The outcome of a bankruptcy of a Fairhaven Shipyard business was one of the main points of interest at the Port of Bellingham Commission regular meeting on April 9, 2019.
The public meeting was called to order at 3:30 pm and immediately recessed to a closed executive session so board members could discuss potential litigation pursuant to RCW 42.30.110 (1) (i). The meeting reconvened at 4:30 pm. Board President Ken Bell, Vice President Bobby Briscoe and Secretary Michael Shepard were all present with Bell attending by phone. No formal action was taken during the closed executive session.
Puget Sound Energy (PSE) Grant Award
Lynn Murphy and Peter Lillesve with PSE presented the Port with an oversized novelty check for more than $23,519.93, and recognized the Port Commission and staff for their work with PSE on the Port’s warehouses. They said the 16 projects over the last 3 years paid out almost $120,000.
First Public Comment Period –
Eddy Ury from the non-profit Resources for Sustainable Communities talked about the proposed Comp Plan amendments that would limit growth for industries at Cherry Point. He was pleased to hear that the Port recently showed interest in having a policy discussion on the amendments but said the discussion misrepresented the proposals. Ury said he welcomes a policy discussion with the Port but they need to recognize the common assumptions they’re all making before they can discuss their differences. He said all sides agree that Cherry Point industries are very important for our community and that the discussion is about what conditions should be required for permitting a project.
Nine items were on the consent agenda. Approvals on a 3-0 vote were the following:
A. Approve the minutes of the March 19, 2019, regular Commission meeting.
B. Establish a capital budget line item for the purchase of two new computers for the Bellingham International Airport (BLI) in 2019.
C. Authorize the Executive Director to approve funding of additional repairs and restoration work due to water pipe breaks and subsequent water damage in the BLI airport commercial terminal.
D. Authorize the Executive Director to execute Amendment No. 1 to the Professional Services Agreement (PSA) with Coffman Engineers Inc. for support services for the Multiple Fire Suppression Systems project.
E. Authorize the Executive Director to execute a letter to the Department of Natural Resources approving a grant of Easement to the City of Bellingham under PMA 22-080025, subject to a request for additional information.
F. Notification purposes only, per Resolution No. 1358A Small Works Roster –BLI Deplaning Hallway Improvements project – Lummi Nation Construction Co. LLC.
G. Authorize the Executive Director to enter into a grant agreement with Washington State Parks & Recreation Commission for 75% of costs associated with the purchase and installation of pumpout equipment for the Gate 10 pumpout facility at Squalicum Harbor.
H. Authorize the Executive Director to enter into three separate grant agreements with the Washington State Parks & Recreation Commission for 75% of costs associated with the annual operations and maintenance costs for pumpout facilities at Squalicum and Blaine Harbors and the Bellingham Cruise Terminal.
I. Authorize the Executive Director to execute the Deed conveying the Bellingham International Airport Boundary Lot Line Adjustment for the former Washington Air National Guard (WANG) site and any other documents necessary in connection with this boundary adjustment.
Commissioner Shepard asked if the airport boundary lot line adjustment was routine or if a user had identified a specific interest in the project. Director of Aviation, Samil Harmon, said 2-years ago they put together a request for proposals to re-use the former WANG site for a corporate business hangar complex. They received an acceptable proposal and entered into a memorandum of understanding to negotiate a lease. Some issues arose and the developer decided to hold off. The Port was already in the process of surveying and identifying lot lines to enter into the lease, but that was set aside until recently when the same developer showed an interest again to pursue a long-term lease. Harmon said they need to identify lot for tax assessment and parcel ID purposes; this will enable that. The client wants to tear down the existing building and re-use the entire site for several hangars. Harmon said the project is valued at $16 million.
Weblocker Assignment Update
Harbor Master for Squalicum Harbor Kyle Randolph told the commission that after the weblocker regulations were recently approved, staff came up with a list of weblocker users that are not active commercial fishers that could be an exception to the new rules. Randolph said all but 2 were approved, and he invited them to ask the commission directly and explain how they use the weblocker.
Officer John Kuntz with Washington Dept. of Fish and Wildlife said he uses a weblocker to store mostly dive gear as well as life jackets, uniforms, miscellaneous boat parts and supplies, and as a secure location for lost gear. He says the weblock is in his name due to WDFW accounting rules. Commissioners said it would be more transparent if the weblocker was in back in WDFW’s name, and discussed moving to the smaller upstairs lockers which are in less demand.
Tim Mumford with Squalicum Marine Upholstery said they use the a weblocker as a space to bend heavy 24-foot long pieces of steel into boat frames, and then bring them directly to the boats. He said they’ve used it a couple times a week for the last 20 years. Commissioner Bell said they don’t usually have a commercial business operating in a weblocker. Mumford said he couldn’t find another space that will fit a 24-foot beam.
Port Director of Environmental Programs, Brian Gouran, presented the latest progress on the redevelopment of Bellingham’s waterfront. He said:
- The Subarea Plan Amendment process is currently underway.
- Waypoint Park is open. The City is ramping up design work on an extension of the park into the small strip of land between the shoreline and a future residential development. This extension is pending approval of the Subarea Plan Amendment.
