Port commissioners vote to reimburse California developer in case its lease option is terminated

In another 2-1 vote, Port of Olympia commissioners voted last night to reimburse real-estate developer Panattoni in the event that its lease option agreement is terminated.

Last night’s meeting was the final meeting in which E.J. Zita and Bill McGregor will be serving as Port Commissioners.

Commissioners McGregor and Joe Downing voted to reimburse Panattoni up to 50 percent of their expenses with a maximum of $125,000 if the lease option agreement for the New Market Industrial Campus is terminated.

Generally, the lease option agreement acts not as a lease, but more of a reservation until Panattoni decides on pursuing the development. In his presentation, Port of Olympia’s Director of Business Development and Real Estate Allyn Roe shared that the reimbursement can only apply once the agreement is terminated for reasons beyond the developer’s control.

These include details such as inconsistencies with Tumwater’s codes, and zoning regulations.  The reimbursement covers expenses incurred for survey, engineering, traffic, wetland, Geotech, endangered species, and other miscellaneous items. 

Commissioner E.J. Zita strongly disagreed with the proposal, stating that it gives the developers free insurance. “Commissioners McGregor and Downing, do either of you have heartburn over that? I do.” She continued, “I don’t think that we should be on the hook for their gambling risks,” Zita said.

In response, Commission Chair Joe Downing explained that “I’ve had conversations with Allen [Roe], I had conversations with outside real estate people, and so this is not uncommon to have a backstop for a developer.” He continued, “I do think it’s reasonable, and I trust that Port staff would not put something together with a net losing proposition to the Port.”

Zita asserted that the Port needed more time and research. She also insisted that the Port must conduct a market and feasibility study. “We should always do a feasibility study, and a market study, before getting in too deep on any new project,” the commissioner said. 

In addition, Zita suggested that there are still certain issues that need to be addressed, “We’re doing a lot to help Panattoni here…we are planning to give Panattoni [rights] to log most of Tumwater’s urban forest, in an environmentally sensitive area. A flooding area, near the city’s primary drinking water well.” With this, she advised the Port, “I think we need to take a step back here.”

Downing reiterated his support for the development, “I remain committed to developing this area.” He added, “I applaud Panattoni’s interest in this area…a more squeamish developer might have left by now.”

Negotiations with Tumwater

 During the discussion, Downing expressed the Port’s desire to work with the city of Tumwater. On the contrary, Zita shared that she was unsure whether the Port was indeed working with the city following the cancellation of the development agreement earlier this month. Zita claimed that the Port’s Executive Director has made it clear that the process for the development agreement has ended. “Let’s be honest, we’re not working with Tumwater; we’re working with Panattoni,” Zita said.

In response, Gibboney called a point of order and asked the commissioner to refrain from making “inaccurate” and “disparaging” remarks against Port staff. She clarified that they did not cancel the negotiations, but only the Mayor’s version of the said agreement.

Gibboney also noted that the Port has yet to receive a formal document outlining Tumwater’s version of the development agreement. Zita stated that Tumwater had already submitted its proposal to the Port on Nov. 24.