Northwest Packing, port face off over lease
By Aaron Corvin
VANCOUVER, Wash. — A landlord-tenant dispute between Northwest Packing Co. and the Port of Vancouver flared Tuesday, as the regional food processor once again pressed its case for a lower lease payment.
Its arguments included public testimony from workers concerned about their livelihoods and statements that it may relocate hundreds of jobs if it doesn’t get the rent concession it says will boost its competitiveness.
“I’m worried about losing my job,” Juan Tapia, a 15-year employee of Northwest Packing, told port commissioners Tuesday.
Port officials pushed back, saying the company, like other tenants, must shift to paying fair market value as required by its lease contract. Port administrators and company officials keep meeting and talking, but the company has yet to respond to the port’s request for a written lease proposal, said port Executive Director Todd Coleman.
Northwest Packing’s 25-year lease, which the port extended for three years in 2011, is set to expire at the end of this year. In the interest of resolving the dispute ahead of that deadline, Coleman said, he’s asking the port’s Board of Commissioners to direct port staff to obtain proposed lease terms in writing from the company for the commissioners to review.
That will move things forward, Coleman said, so that Northwest Packing may choose to either make its planned capital investment at its current location or to move elsewhere. I hope it’s not the latter, Coleman added.
It’s unclear when or how the conflict between the port and Northwest Packing, a division of Vancouver-based The Neil Jones Food Co. and a port tenant since 1973, will reach a resolution.
Over the years, the company has expressed interest in either purchasing its property or paying $100,000 annually instead of $149,439, a 33 percent rent reduction. The port has rejected the purchase request and frowned on any further decrease in rent. The company also has said it faces higher freight, water and other costs than in other parts of the state.
The port has said it prefers to keep Northwest Packing in Vancouver and that it hopes to do that while also finding a way to bring the company’s rent up to fair market rates. A land-only appraisal of the company’s property, conducted by the port in 2010, pegged fair market value rent at $372,021 annually.
The parties appeared to be no closer to resolving the matter Tuesday, when the company, at its request, presented its case during the Board of Commissioners regular public hearing. The port and company again disagreed over how the company’s property should be appraised. They also clashed over the meaning and purpose of the port’s comprehensive plan.
In testimony to commissioners, Mike Bomar, president of the Columbia River Economic Development Council the nonprofit jobs promoter and business recruiter said the agency includes food processing among its targeted industries. He said he encourages the port and the company to work together to keep the company’s jobs and the families they support in Vancouver.
Under a 25-year leasing arrangement inked in 1987, Northwest Packing paid rent based on land value only. That helped push the company’s annual payments substantially below market rates, according to the port. It was a friendly economic-development move aimed at encouraging the company to grow in Vancouver.
The company’s lease was slated to expire by the end of 2011. Northwest Packing, which processes a variety of fruits, including pears, cherries, cranberries and plums, for canning, juices and sauces, had the right to extend its lease for another 25 years, but with the contractual understanding that its new rent would reflect fair market value.
Before the lease deadline, the company which processes a variety of fruits, including pears, cherries, cranberries and plums, for canning, juices and sauces had sought to end its renter status or to secure a lower lease payment.
In September 2011, port commissioners agreed to extend Northwest Packings 25-year lease for three years. The extension bought more time for negotiations. The port also reduced the company’s annual rent from $154,859 to $149,439, reflecting the fact that the company no longer used a piece of its property.
Since then, the port and the company, which maintains 400 to 500 full-time equivalent jobs at its 15-acre site, have continued to talk about the potential terms of another long-term lease.
“We will entertain a sound proposal, but make it sound,” port Commissioner Jerry Oliver said to Northwest Packing officials after they’d presented their case Tuesday. But the port is not going to subsidize any industry, Oliver added, not Tesoro-Savage or Great Western Malting or United Grain.
Robert Schaefer, an attorney for the company, said the port’s own comprehensive development plan specifies the food processing industry as one the port wants to maintain. The port wants a fair market rate, Schaefer said, but it’s important to understand the rates paid by food processors in other parts of the state. “You’re going to find they’re lower than what were paying now,” he said.
Schaefer said Northwest Packing is willing to share the cost with the port of an appraisal that takes such information into account.
Coleman countered that the ports comprehensive plan is a thou canst document, not a thou shalt document. Based on the type of appraisal it wants, Coleman said, the company is basically asking to pay Quincy, Wash., rates for a property located in Vancouver. Property in Quincy isn’t valued the same as it is in Vancouver, Coleman said, adding that the company’s request “seems absurd to me.”
During the company’s presentation to port commissioners, Matt Jones, president and CEO of Northwest Packing’s parent, The Neil Jones Food Co., outlined the company’s positive economic impacts, including that it supports $33.1 million in household income in Clark County annually.
He also spelled out the negative impacts including the loss of existing jobs, income, and capital investment to expand and add jobs if the company leaves Vancouver. The Port of Vancouver’s proposal to more than double the company’s lease rate is just not competitive with other ports in the state of Washington, Jones said.