- Phase 1 of Granary Avenue is complete and open. The City of Bellingham is currently working on Phase 2 of Granary Avenue and Laurel Street and aims to reopen the roads in June or July.
- The Port has entered into a Memorandum of Understanding (MOU) with Corix as a potential energy provider. The Port team and Corix team met on April 8 to review the preliminary results of due-diligence work, and will present a project-specific report soon.
- The City has completed a Basis of Design for the other parts of Waypoint Park, and completed a Master Plan for Cornwall Beach Park.
- Harcourt Developments is making progress on the Granary Building. The building’s extension annex is nearly complete and they are now doing the last inspections on the rest of the building. They hope to get an occupancy permit for the building within the next few weeks.
- Harcourt completed the design review for the waterfront residential building and will likely submit land-use permits and building permits within in a few weeks. They are hoping to start construction as early as the end of 2019.
- The Port is looking for consultants for the Whatcom Waterway-ASB, securing and preparing for demolition of some of the old buildings, and submitting permits for a temporary bike trail and pump track around the tile tanks. They hope to get permits for the pump track by early June and begin construction as soon as possible.
- The Port received a Healthy Housing Grant from the state to use for affordable housing at the 3-acre Lignin Parcel, and is now getting a grant application framed up to bring to the commission for approval.
Action Items –
1. Authorize the Executive Director to execute a Professional Services Agreement with Reid Middleton, Inc. to complete condition assessments for the Squalicum Harbor Gillnet Loading Zone, Fire Belle Pier and Inner Harbor Marina in the amount of $90,000.
Project Engineer Greg Nicoll told commissioners this project is a periodic assessment. It will include above water and underwater inspection of piles, the pier superstructure, floats, whalers and utilities. Nicoll said Inner Harbor Marina is near the end of its useful life and this assessment will identify improvements to extend the life of the facility. Reid Middleton, Inc., out of Everett, has been selected for the project; the firm completed their last assessment of Inner Harbor in 2010.
Port Director Rob Fix said extending the life of the Inner Harbor Marina with strategic improvements is “money well spent.”
2. Authorize the Executive Director to execute a Professional Services Agreement with Reid Middleton, Inc., for planning and design assistance of the Blaine Harbor Marine Industrial Peninsula Access Improvements project in the amount of $84,465.
Project Engineer Greg Nicoll said the scope of work for this project will include a survey of the entire peninsula, additional stakeholder outreach, completing an alternative analysis and providing a recommended preferred alternative with 30 percent design, and planning level cost estimating for that recommended alternative. Commissioner Shepard commented that, a lot of these tasks could be performed by Port staff, and asked what they would gain by hiring an outside consultant? Nicoll said the survey is about a third of the project and they like to have an expert set of eyes from the outside.
3. Authorize the Executive Director to enter into a Limited Operations Agreement with Fidelity & Deposit Company, Washington Federal, Pierce County, David Stapleton as Trustee and the Chapter 7 Estate of Puglia Engineering Inc., and Washington Federal Bank for the completion of the Ferry Steilacoom project.
Despite successful operations in Tacoma and Fairhaven, Puglia started to go bankrupt in 2017 after a problematic investment in San Francisco. Before entering Chapter 7 bankruptcy the company continued taking on new projects at the shipyard in Fairhaven. Puglia is currently working on the Pierce County ferry Steilacoom and is seeking an agreement for limited operations to finish the project which is expected to be done by mid-May.
Currently, Puglia owes the Port $638,492 for charges including rent, deferred rent, utilities and leasehold tax. The Limited Operations Agreement requires Fidelity Insurance to pay the Port $218,064 by April 19, 2019, to allow the shipyard to continue operations through May 31 to finish the ferry. Fidelity must also pay the Port $243,257 owed under the Lease Bond by April 19. The net loss to the Port is approximately $177,000. If WA Fed keeps the drydock and other equipment seized from Puglia at the Fairhaven property past May 31 the Port would receive $54,869 per month in Rent, plus utilities and leasehold tax.
Legal Counsel Frank Chmelik said the executive director had the delegative authority to approve the deal late on April 1, but out of an abundance of caution has wants the commission to ratify the action of the Executive Director. Commissioner Briscoe said Puglia employed 80 people at the Fairhaven shipyard and the outcome could have been much worse. He said hopefully they’ll find someone to quickly take over the shipyard and keep business going.
Other Business –
Commissioner Shepard asked about the progress of the Broadband grant. Executive Director Rob Fix said the Port has submitted an application and staff met with Jack Louws on April 8. He said Louws thought the paperwork looked good. The Port is on the EDI agenda for April 16th and they’ll be asking for $750,000. The Port will give a presentation to the EDI board and then to the County Council, Fix said, and then start installing some fiber.
Commissioner Shepard also asked about the status of making upgrades to all railroad crossing in the city to obtain a quiet zone. Executive Director Fix said they’ll be doing a presentation at the April 23 commission meeting with updates on the progress by the City and Port.
Commissioner Briscoe wanted to remind citizens to be transparent when submitting paperwork or proposals to the commission. He also discussed complaints he’s received about homeless camps on the beaches near Port property, as well as the solar panel project at the Bellingham Cruise Terminal.