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Toledo ‘close to closing’ on Fred Wahl takeover

Posted: Friday, Oct 2nd, 2009

Port officials awaiting word on state funding

Slow but steady is the motto for Port of Toledo officials as they move toward finalizing the deal to acquire the former Fred Wahl Marine boatyard.

During their Sept. 16 session, Toledo City Council members, who have followed the process closely in terms of economic development benefits for the city, learned that the port had received a 30-day extension for the property exchange. The delay puts the final transfer on hold as port officials await final word on potential state funding and state approval of the deal, Port Manager Bud Shoemake told the News-Times Thursday morning.

“We’re close to closing,” he said. So close, in fact, that port officials have posted an ad with the state employment office in Newport for 3.5 full-time equivalent positions at the boatyard.

Future plans include site upgrades to allow haul-outs of larger vessels, and the ability to work throughout the year in all weather conditions.

Fred Wahl shut down the operation in December 2008 after nearly a decade on the sliver of land at Sturgeon Bend near Toledo. When port district voters nixed a $3-million general obligation bond a month earlier to allow the Port of Toledo to purchase the facility, any hope of keeping the facility going seemed dead in the water.

Port officials opted to try another venue, and they are not only on the verge of resurrecting the boatyard, but setting the stage for major improvements.

Everything hinged on reaching an agreement with Wahl, developing a viable business plan, doing an environmental impact survey, and obtaining necessary financing.

The agreement

Under terms of the agreement reached after two months of back-and-forth negotiating between Wahl and Shoemake - with help from their respective attorneys Kurt Carstens and Chris Minor, the port would pay Wahl $1.5 million for the 20 acres of land on four parcels along the Yaquina River across from the Georgia-Pacific mill. Wahl agreed to donate the remaining value depending on a current appraisal. The appraised value then becomes part of a 50/50 match the port needs to apply for a federal Economic Development Administration (EDA) grant that - if successful - could bring in the funds needed for those major improvements, including a marine haul-out rail to handle heavier, longer vessels, storm drainage, parking, and sewer service.

Using funds provided by the Oregon Economic and Community Development Department, port officials hired consultants to create a business plan, which Shoemake said contains “everything on how we’re going to do this.” He said funding would derive from a combination of loans and state and federal grants.

The plan

The port would oversee the facility as a public boatyard operated by private industry under contract with the port.

According to the business plan completed in June by Portland-based Maul Foster & Alongi, Inc., and BST Associates out of Kenmore, Wash., the terms of the $1.55-million loan ($1.5 million for property acquisition, $50,000 for improvements) at a rate of 5 percent for 25 years would require an annual loan payment of $110,000. Any state and federal grants the port gleans would help pay down the principal loan amount.

The business plan, Shoemake said, “has no fluff.”

It presents an “as is” financial analysis of the boatyard operation. Under that scenario, expected gross revenues for the first year of operation are $508,000 to $602,000. Adding in expected revenues from private operators renting space and performing services there boosts gross revenue expectations to $1.1 million to $1.2 million.

“This is comparable with competing boatyards, which generated between $750,000 and $1.1 million in the most recently reported year of operations, or an average of approximately $950,000,” the plan stated. “It is also comparable to revenues at Fred Wahl Boatyard in previous years.”

The plan expects operation expenses of $458,000 to $463,000 the first year, with net operating income before depreciation of $50,400 to $139,400. Subtracting the first year loan payment drops net income from -$59,000 to $29,400.

“The projections assume operations in an as-is condition, and do not reflect potential increased revenues associated with facility improvements,” the plan noted. “Additional marketing efforts could also increase the number of boats handled. However, it should be recognized that there is substantial competition from other boatyards and shipyards on the West Coast.”

In short, it’s a risk. But it’s a risk port officials believe is worth taking.

Economic vitality

Shoemake and Port of Toledo commissioners have agreed all along the facility is vital to the local and regional economy.

According to the business plan, the proposed Port of Toledo Boatyard would provide 12 direct jobs with an annual payroll of $350,000 and sales of $1.4 million. Total annual payroll through direct, indirect, and induced effects is projected at $585,000 based on 29 overall full-time jobs. Overall annual economic impact pencils out to $2.54 million.

Boatyards are also vital to a viable commercial fishing industry in the Newport area (Newport, Toledo, and Depoe Bay), which generates about 4,000 jobs and accounts for 15 to 16 percent of the area’s earned income, according to an economic analysis of 2005 to 2007.

“More than half of this activity is generated by the distant water fleet, and the remainder by the local/regional fleet,” the business plan stated. “A frequently cited economic concern for this industry is that the loss of key infrastructure, including but not limited to boat repair services, could result in further decline in the area’s fishing industry.”

Port of Toledo officials say they want to stave that off, while pursuing the port’s prime objective of stimulating economic development in the Toledo area.

Shoemake said he expects things to fall into place within the next two to three weeks, and the port can stop idling, and move on to the next phase.

Terry Dillman is the assistant editor of the News-Times. Contact him at (541) 265-8571, ext 225, or terrydillman@newportnewstimes.com.

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