Eight days after reaching a tentative deal with International Raw Materials, Port of Longview commissioners Wednesday agreed to enter a new five-year lease with the terminal operator, in what is expected to bring millions of dollars in new revenue and dozens of jobs to the port.
Commissioners Jeff Wilson and Doug Averett approved the lease as presented to the commission last week, but Commissioner Bob Bagaason abstained, citing concerns about the process being too rushed.
Bagaason said he did not like the fact that the lease, which staff has spent months negotiating, was presented to commissioners as a done deal.
“I don’t want to be seen as a rubber stamp for anything,” he said.
Wilson and Averett said the agreement will be a boon for the terminal, which has struggled to turn a profit under its former operator, Kinder Morgan.
“I think this is good for the port and good for the community,” Averett said.
The commissioners gave the green light on the lease despite opposition from the local longshoremen’s union, which said it still has jurisdictional issues to work out with IRM.
“Once again we’re getting into an EGT-type situation,” said Billy Roberts, president of ILWU Local 21, referring to the union’s highly-charged battle over a lease with EGT in 2011, which lead to protests and several arrests. “This is like packing up and moving across the country when you don’t have a house. At this time, we still have a lot of work to do … and we’re not in support of this project.”
If the two sides can’t reach a compromise by next Tuesday, when a ship is scheduled to dock at the terminal, Roberts said it’s likely the two sides will have to enter a formal arbitration process to resolve their differences. But IRM President Tip O’Neill said the company wants to avoid arbitration, noting that IRM has never reached that level of conflict with the ILWU at Port of Portland, nor at Port of Longview when it operated here in the 1980s and 1990s.
O’Neill said the company is committed to working with the ILWU to address any remaining concerns.
“I’m a bit upset when I hear reference to EGT (labor unrest) because that’s a whole different scenario,” O’Neill said.”We’ve got people that have been part of the community ... we’re not going to do that to this community. We’re going to get things sorted out.”
Wilson said the lease explicitly states that IRM will have to honor the port’s working agreement with the ILWU.
“It was a good lease … staff worked tirelessly on this,” Wilson said. “This is (economically) good news for the community.”
Under the deal, the port will make an additional $1.5 million to $2 million annually from Berths 1 and 2, now collectively called the Bridgeview Terminal. Currently, the Bridgeview Terminal isn’t breaking even.
In its first year of operations, IRM will guarantee that 250,000 metric tons of product will be shipped through the terminal. This will double in the second year, hitting 500,000 metric tons annually and possibly exceeding that minimum if IRM can attract more business. The company will handle pot ash, soda ash and other dry bulk commodities.
That level of volume will support more than 30 longshoremen jobs, although it’s possible that jobs number could be higher if the terminal is busier. According to a 2012 economic impact study of Berth 2, there are about 15 direct jobs supported for every 220,000 metric tons of cargo shipped at the dock.
The port charges wharfage fees based on the volume of cargo passing through its docks, so higher volumes will mean more revenue and more jobs.
IRM operated the terminal from 1981 to 2001, when it sold its operating rights to Kinder Morgan. But Kinder Morgan only shipped an average of 360,000 metric tons through the terminal, although it is capable of handling more than double that amount.
IRM officials say they want to make the terminal more lucrative for the port again. The Philadelphia-based company will invest at least $1.25 million into modernization and upgrades at the 20-acre terminal, which will be credited back to cover the company’s initial wharfage and lease payments.
Unlike Kinder Morgan, which only ran the vessel side of the terminal’s operations, IRM will be responsible for managing the entire terminal, including rail unloading. It will contract with Seattle-based Jones Stevedoring to manage labor.
Under the five-year agreement, IRM would pay the port a minimum of $410,000 in wharfage fees in the first year and a minimum of $820,000 thereafter. The base lease would generate $473,000 annually, and the company would pay the port’s standard dockage fees. The agreement includes two five-year options to extend.
“We’re committed to being a good neighbor, to running a safe operation and protecting the environment,” O’Neill of IRM said Wednesday.