of small trailered survey boats, and offices. Aberdeen Landing would be the second location which would include moorage float use for the Shoalhunter and a fenced dock area for vehicle parking. The lease would have an initial one-year term with four, one-year options to renew.

Motion to approve the Lease No. 1156 with U.S. Army Corps of Engineers was made by Commissioner Quigg and seconded by Commissioner Papac. Motion passed with a vote of 3-0.

Action Item No. 2
Leonard Barnes, Deputy Executive Director, requested approval of new Lease No. 1158 with MB Investments Grays Harbor LLC for 2100 Port Industrial Road in Aberdeen.

The current lease is set to expire on June 15, 2019. Several meetings have occurred to discuss the continuation of a lease. The new lease would be for an initial term of 20 years with four options to renew at five years each. MB Investments will continue to use the property for storage and selling of industrial construction supplies and equipment along with electrical contracting. Insurance and performance bond will be in place before execution of agreement.

Motion to approve the Lease No. 1158 with MB Investments Grays Harbor LLC was made by Commissioner Papac and seconded by Commissioner Quigg. Motion passed with a vote of 3-0.

Action Item No. 3
Leonard Barnes, Deputy Executive Director, requested approval of Fifth Amendment to Lease No. 1019 with SSA Pacific, Inc.

SSA Pacific Inc. has been a tenant with the Port of Grays Harbor for over 20 years providing stevedore services. The original lease was for five years and has been amended four times and is set to expire on June 30, 2019. This amendment will extend their lease by one year to expire on June 30, 2020.

Motion to approve the Fifth Amendment to Lease No. 1019 with SSA Pacific, Inc. was made by Commissioner Quigg and seconded by Commissioner Papac. Motion passed with a vote of 3-0.

Action Item No. 4
Leonard Barnes, Deputy Executive Director, requested approval of Fourth Amendment to Lease No. 982 with Green Crow.

Green Crow has been a tenant for 30 years with their current lease ending on May 31, 2019. This amendment will extend their lease by one year to expire on May 31, 2020.

Motion to authorize the Fourth Amendment to Lease No. 982 with Green Crow was made by Commissioner Papac and seconded by Commissioner Quigg. Motion passed with a vote of 3-0.

Action Item No. 5
Leonard Barnes, Deputy Executive Director, requested approval of the change in controlling interest in the stock of Western Steel under Lease No. 586 and an Amendment to add two additional five-year options to the agreement term.

Western Steel has been a long term tenant of the Port of Grays Harbor and currently holds a lease with 17 years remaining. The new owners have provided a detailed transition plan and intend to keep key employees. The Amendment would add two additional five-year options to extend the current lease to a total of 27 years.

Commissioner Tom Quigg recused himself from voting on this issue due to a potential conflict of interest.

Motion to authorize the change in ownership of Western Steel under Lease No. 586 and Amendment to add two additional options was made by Commissioner Pinnick and seconded by Commissioner Papac. Motion passed with a vote of 2-0.

Action Item No. 6
Mike Johnson, Contract and Project Manager, requested approval to award Contract No. 1999, Terminal Maintenance Dredging.

Annual maintenance dredging needs to be done to keep the berths at the necessary depth for ocean class vessels calling the Port. On May 8, 2019, bids were requested for pricing on removing 60,000 cubic yards at Port Terminals 1, 2, and 4. Four bids were received and staff recommends awarding the Base Bid and Additive Bid Alternate 1 to HME Construction, Inc, the low bidder

Motion to authorize the award of Contract No. 1999, Terminal Maintenance Dredging was made by Commissioner Quigg and seconded by Commissioner Papac. Motion passed with a vote of 3-0.

Action Item No. 7
Gary Nelson, Executive Director, requested approval to reject all bids as unsatisfactory on Contract No. 2000, Westport Marina Maintenance Dredging Project due to them being significantly over the engineer’s estimate and project budget. Mr. Nelson went on to recommend that the Contract be split into two, Contract No. 2003 and Contract No. 2004 which will have substantial changes compared to the original.

Authorization was previously given to request bids for Contract No. 2000, but only one contractor submitted a bid which was reviewed and was significantly higher than the budget. RCW 5308.130 states that if all bids are unsatisfactory according to the opinion of the Commission, all bids can be rejected and re-advertised. Based on the engineer’s recommendation, the new suggested strategy would be to break the Marina Dredging into two projects. Both contracts will be advertised and awarded at the same time but under separate contracts numbers to provide flexibility in maximizing the value within the Port budget.

Motion to authorize the rejection of Contract No. 2000, Westport Marina Maintenance Dredging Project was made by Commissioner Pinnick and seconded by Commissioner Papac. Motion passed with a vote of 3-0.

Motion to authorize call for bids on Contract No. 2003 and Contract No. 2004, Westport Marina Maintenance Dredging Project was made by Commissioner Pinnick and seconded by Commissioner Quigg. Motion passed with a vote of 3-0.

Action Item No. 8
Molly Bold, Westport Business Manager, requested approval of Westport Charter House Agreements No. 1159, Deep Sea Charters and 1160, Westport Charters.

