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State okays funding to buy Wahl

Posted: Friday, Oct 23rd, 2009

Port of Toledo aims to close deal on boatyard purchase

Port of Toledo officials received word this week that state funding is in place for the purchase of the former Fred Wahl boatyard.

Port Manager Bud Shoemake said the port received a letter of award from the Oregon Business Development Department on Oct. 13. The department’s new Infrastructure Finance Authority will provide a $1.2-million loan from the Port Revolving Fund to help finance the Toledo boatyard purchase.

In addition, Gov. Ted Kulongoski approved a $350,000 grant from the state’s Strategic Reserve Fund.

Those awards secure the funding needed to close the deal with Wahl, who 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, they are setting the stage for major improvements.

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, pending an appraisal. The appraised value - set at $4.27 million by Salem-based Powell Valuation Inc. - is part of a 50/50 match the port needed to apply for a federal Economic Development Administration (EDA) grant. If successful, the port could bring in the funds needed for major improvements, including a marine haul-out rail to handle heavier, longer vessels, storm drainage, parking, and sewer service.

Shoemake said funding to buy the boatyard itself would derive from a combination of loans and state and federal grants.

While they awaited word from the state about funding, they worked on closing the deal with Wahl. The process hit a snag when the Oregon State Bar meted out a 90-day suspension on Wahl’s attorney in July. Although Carstens arranged for a Portland-based attorney to take over in his stead, Shoemake said the situation “delayed things a bit.”

In September, port officials received a 30-day extension for the property exchange, pending state decisions on funding. With the funding now in place, Shoemake looks forward to sealing the deal with Wahl and starting work on improvements at the boatyard site.

“They want us to close within the next 30 days,” Shoemake told the News-Times on Thursday.

Shoemake, who posted an ad with the state employment office in Newport in September, said he just hired an office manager who will begin training at the port office immediately to learn policies and procedures.

He had 70 applicants for three other openings at the boatyard. “There are some pretty talented people among them,” he said, noting he would begin the interview process immediately. Once hired, they would get to work on the existing boatyard equipment, repairing and upgrading as needed.

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.

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. 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.

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

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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