The Port of Astoria: It's Time To Cut...

The Port of Astoria: It's Time To Cut The Cord With Calpine!

There are 2 comments on the Patrick McGee on story from Jan 21, 2006, titled The Port of Astoria: It's Time To Cut The Cord With Calpine!. In it, Patrick McGee on reports that:

Editorial From: S.A. Forrester, Editor...The Daily Astorian The Port of Astoria does not need one more millstone around its neck.

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Patrick McGee

Since: Jan 06

Orlando, FL

#1 Jan 21, 2006
The Response From Port Director Peter Gearin

Letter: Other factors
The editorial (“It’s time to cut the cord with Calpine,” The Daily Astorian, Jan. 9) fails to take into consideration important factors in its conclusions. Specifically, the Port of Astoria entered into a lease with the state of Oregon for the northern 96 acres of the Skipanon Peninsula. Terms include an initial term of five years at a rate of $38,000 per year. At the same time, the port leased the property to Skipanon Natural Gas LLC under similar terms, including a rate per year of $38,000.

The lease with Skipanon stipulates that should the tenant file for bankruptcy, the landlord may cancel the lease. Should the port so choose, it is faced with making payments to the state of $38,000 per year for the remaining three years with no income from the tenant. Furthermore, bankruptcy is a unique situation because the courts may determine whether contracts such as leases are enforceable. Thus, in addition to loss of sub-lease income to offset its cost, the Port could face significant legal expenses should it choose to exercise its rights under the lease.

The port has provided the opportunity for Skipanon Natural Gas LLC to seek the necessary public support and regulatory approval for its project. It will need to convince the financial community of the soundness of the project, or it will not raise the funds to build the facility. The port has no financial risk in that process.

As pointed out by the state, Calpine and Skipanon Natural Gas are in a reorganization, not a liquidation. Should the port succumb to the opinion of a few in regards to “cutting the cord with Calpine” it would fly in the face of voters of Clatsop County who resoundingly expressed their opinion in the last election.

Contrary to the assertions expressed in the editorial, port staff did not estimate the cost of the new Bornstein Seafood plant. That information was provided by an engineering contractor engaged by the tenant and was the basis upon which the port and state moved ahead with the project. Soil conditions at the site proved insufficient to proceed as expected and, while every attempt was made to value-engineer the project to maintain cost, it was not possible. The tenant agreed to pay the increased cost.

Five years ago, the port was declining, some say, dead. It set a new course, took risks, and is succeeding. The biggest impediment to success is not whether Calpine succeeds or fails, or whether Bornstein succeeds or fails, or the success of its boat yard, but whether the port can keep its waterfront open. DDT contamination settling in port waters from upriver agricultural and commercial operations, threatens the port’s very existence.

Yes, the port made mistakes in its attempt to keep its piers open and it is paying for its mistakes as evidenced by the proposed fines with the Corps of Engineers. Rest assured, it will not make those mistakes again, and the port will remain open.

Executive Director
Port of Astoria
Patrick McGee

Since: Jan 06

Kissimmee, FL

#2 Jan 28, 2006
Letter: Diligence (not!)
So now, let’s let the Port of Astoria move forward with a little exercise in “eminent domain,” right?(“Other factors,” The Daily Astorian, Jan. 13)

Is this what’s next for us?

The condemnation and taking of the Astoria Red Lion Inn property for yet another undisclosed scheme?

Looks to me, the cogs are starting to fall into place for the next “boondoggle” by the dealmakers at the port. Do we really need condos on that site? Wouldn’t condos at a planned unit development on Skipanon Peninsula be more exciting?

Before the port goes off on its next adventure, let’s take a look at a couple of the deals in question.

Calpine: A 60-plus-year irrevocable lease of 92 acres at $38,000 a year for a half-billion dollar project with the potential to pump one billion cubic feet of natural gas per day out of our community to Calpine’s “commercial clients” in who knows where, through their pipeline through who knows where, for a measly and purely speculative $6 million dollars a year tax revenue that will be so diluted by the time it gets back to this community that it will mean nothing, and a few jobs nobody here is qualified to handle.

Not one thought of a residual per cubic feet of that gas or a tariff on gross revenue, just a $38,000-per-year lease to go from one hand to another.

Don’t even get into the infrastructure upheaval. And these people actually expect us to believe they did “due diligence?”

Bornsteins: Starting out with a port-sanctioned loan through the state Economic Development Commission, forgive me for not getting that name right, for what was it,$6 million-plus dollars and then, deep in the throes of construction, Bornsteins comes back and says “Ooops, we need another $4 million because we overlooked something?”

And the amazing thing is they got it!

Lack of “due diligence” is exactly what I would call it, on somebody’s part and yes, it’s time to cut some cords and quickly.

Another appropriate question is: Who does the overseeing of these state ports? Is it true, as I read somewhere, that they are an island unto themselves?


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