Friday, March 14, 2014
A new lease at the Port of Walla Walla’s Burbank Business Park could do more than bring new life to a long vacant grain storage and transportation facility.
Coupled with the Port’s existing lease with Northwest Grain Growers, it could result in the greatest throughput of wheat in the Port’s 62-year Burbank history.
On Thursday, Port Commissioners Mike Fredrickson and Peter Swant unanimously approved a draft lease with The Scoular Company, a 120-year-old Omaha agriculture company that buys, sells, stores, handles and manages transportation for grain worldwide. Commissioner Ron Dunning was in Washington, D.C., representing the Port at a Pacific Northwest Waterways conference.
The 25-year-lease is tentatively set to begin April 1.
If successful, the relationship would finally fulfill the vision by which the Port was created more than six decades ago.
The creation of the Port in 1952 is rooted to the planning of the McNary Dam and the potential for shipping on the Columbia and Snake rivers, Port Executive Director Jim Kuntz said.
“We don’t do leases like this very often,” Kuntz told commissioners Thursday. “This is a big deal.”
The wheat will be trucked in from Southern Idaho, a detail that particularly pleased commissioners. It means the grain coming in will be new to the community rather than existing grain from local companies being divided further for shipping.
“Our grain basket in that sense is getting bigger,” Kuntz said.
Fredrickson on Thursday called the partnership a “no-brainer.”
“This will be a great use, and a lot of benefit to many people,” he said.
One of the Port’s first major investments there was construction of the grain facility that for decades housed Cargill and now is home to Northwest Grain Growers.
Scoular would lease the complex that until 2002 had been occupied by Co-Grain. A flathouse at that facility had in more recent years been occupied for a short period by a biodiesel plant. A metal grain silo at the 12.63-acre site that holds about 400,000 bushels of grain has been used off and on over the years, Kuntz said. But since 2002 the complex has not be fully utilized.
Kuntz said Scoular plans to invest $1.3 million to $2 million at the site. The company has an option to terminate the lease upon a two-year written notice. The Port’s only initial cost would be related to dredging, but only if that’s needed.
With state leasehold tax folded in, the base lease revenue to the Port the first year would be $80,116. That amount would increase 1 percent each year over the first decade. The base lease rate would then increase 2 percent annually over the next 10 years; and then 2.5 percent annually during the final five.
The base lease is just part of the revenue. The Port will also receive “throughput” fees for any and all bushels of product shipped. Most of that will likely come through Scoular’s access to an on-site barge slip. But as part of the agreement, the company will also have access to the 60-foot-by-250-foot high dock that accommodates cargoed containers.
In a groundbreaking partnership, Scoular will lead recruitment of other companies for use of the high dock and commodities shipping. The company will receive a cut of the throughput fees from the Port.
“For the very first time we have a business partner now that has an incentive to make this thing work,” Kuntz said.
The high dock was constructed in 1983. The Port spent about $300,000 a few years ago for improvements to the structure.
“We’ve got an entrepreneurial partner here that really wants to make this thing work.”
According to its website, Scoular operates 90 independent business units that provide supply chain solutions for end-users and suppliers of grain, feed ingredients, and food ingredients. The company employs more than 700 people.
For three years Scoular has made Forbes magazine’s top 100 list of America’s Largest Private Companies. It landed at 54 in 2013. The list includes only companies with revenues of at least $2 billion a year. Scoular reported $6.4 billion in annual sales for its ranking.