Ms. Bold states that there are roughly 40 charter vessels in the Westport Marina with a portion being represented by a charter house. A charter house maintains an upland physical presence for bookings and commercial sales within the Westport Marina District, leases slips from the Port for the purpose of mooring charter vessels and manages bookings on behalf of charter vessels. These agreements allow the charter house the right to assigned berths for an extended period of time, beyond the standard annual moorage agreement. The agreements outline their reserved spaces and the charter office will have the right to those berths for the duration of the agreement or until relinquished, which is proposed to be from July 1, 2019 through June 30, 2022.

Motion to authorize the approval of Westport Charter House Agreements was made by Commissioner Quigg and seconded by Commissioner Papac. Motion passed with a vote of 3-0.

Action Item No. 9
Randy Lewis, Director of Environmental and Engineering Services, requested approval of an easement with Frontier Communications of Everett for the installation of a buried fiber cable on Port property in Westport.

The easement is for the installation and maintenance of a buried fiber cable and conduit previously installed by Frontier to provide communication services to the United States Coast Guard Station at Westport. There currently exists an easement for the Coast Guard dating back to the 1970s; however, a portion of the new cable was installed outside the existing easement.

The easement is located within the boat launch parking lot, which is undergoing a significant upgrade project. The presence of the cable was discovered during the geotechnical and underground site investigations for the parking lot project. It was determined the cable path does not interfere with the parking lot project’s underground infrastructures. The easement will require Frontier to reimburse the Port for the expenses incurred to locate, survey and ensure the cable would not impact the parking lot project, and to pay all expenses to repair any damage it does when maintaining or repairing the cable in the future. Frontier is also required to indemnify the Port for any claims, to remove their equipment when the easement terminates and is prohibited from assigning the easement.

Motion to authorize the Executive Director to sign easement with Frontier Communications for the installation of a buried fiber cable on Port property in Westport was made by Commissioner Quigg and seconded by Commissioner Papac. Motion passed with a vote of 3-0.

Resolution 2975
Zachary Edwards, Legal Counsel, proposed to change the location for the regular monthly Port Commission Meeting in June 2019 to the Satsop Business Park. The meeting date and time will remain the same.

Motion to adopt Resolution No. 2975: Change in location for regular monthly Port Commission Meeting in June 2019 to Satsop Business Park was made by Commissioner Papac and seconded by Commissioner Quigg. Motion passed with a vote of 3-0. Resolution adopted.

Resolution 2976
Randy Lewis, Director of Environmental and Engineering Services, requested authorization to apply for grant funding to the Washington State Department of Transportation Aviation Division Airport Aid Program for projects at Bowerman Field.

This year the Port has two eligible projects to seek funding for. The first project is crack sealing approximately 15,000 feet of cracks that have developed in the runway surface. The Port sealed approximately 1,300 feet of cracks in 2015. There is a project to crack seal and slurry coat portions of the runway with FAA funds currently scheduled for 2021. This project will be completed next year and will focus on the shoulders outside the area of the FAA project.

Lewis states that in 2017 the Port applied for funding from WSDOT for half of the match for the drainage project, and were awarded $50,000. The funding ends with the end of the biennium on June 30, 2019. The delay in the award of funding from the FAA has moved the start of construction to July on that project. Under the agreement with WSDOT, only $5,000 will be able to be used before expiration. WSDOT is working to reprogram the remaining $45,000 to another project and will consider funding this project during this grant round.

Motion to adopt Resolution No. 2976: Authorizing Application for Grant Funding to the WSDOT Aviation Division 2019 Airport Aid Program was made by Commissioner Quigg and seconded by Commissioner Papac. Motion passed with a vote of 3-0. Resolution adopted.

Recessed at 10:30 am for a break.

Reconvened at 10:35 am.

Workshop
1st Quarter Port Financial Review and Updated Forecast
Mike Folkers, Director of Finance and Administration, reported on the Port’s 1st Quarter Financial Review. Mr. Folkers’s quarterly financial review provides staff and Commissioners the opportunity to re-evaluate business trends using the most current customer forecasts and market analysis, and to quickly respond to changing market conditions impacting customer and Port operations. The Port proactively updates forecasts based on this evaluation to ensure business and financial objectives are achieved. Mr. Folkers reported that the Port’s 2019 financial outlook is positive with growth from last year even through discussion about trade impacts and tariffs.

Public Comment
None

NEW BUSINESS:
Executive Director Gary Nelson reported that Captain Woodhouse resigned as of April 1. Captain Eric Michaels is a potential pilot trainee. Mr. Nelson also listed several upcoming calendar items:
• May 15 – Westport Public Hearing
• May 16 – Pilotage Meeting in Seattle
• May 15-17 – WPPA Spring Meeting in Spokane
• May 21 – Ribbon Cutting for 28th Street Boat Launch

Leonard Barnes, Deputy Executive Director, reported that REG is changing their warning system from handheld radios to an audible alarm system. They will be testing the new system on May 14 and 15.

There being no further business to come before the Commission, the regular Meeting recessed at 10:52 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 90 minutes.

The Executive Session ended at 12:22 p.m. and the Regular Meeting adjourned at that time.