PORT ANGELES — McKinley Paper Co. is targeting mid-January for beginning production at its 99-year-old Ediz Hook plant with about 100 workers after nearly three years of industrial dormancy at the site and lost revenue for the city of Port Angeles.
If that time line holds, city government can expect once again to receive about $330,000 annually in utility and electricity fees — although city officials are not including the revenue in the proposed 2020 budget the City Council will discuss tonight at 6 p.m. at city hall.
General Manager Edward Bortz said Monday there is some doubt McKinley can be definite about a specific date in anticipating the plant will open in about eight weeks, but is confident it will happen around that time.
“We are trying to do it as fast as we can,” Bortz said.
“That’s our best guess right now, but there are a lot of things we’ve got to pull together to hit that date.”
He said McKinley is still installing equipment.
“We’re in an intensive construction phase,” Bortz said.
McKinley also continues to hire about 100 workers for processing recycled cardboard into heavyweight grades of paper and corrugated fluting for box liners.
“Even after we start, we’ll still be hiring a few folks,” Bortz predicted.
City Finance Director Sarina Carrizosa said revenue generated by McKinley in 2020 will be deposited in city reserves, upping next-year’s set-aside to $5.65 million, or 26.3 percent of the general fund spending plan.
That exceeds the 25-percent target for the reserve fund set by the City Council, although it’s not unusual for the fund to exceed that percentage, Carrizosa said.
The first reading of the 2020 plan, which anticipates $20.5 million in revenue and $21.6 million in expenditures, is at a City Council public hearing at 6:30 p.m. tonight at city hall.
McKinley pays about $300,000 yearly in city utility taxes and $50,000 for electricity used at the mill and supplied to the city by the Bonneville Power Administration.
Carrizosa said the only revenue McKinley has been paying the city is $62,400 to keep power supplied to the mill as the company gets the plant ready for start-up.
“The 2020 budget is balanced without the use of McKinley revenue for current programs and services,” Carrizosa said in an email.
“Of the $350,000, about half of the $62,400, or $31,200, is included in the $350,000.”
The only program using those funds is code enforcement, Carrizosa said Monday in the interview.
“It’s already built into the budget.”
Previous start-up dates anticipated by McKinley did not pan out, Carrizosa noted.
McKinley, the American subsidiary of the Mexican paper products company Bio-Pappel, purchased the mill from Japanese-owned Nippon Paper Industries USA in March 2017, after most workers had been laid off.
The company planned to reopen the plant in December 2018, announced in September 2018 that September 2019 was the target date, and announced this September that by Dec. 31, the plant would be up and running.
“We’re basically trying to be conservative with all revenue sources, so if anything were to happen to any one of those, the impact would not be as great to the city,” Carrizosa said.
The City Council has established a policy of keeping 25 percent of general fund spending in reserves.
Reserves would increased to $5.65 million, or 26.3 percent of the budget, if McKinley starts up as planned.
Deputy Mayor Kate Dexter said Tuesday if McKinley does infuse reserves with an additional $330,000, and there is some “predictability” in receiving it in the future, council members could discuss “whether or not there are projects that need funding that we should use that money for rather that building the reserves, defaulting to build the reserves.”
McKinley’s new recycle pulper will increase production from the 700 oven-dried tons manufactured daily by Nippon to 900 tons by McKinley.
Air emissions from the plant will be within “acceptable levels of increased health risks,” the Olympic Region Clean Air Agency determined.
Odors from the plant will not be detectable beyond the boundaries of the plant, ORCAA concluded.
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at [email protected].