Astoria Forest Products is trying to get out of leases with the Port of Astoria without termination costs, accusing the agency of elder abuse against its 82-year-old owner, Dennis Murphy.
The company’s log exports have evaporated amid a prolonged trade war between the U.S. and China. Prior to the trade war, the owners had been trying to sell the business.
Matthew Colley, an attorney for Astoria Forest Products, sent a 120-day notice of termination to the Port in late December notifying the agency the company would not renew any of its leases.
The company leases much of Pier 3, where it processed raw logs into timber, through this year; Pier 1, where longshoremen loaded the cargo onto ships destined for China, through April; and in the Taggart Building on Pier 1, where the company has offices, through January 2021.
“If the Port will agree to a straight-forward termination of the leases and waive its right to any additional payments to which it may be entitled under the terms of the leases, Astoria Forest Products and Mr. Murphy will agree to release any claims they might have against the Port, including Astoria Forest Products’ right to compensation for any capital improvements it made on the leased premises,” Colley wrote.
The Port’s attorney, Eileen Eakins, responded in a letter that the Port has no objection to Astoria Forest Products terminating its leases effective April 30. She then laid out the costs of the company terminating leases early.
That includes more than $14,600 a month due through April for the lease on Pier 1, along with the repair of damaged asphalt and fencing. The company would owe $27,200 a month through April on Pier 3, along with an early termination fee of nearly $109,000 and repair of any asphalt damage. The payment would be due Jan. 27.
The Port will help find new tenants to fill Astoria Forest Products’ offices on Pier 1 and lessen its termination costs, Eakins wrote, but the company is still liable for any unpaid rent.
On the accusation of elder abuse, Eakins argued that the Port has negotiated with Astoria Forest Products’ general managers, rather than Murphy.
The company’s “general managers — including, most recently, (Chad) Neidermeyer — never indicated a concern that Mr. Murphy was being exploited by the Port, and the Port reasonably assumed that these agents were negotiating in good faith on behalf of” Astoria Forest Products, Eakins wrote.
Astoria Forest Products assumed the leases of Westerlund Log Handlers in 2014 after helping its predecessor settle a lawsuit with Chinese customers.
But Astoria Forest Products ran into its own troubles last year when the Chinese imposed tariffs on hemlock, the most common species exported from Astoria, along with Douglas fir and spruce, in retaliation for tariffs enacted by President Donald Trump.
The tariffs have made buyers hesitant and dried up timber exports, the associated fees of which once accounted for between one-fifth and one-quarter of the Port’s operational revenue.
Astoria Forest Products has not scheduled an outgoing ship since October, when the African Raven left for China loaded with 6 million board feet. The company recently gave up two of its three offices in the Port’s Taggart Building on Pier 1 amid the slowdown, sold a front-end log loader to Hampton Lumber and gave up many of its equipment leases.
The Port has cut staff costs, moved back to its old offices, rented out its new offices and signed a series of smaller leases to make up the losses from exports.
At a recent Port Commission meeting, Will Isom, the Port’s executive director, said the agency is still at 93% of what it budgeted for revenue, while at only 89% of its budgeted expenses. A record 33 cruise ships visiting this year will also help make up some pier revenues, he said.
“But longer term, we understand that financially the piers are the Port’s most valuable asset,” Isom said. “So we’re going to have to find a way to utilize those piers.”