Andrew Bornstein attended a Tuesday Port of Astoria Commission meeting for the outcome of both Bornstein Seafoods potential to expand on Pier 2 and its efforts to sell a building on Seventh Street to his budding brewery partnership, River Barrel Brewing, with David Kroening, Arbor Care Tree Specialists owner Luke Colvin and others.
Port CEO Hank Bynaker said Bornstein wants to pay the Port approximately $335,000, an appraised value of its former location at the foot of Seventh Street, so that it can relinquish the buildings status as collateral and possibly sell it to the brewing partnership, which intends to locate there.
The Port put up piers 2 and 3 as collateral to help finance the $10.5-million loan to build Bornsteins current processing plant between piers 1 and 2.
Bornstein Seafoods former location is also held as collateral by the Port, with Bornstein able to lease, but not sell, the building. Bornstein must have the Port Commissions permission for a collateral swap.
Its a $335,000 cash upgrade to your assets, said Bornstein about the deal. You can pay down the loan, or you can let it sit on your balance sheet as an asset.
Port Commissioners Jack Bland and Bill Hunsinger said the Port might have an advantage in keeping the building as collateral, as River Barrel plans on significantly improving it, opening a brewpub in 2014 and thus raising the propertys value in the near future. Andrew Bornstein said his course of action in that case would be a long-term lease agreement that outlasts the Ports collateral agreement.
Mike Weston, the Ports director of business development and operations, said taking the money would improve the Ports debt-to-asset ratio.
Lynn Schoessler is the deputy director of Business Oregon, the Ports largest single financial lender. He and Ports Manager Dave Harlan attended Tuesdays Port meeting to provide feedback on several issues.
Schoessler said that hed rather the Port have the cash on hand from Bornstein, in case its needed for debt payments and in case the brewery fails.
Randy Bowe, a local real estate agent, said he and partners own property west of Bornsteins Seventh Street building, and that on average, piling maintenance is in excess of $100,000 annually.
I hate pilings, he said, adding that theyre a huge hole that sinks in money. If you have a chance to get real dollars in hand I dont care, get rid of the asset on pilings and go with cash.
Commissioner Stephen Fulton asked Andrew Bornstein if he had considered refinancing the loan on the fish plant and taking the Port out of it. I think the Port would be a heck of a lot better if your debt wasnt on our books, he said.
I would consider it, but I doubt I could get a better deal, said Bornstein, later adding that the slow decision-making process at the Port makes the option unlikely.
Commissioner Fulton later made a motion to table the matter of a collateral swap with Bornstein and have staff discuss with the state the potential of taking the money the Port gets and applying it to an overage on the Ports Pier 2 improvement project.
Weve already heard from the state, said Commissioner Ric Gerttula. Why are we tabling it?
In the end, the Commission decided to table the discussion, with Fulton wanting staff, Bornstein and the state to explore issues surrounding the collateral swap, along with a staff report to the Commission.
In other news from the Tuesday Commission meeting:
Bynaker said he talked to Oregon LNG representative Peter Hansen about a recent increased appraisal of 96 acres of Skipanon Peninsula land the Port leases from DSL and subleases to Oregon LNG, which pays the lease amount. The land increased in value from less than $400,000 to $1.29 million, increasing the annual lease payments to $129,000 for the next 27 years. The new value is retroactive to 2011, meaning $260,000 is owed to DSL by November, and the state agency is seeking the Ports signature on the reappraisal. Bynaker said Hansens lawyers are going over the changes to the lease agreement, adding that he wont sign anything without a guarantee that Oregon LNG will pay for the duration of the lease.
When the Port readied to vote on new International Longshore and Warehouse Union contracts, Hunsinger said he believed the commission isnt supposed to vote in special meetings because of a prior rule change, to which Bland, the only other veteran commissioner, seemed to agree at one point. Bynaker said the Commission is allowed to vote in special meetings, something its done many multiple times in the past. The Commission subsequently delayed votes on the contracts, Port tariffs and putting out requests for an attorney to attend meetings until a regular meeting.
Brad Smithart, owner of the Astoria Riverwalk Inn, said the commission once again made motions without allowing the public to speak, and that it needs to focus more on job creation in its decision-making. Bland said he would look favorably on adding a second public comment section onto the beginning of the agenda, as it was before, to which Hunsinger agreed.