Steve Oliver, Northwest Maritime Center board president, addresses the Port of Port Townsend commission at its meeting. (Jeannie McMacken/Peninsula Daily News)

Steve Oliver, Northwest Maritime Center board president, addresses the Port of Port Townsend commission at its meeting. (Jeannie McMacken/Peninsula Daily News)

Port of Port Townsend weighs maritime center’s proposal to operate Point Hudson

PORT TOWNSEND — Port of Port Townsend commissioners have outlined questions they want port staff to research about a proposal from the Northwest Maritime Center to lease and operate the Point Hudson campus.

Questions were raised Wednesday as staff members offered commissioners talking points developed from two consultant reports, from ECONorthwest, an economic consulting firm specializing in the analysis of investment decisions for private and public sector clients, and Red Fern Consulting of Port Townsend.

No action was taken on the lease proposal. Commissioners voted to establish the Point Hudson Jetty (South) Donation Fund to receive donations for the costs associated with the demolition and replacement of the south jetty. Pledges offered at the March 20 commission meeting totaled between $155,000 and $175,000.

Officials with the port and the maritime center have met for several months to discuss various options for partnership, and the commission asked staff to prepare a counter proposal to the maritime center’s plan.

The proposed master lease would be for 50 years and provide $3.5 million for ongoing development, $1.0 million in capital improvements, $350,000 a year in lease payments, $4 million in deferred maintenance over time, and a 15 percent share on net income improvements. Details of the plan can be read at

The commissioners reviewed several factors: should the port lease the property and if it does, should it lease it to the nonprofit Northwest Maritime Center, and should the lease provide the financial resources to cover the debt service associated with the property?

Currently, the maritime center’s proposal does not include the replacement of the north jetty. The commissioners said the most current cost estimate for the work is $2.7 million. If the port issues a general obligation municipal bond for the south jetty, port officials believe there will not be enough bonding capacity to complete the north jetty.

Capital contribution has been a big part of the maritime center’s plan, with a payment of $3.5 million up-front. Port officials have raised concerns about leasehold tax ramifications.

An analysis of the last nine years of revenues shows that port revenues have grown at an average rate of 4 percent. Expenses have grown on average at a rate of 4.9 percent. Staff members said these numbers are considered conservative but appropriate for modeling purposes.

The maritime center proposal offers two lease payment scenarios, neither of which, in the port staff’s analysis, appears to account for inflation after the initial period.

Staff questioned the concept of a percentage of net income sharing and suggested that the more accepted real estate practice is a percentage of gross receipts.

The maritime center’s proposal did not include security to protect the public’s interest in case of non-performance. The staff said that state law requires it and any security offered should be not less than one year’s value and no more than three year’s value.

Port officials question if the maritime center has the demonstrated experience to develop and manage the variety of uses presented for Point Hudson, such as additional restaurants, grocery sales, a seafood market, venues for theater or music/dancing, and the relocation of RV spaces.

In a letter to commissioners, maritime center Executive Director Jake Beattie said that “ECONorthwest’s analysis included capital expenses. They based their calculations on performance projections created by port staff that appear overly optimistic based on historical performance, significant revenue growth with expense growth of less than 2 percent.”

“As we calculate it,” Beattie continued, “using ECONorthwest’s own numbers, our proposal is slightly better for the port on a cash basis and much better for Point Hudson as a facility. With our proposal, your asset is more improved, and jobs are created. The port wins, the community wins.”

Steve Oliver, Northwest Maritime Center board president, said that a year and a half ago, headlines said that the port was in dire straits.

“It needs help from the community to solve all its problems,” he said. “As far as I know, the Northwest Maritime Center is the only part of that community that over the last year and a half that has met with you folks and tried to carve out a way to help.

“We have done that in good faith and invested a tremendous amount of time and energy in developing a proposal for you. We can go through the punch list and successfully to solve all the issues that were brought up today.

“First and foremost, we have to make the decision that we want to do this together, and I’m not sure where the commission is on that.

“It’s foolish not to go any further with this without some kind of mutual letter of intent that says yes, we would like to do this and we’re going to proceed in good faith. If we can’t get there, we can’t do anything.”


Jefferson County Executive Editor Jeannie McMacken can be reached at 360-385-2335 or at [email protected]

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