The Port of Grays Harbor will add six new full-time jobs next year and will collect $2.4 million from its property tax levy, according to its preliminary budget.
Overall, income is slightly down, expenses are up, and the expected cash-on-hand at the end of the year will be about half what it will be this year. That’s mainly due to a list of capital projects more than double what it was this year.
None of the crude-oil projects at the Port are factored in to the 2014 budget.
“There’s no crude-by-rail in any of the budgets, we’re waiting for those projects to evolve and work their way through,” Executive Director Gary Nelson said.
The Port doesn’t always collect the levy funds, but it’s allowed to levy up to 45 cents per $1,000 of assessed valuation. Last year it collected just more than 37 cents per $1,000, about $55 for a homeowner with a $150,000 home.
“One of the reasons I always recommend that they do collect the levy is how the levy is viewed by the bond community,” Finance Director Mary Nelson explained. “The property tax levy is very important when it comes around to being able to issue bonds.”
Credit agencies like Moody’s look at things like that when rating bonds if they’re issued, although it’s something the Port rarely does. The levy income will only be used toward a nearly $12.8 million capital project list.
“We don’t pay personnel out of the levy. We’re a little bit different that way … the commissioners have been very strict about that,” Nelson said.
The levy rate won’t increase this year except for properties constructed in the past year, and likely by less than a cent per $1,000.
“The commissioners during the workshop last week did ask me to look at a zero-percent increase in the levy, so that would be taking last year’s levy and just rolling it over to this year,” Nelson said.
The Port specified it wants to increase its income from $2.3 million to $2.4 million only from that increase on new properties. The exact increase on new construction will come from the county auditor in the final draft of the budget.
Two part-time positions are being eliminated through retirement at the Satsop Business Park, the Port’s recent acquisition. The budget anticipates one of those positions will be replaced by a full-time employee.
Two new bar pilots are currently in training with the state, and will be hired by the Port in 2014. Bar pilots help ships cross the bar in Westport and guide them into the terminals.
Two new maintenance positions will be created, and one person will be hired in executive public affairs.
Cost of living increases, usually 2 percent to 3 percent, have been budgeted for but not yet negotiated by bargaining groups.
The 2014 draft budget projects operating revenues in the general fund at $29.4 million, about $315,000 less than this year.
Nelson noted in a presentation to the Port Commissioners Tuesday that operating revenues have seen a 500 percent increase since 2003.
Income from the Port’s tenants is expected to be down by about $1.2 million.
The marine terminals represent more than 70 percent of the Port’s revenue, about half of that from dry goods shipping like cars and wood products.
A curve ball could come depending on how Satsop tenant Brown-Minneapolis Tank Northwest’s departure plays out. BMT announced in September it would close its Satsop operation by the end of this month. So far, Nelson said, the Port hasn’t heard anything from the manufacturer on how it wants to handle its long-term lease.
“The BMT announcement was made so close to when we were finalizing the preliminary (budget) we didn’t provide a contingency for them actually leaving the park,” Nelson said.
It could end up as a $300,000 hit to the Port’s bottom line.
“Everybody’s working with that in mind,” Nelson said. “It would really be premature to factor that in right now.”
“They can walk away or they can breach, which would be a breach of the contract, and we would probably have to sue or something,” Gary Nelson said. “The other way is to sit down and try to negotiate some kind of resolution.”
He said it would be premature to speculate before they talk with BMT.
The Port does quarterly financial updates, so a course-correction is an option in the near future, but it hasn’t ruled out the possibility of another industrial company taking an interest in the property.
“When an announcement like that will take place, then other similar-type businesses will possibly start expressing interest in the building when they know it’s available. There’s a lot that can happen within the next six months,” Mary Nelson said.
The Port will pay $2.2 million in principal and interest payments on $18.5 million still outstanding in bonds and loans. Its operating expenses are estimated at nearly $25.3 million, up about $900,000 from 2013. The largest single area of increase is personnel costs, with regular wages up nearly $429,000. Overtime pay is projected to be down by about $8,000.
The Port expects to have nearly $3.3 million cash-on-hand at the end of 2014, compared to about $6.5 million at the end of this year, mainly because of investments in maintenance and infrastructure in the capital budget.
The project list for next year has more than doubled from just less than $5.5 million in 2013 to about $12.8 million. Of that list, $7.5 million is expected to come from the Port’s general fund, $5 million from grants and loans, and $300,000 from the Port’s repair and replacement fund.
Nelson said two factors send a project to the top of the list: its use by customers as a source of revenue, and safety and environmental concerns.
“When we looked at the capital projects list this year, all of those projects are high-priority projects,” Nelson said.
Some are in the budget only if a customer is found for that space, like a warehouse at Satsop awaiting completion. Others are more urgent, like $3.5 million for the Satsop sewer project.
Dredging the Westport Marina is expected to cost $1.5 million. Nelson said it’s been at least 18 years since the marina has been dredged.
Improvements to Terminal 4, the Port’s main general cargo terminal, are ongoing and rely on a state Community Economic Revitalization Board funding partnership. They account for another $1.5 million this year.
“That’s kind of a large project, so the second half of that is in next year’s budget,” Nelson said.
A public hearing on the budget is set for the Port Commission’s next regular meeting at 9 a.m. on Nov. 12 at the Commission office at 111 S. Wooding St., Aberdeen.