Port staff address concerns on proposed lease of airport land to Coca-Cola bottler

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Port of Olympia staff addressed concerns regarding a 95-acre lease in Tumwater for bottler Swire Coca-Cola during a meeting held on Monday, November 28.

The Port Commissioners and the public raised a broad range of questions regarding the leasing agreement and sustainability of the manufacturing and storage site that will be built on the airport property.

Extended term of lease

Resident Charlotte Persons raised three issues about the proposed lease, starting with the contract term that would allow Swire to lease the land for up to 75 years. She thought this period was longer than what most lease contracts offer to industrial developers, citing the 200-acre lease with commercial real estate company Panatonni Development which she said is for 55 years.

Allyn Roe, the Port’s business development and real estate director, explained that the lease contract started as a template that the Port has already approved for Panatonni and another real estate company, CRG. 

“The term on the form is blank, so that is a fill-in item that is going to be consistent with not just Washington State laws, but this is a term length that we cannot exceed because of FAA regulations as well,” Roe said referring to the Federal Aviation Administration.

Roe clarified that the Port has not yet entered into a lease contract with Panatonni and has only approved its lease form. The Port currently has a lease option agreement with Panatonni to essentially reserve the land for the company.

Under the draft lease contract, the 75 years under discussion could be divided into periods of 30, 25, and 20 years. Swire will have the option to extend their lease for up to three additional periods.

Low rate adjustments

Persons’ second concern was the low rate of increase for the rent over time.

The draft agreement states that the rent would increase by 10% every five years. Persons said that this is less than half of the historical annual inflation rate for industrial rent, which she said was 4.1% over the last 61 years. She proposed to base the rate of increase on the average rate of inflation for the past five years.

Roe said that the lease agreement comes with a reappraisal that occurs after the 26th year of the lease. The agreement also stated that the property would be reappraised every ten years after the 26th year.

Roe added that reappraising the property was better than having consumer price index (CPI) adjustments and gave an example of a property that has been locked in for CPI adjustments since the 70s.

“‘Compared to an appraisal done across the street, the market, while the lease rate on that particular CPI fixed lease is about 10% of the value of what we have on today's prices,” he said. “So we do prefer the fixed adjustments with a readjustment period.”

According to the draft lease agreement, Swire would initially pay $0.041 per square foot once the Port Commission approves the lease agreement. The initial period would be used so Swire can secure all the requirements for construction.

This rate would increase to $0.48 per square foot once the rent starts, which would occur either after Swire receives a temporary certificate of occupancy from Tumwater or 24 months after Swire approves a Habitat Conservation Plan (HCP).

Port will cover Habitat Conservation Plan mitigation fees

Once the HCP is approved, an in-lieu-of fee mitigation to Tumwater would have to be paid. Under the draft agreement, the Port would cover a maximum of $9.5 million of this fee. If the fee exceeds the amount, Swire would pay the remainder.

Persons found this unacceptable as the Port would only earn around $2 million annually from the rent.

“The terms of this lease are very lopsided,” she said. “It looks like the Port is desperate to rent this property and is willing to make a huge giveaway of public funds right now, with even less value for future generations of taxpayers.”

Roe said that this concern has also been raised during the discussions for the lease of Panatonni. He explained that the Port will assist with the HCP costs because the Port is asking for the property’s fair market value.

“When you consider fair market value… those properties are not subject to the expense of having to go through the HCP mitigation process,” he said. “Rather than saying we are going to discount the lease to make up for the costs, we are going to say, ‘let's go with the known and a given.’ We know what the fair market value is, and we'll cover the HCP costs.”

Commissioners question staff

Port commissioners also raised their questions about the lease.

Port Commissioner Joe Downing questioned how they could justify renting the property when it has been a difficult process to re-lease another airport property that OYO Hotel currently rents.

Roe said that they are different processes. He explained that the Port will retain ownership of the Swire property, whereas they are working on releasing the OYO Hotel property so it can be utilized for residential use.

Port Commissioner Amy Evans Harding also questioned the sustainability of Swire’s water usage. Mike Bernier, sustainability director of Swire, said they are working with Tumwater, which assured them that they could meet the company’s needs. 

