Port of Vancouver approves fruit processor lease on 2-1 vote

The Port of Vancouver Board of Commissioners voted 2-1 on Tuesday to approve a new long-term lease for Northwest Packing Co. that reaches a compromise between the two parties about how much the fruit processor should pay in rent.

The company had said if it didn’t get a favorable deal to maintain its competitiveness, it might move its facilities and several hundred jobs out of Clark County. The port had argued the company was contractually bound to move to a higher lease payment based on fair market value.

At one point, the company urged the port to keep its annual rent at $149,439. The port countered it should increase to $372,021, based on fair market value.

The lease approved Tuesday, which covers an initial extension term of 10 years, requires the company to pay $251,621.54 in rent for 2015. After that, the lease gradually raises the company’s rent. It also includes potential caps on later increases and allows the company to opt out of the lease if it decides it must relocate for business reasons.

In casting the lone dissenting vote, Commissioner Jerry Oliver said Northwest Packing, a subsidiary of The Neil Jones Food Co., has effectively paid “almost zero rent” for some 40 years as a port tenant. Under the new lease, he said, the port continues to subsidize the parent and subsidiary companies at a rate of $100,000 per year.

“I cannot support this lease, and I will not support it,” he said.

Commissioners Brian Wolfe and Nancy Baker both voted “yes” on the new lease. While he shares concerns about extending a subsidy, Wolfe said, “you can’t go from zero to 100 overnight.” and gradually increasing the company’s rent “is an appropriate way to do it.” The deal also keeps hundreds of jobs in the community, Wolfe said, and those jobs “are more important for me than the economics.” After the company’s lease payment of $251,621.54 for 2015, its rent will increase by $25,000 a year each of the next four years.

For the second five years of the initial 10-year term, the company’s rent would be reassessed based on fair market value. If that reassessment increases the company’s rent by more than $15,000 over the previous year’s rent, the port would cap the rent increase at $15,000 for the first year. After that, the company’s rent would increase by $15,000 a year until it reaches the rate determined by the earlier fair market reassessment.

The lease also gives Northwest Packing three five-year options to lengthen its stay with the port to as many as 25 years. During the initial 10-year term, the company would have one opportunity to exit the lease, at the end of 2019, if it decides to relocate because of business reasons.

Northwest Packing, which processes a variety of fruits for canning, juices and sauces, has been a port tenant since 1973. Its 15-acre site includes more than 670,000 square feet of space. The company employs 355 full-time equivalent employees on an average annual basis, according to the port.

Aaron Corvin: http://twitter.com/col_econ; http://on.fb.me/AaronCorvin; 360-735-4518; aaron.corvin@columbian.com