The Port of Astoria is moving toward a sale of the Astoria Riverwalk Inn after an analysis showed the agency could make up to $4 million more over the next decade by selling the building and leasing the land to a private owner.
Strapped for cash to fix crumbling infrastructure, the Port is looking at assets it could sell. The hotel, owned by the Port and leased to Param Hotel Corp., became the lowest-hanging fruit. An outside appraisal valued the hotel property at more than $5.2 million.
Param’s lease runs through October 2020, after which the company is expected to exercise a five-year extension option. The Port receives $5,000 a month and 7% of gross sales from Param, totaling $218,000 last fiscal year. Any sale would have to honor Param’s contract. Param could either buy the hotel or be bought out of its contract by a new owner.
The analysis found that the Port, if it sold the hotel and rented the land for $141,000 a year, could make as much as $6.6 million over the next decade if the rent is increased by 15% every five years. That compares to around $2.6 million if the Port keeps the hotel and rents it to an operator.
“Selling the building, from a financial perspective, it makes all the sense in the world,” said Will Isom, the Port’s finance director and interim executive director.
The Port should look at nonfinancial considerations when deciding whether to sell the hotel, Isom said.
“But with the current state of affairs, I do think having that influx of cash, and giving us the ability to leverage these funds into some of the projects that are in need of getting done is going to be important,” he said.
The Port is completing a five-year strategic business plan focused on regaining financial stability and trust at the local and state levels. The plan is required to secure more state financing the Port needs to fix its crumbling docks — namely Pier 2, where seafood processors employ hundreds during fishing seasons. The Port faces weight restrictions and a sinking western face of the pier. The hope is to leverage a property sale into a larger grant or loan to fund the rehabilitation.
Port commissioners agreed Tuesday to have Isom engage a commercial agent to create a listing.
The Port Commission also approved the formation of a permanent advisory finance committee. An ad-hoc committee of banking, accounting and other financial professionals recently recommended a host of changes at the Port to better track finances and review the viability of its properties. Among the committee’s recommendations was possibly selling some buildings, such as the Riverwalk Inn, Chinook Building and former Seafare Restaurant around the West Mooring Basin.
Commissioners approved a contract with the Special Districts Association of Oregon to help the agency search for a permanent executive director to replace Jim Knight, who resigned in June under pressure from the Port Commission and stakeholders.
Dirk Rohne, the president of the Port Commission, said the contract is necessary in part because the Port could hire internally. Isom, who has been lauded by the Port Commission but previously said he did not want the permanent job, declined to comment on his current level of interest. The Port also recently rehired Matt McGrath, the former director of operations who resigned in April over managerial differences with Knight, to his old position.
Port commissioners also voted to limit their $50 reimbursement per meeting to Port Commission meetings and other preapproved gatherings.