NEWS STORY Port in a Storm The Port of Portland steams ahead with its shipyard sale, despite new criticism. BY NIGEL JAQUISS njaquiss@wweek.com

Both the Port and Cascade point out that the $38.8 million sale price is toward the high end of an appraisal made in 1997. That appraisal was partially paid for by Cascade.   In 1976, the Port paid $17.5 million to build Dry Dock 4, says port spokesman Aaron Ellis. Currently, Dry Dock 4 is insured for $40 million. Of that sum, $28 million is allocated for retiring bond debt, and $12 million is for clean up and partial replacement of the dock.   Carla Anderson of Diversified Marine, another local ship repairer, says her company has encountered great difficulty in buying waterfront land. Anderson is critical of the Port. "I think they should have definitely offered the yard for sale to more people," she says.

In spite of a flood of unanswered questions, last week the Port of Portland moved one step closer to selling the Portland Ship Yard. Since early 1997, the port has been negotiating the sale of the 94-acre Swan Island facility to the yard's current operator, Cascade General, Inc. Earlier this month, the Port announced plans to sell the yard to Cascade for $38.8 million--$22 million in cash, $7 million in rent already paid and $9 million in loans from the port ("Their Ship Came in," WW, Dec. 9, 1998). At a heavily attended public hearing at Port Headquarters last week, the port commission heard objections to nearly every aspect of the proposed sale. Ed Zajonc and Tom Maples, both of whom work for Cascade competitors, characterized the sale as a subsidy for Cascade rather than the best use of the facility. They again asked why the port is rushing to sell the yard, which includes 94 waterfront acres and the Western Hemisphere's largest floating dry dock, without a competitive bidding process. But it isn't just Cascade competitors who think the Port is acting hastily. "I don't think they have an idea in the world what they're giving away," says Mel Pittmon, who retired as the city's harbormaster in 1990. A former member of the governor's task force on submerged and submersible lands, Pittmon noted that the proposed sale would transfer publicly owned river-bottom land to Cascade. The state, Pittmon explains, owns nearly all submerged river land. Buying the Port's chunk of the riverbed will allow Cascade to moor vacant ships alongside the yard--a right easily worth a million dollars a year--and could pave the way to future development of the land. Zajonc, a consultant for Seattle's Todd Shipyards, has a special interest in the issue of submerged lands. He ran Oregon's Division of State Lands when that agency transferred ownership of the river bottom from the state to the port. "A private entity would never have received those lands," Zajonc says. "It's an atrocity." Despite all the questions they raised, opponents of the sale left the meeting gloomy, as the Port's Executive Director Mike Thorne and commissioners seemed uninterested in addressing their concerns. Commissioner Michael Powell, who has been directly involved with the sales process, advocated moving ahead with Cascade. Port Commission President Al Gleason spent more time questioning the motivation of critics than addressing their concerns. Only Cheryl Perrin, a former Fred Meyer official, responded with questions of her own, asking staff members for further information about asset values and prior operating history. Although Port counsel Cory Streisinger said that the agency wanted to sell the facility to retire bond debt and maintain jobs, neither she nor the commissioners explained the urgency of the sale. The proposed deal includes only $22 million in cash, all of which will be used to retire bond debt. Critics of the transaction, including legislators, think the Port is underestimating claims on that cash. News of the sale has reached Salem, where Senate Majority Leader Gene Derfler worries about the Port's proposal to limit Cascade's environmental liability to $2.5 million. "Why would we sell it without establishing our own liability first?" he asks. Bill Witt, soon to be sworn in as a state representative, is troubled by the message the sale sends. The Washington County Republican says that by negotiating exclusively with a private entity, the Port exposes itself to at least the appearance of favoritism. Speaking days after the public hearing, Gleason rejected criticism directed at the sale. If the port opened the bidding to all comers, he says, it would risk alienating Cascade and could undermine the company's current operations. By buying the yard, Gleason says, Cascade will cut its effective rent in half and begin building equity. In so doing, he says, it'll have a better chance of maintaining waterfront jobs. Gleason believes the port has fulfilled its responsibility to taxpayers in the sales process. "We have a fiduciary responsibility to get full value out of the yard, and we really feel we've done that," he says. Fiscal watchdog Don McIntire doesn't agree. He says taxpayers should get some of the proceeds from the sale. "In the late 70's and again a couple of years ago, taxpayers had to put up extra money when the Port couldn't cover costs," he says. "If a sale takes place, especially without open bidding, the Port has a moral obligation to return that money with interest." Port commissioners are scheduled to vote on the proposed sale Dec. 16 at 11 am at the Port headquarters.   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Willamette Week | originally published December 16, 1998