Bernier added that the company will not use its wells as a water source and that Tumwater would supply all of the water needed by the bottler.

The commission is set to resume discussions and vote on the lease agreement on December 12.

Comments

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  • FirstOtter

    Where will the water for this Coke bottler come from? Oh, yes, "Tumwater will supply all the water needed". Does Tumwater have it's own private wells? Or is it the water that those of us who live in Tumwater, drink, bathe and flush?

    It's not your water, Tumwater, it's OURS. All of us who live in Tumwater and beyond.

    THe Port of Olympia has outgrown its usefulness and is obviously thrashing around, trying everything it can to extend its life. Expanding the regional airport, supporting Amazon and Costco's new monster warehouses and now inviting Coca Cola to come and despoil yet another bit of vanishing open space.

    It needs to be abolished.

    Wednesday, November 30, 2022 Report this

  • northbeachcomm

    Thanks for this important article on the Port of Olympia lease with Panattoni Corporation, bottling the "Coke product", contractor Swire.

    This is a Panattoni Corporation contract; a world wide corporation that has tremendous power and money.

    Port Commissioner Amy Evans works for Panattoni Corporation. She has worked for them for years!

    This is a conflict of interest.

    She should not be allowed to vote on this, by law. She must recluse herself from this vote on DEC. 12. Public comment

    is needed. We must not allow this to go forward.

    This lease of Port land to Panattoni (Coke/Cola ) is a give away of public lands for 75 years.

    This is similar to Thurston County tax-payers, subsidizing with their tax money, to have our forests shipped to Asia

    by the Weyerhaeuser Corporation. Our WA. forests are being clear cut. The logs are not made into lumber in the USA. The logs are all shipped through the Port of OLympia to Asia. Weyerhaeuser (WEYCO) does not make a profit for the Port, tax payers pay for the marine terminal that WEYCO uses to make a profit for themselves. The Port of Olympia is giving away public property (rental lands) to corporations. The Port Commissioners know that the marine terminal loses money each year. They do not care. They just want to borrow more and more money in bonds, and have the tax payer holding the bag in a few years to pay it all off. We must use public comment on the Port zoom meetings Mondays at 5:30pm to educate people here in Thurston County.

    The Port of Olympia does not care about the public good, they care about corporations supporting them (the jobs are low wage, this helps no one).

    Wednesday, November 30, 2022 Report this

  • johngreen

    Previous articles indicate that Swire is a Utah based company. However Swire is in fact a British company that has headquarters in Hong Kong and plants and offices in China. It is an international company for what it's worth.

    Thursday, December 1, 2022 Report this

  • JW

    The Port continues to sell out the community. Fleecing us on property taxes and mismanaging the port operations evidently aren't enough so let's **** the land for all its worth.

    Thursday, December 1, 2022 Report this

  • FirstOtter

    Don't blame the Port for ALL of this con job. Tumwater is complicit, as well. Witness their plan to put in three more blooming roundabouts, allow the Port to expand the Regional Airport so that Amazon and Costco can ship their STUFF in by jet, and encourage businesses like Coca Cola and Panattoni to just come and flatten homes and ruin the environment.

    Thursday, December 1, 2022 Report this

  • Geinsbelt

    I don’t know all the facts, but I’d guess along with bottling soda, they’ll be bottling water as well. That’s where the true evil is.

    And…

    WHY THE HELL IS THE PORT SHELLING OUT 9.5 MILLION DOLLARS TO PAY SOMEONE ELSE’S EVIORNMENTAL FEES?

    This whole thing stinks. It’s a privately owned soda pop company.

    Thursday, December 1, 2022 Report this

  • Olywelcomesall

    Consider what Lewis County did to address this issue in Randle and other rural areas of the county https://www.nwpb.org/2020/02/27/lewis-county-pushback-leads-washington-lawmakers-to-tighten-tap-for-new-bottled-water-plants/

    https://www.chronline.com/stories/crystal-geyser-bottling-proposal-draws-fierce-opposition-in-randle,8934

    Friday, December 2, 2022 Report this