The Greenbank Farm Management Group had hoped that the centennial kick-off event in January would also mark the signing of a lease and management agreement with the Port of Coupeville, freeing up $1.5 million in state capital projects funding.
That didn’t happen, but they have reason to be hopeful that they will be celebrating March 21 at a chicken dinner at the farm.
The Port of Coupeville commissioners Wednesday agreed in principle to a draft of the property lease and management agreement that negotiators have worked out over the last eight months.
“It’s been long, and hard and difficult, but I think we have an agreement,” Commissioner Ed Van Patten said to applause at the end of the two-hour Port meeting.
Reduced
role for Port
The agreement would give the management group a much larger role in running the Port-owned property, including being the landlord for all tenants and overseeing the planned improvements.
The Port would see their role, and income from the farm, reduced under the new contracts.
Van Patten said he is neither happy nor unhappy with the deal, even though the Port will get “zilch” in the way of income from the farm for the next 10 years. He estimated the cost to taxpayers at $100,000 per year, including $45,000 in management fees, $10,000 in insurance, and an estimated $55,000 loss in income from rentals.
The Port spent more than $150,000 last year to renovate barn number two, thinking they would recoup that cost in rent. Now that money will instead be used as matching funding for the state grant money.
Van Patten said the Port commissioners who oversaw the purchase of the farm seven years ago thought it would generate the income to pay off the purchase price. He estimated the Port has put $1 million into the farm to date, and it is still responsible for the real estate payments. Port consultant John Coyne said the Port pays about $105,000 annually in mortgage payments for the farm.
Van Patten said the payoff for what the Port is giving up now may come in 10 years, when the lease and management contract end and control of the farm reverts to the Port. The 10-year lease was a requirement of the state for the capital projects funding.
Contract
fine tuned
At Wednesday’s meeting Port attorney Dale Roundy went over the points of the contract that the farm negotiators, Tom Baenen and Clarke Harvey, had expressed concern about after taking a draft to the Greenbank Farm Management Group board last week.
Points to be worked out on the lease agreement were: who pays the fire insurance; approval of capital project plans by the Port; signage at the farm; scope of the work to be done; and payment of leasehold taxes.
Commissioners Benye Weber and Bruce Bryson approved a motion to relegate responsibility for fire insurance to the Port. Van Patten voted against it, saying when negotiations started the farm group said it would pay the taxes, and that further negotiations for a $5,000 management fee increase, land lease and rental of barn number two were based on that assumption.
“I thought it (those fees) would be enough to cover fire insurance,” Van Patten said.
He was also concerned that with improvements to the farm insurance could go from the current $4,000 to $5,000 per year to as high as $10,000.
Baenen noted that originally a $50,000 annual fee was proposed, but it was then reduced to $45,000. The Port previously paid the management group $40,000 per year.
Approval time shortened
While the draft contract called for a 30-day window for the Port to approve of capital projects, Van Patten suggested that be changed to 15 days, and Weber asked that it be shortened to five days.
“We need to move this along,” she said. The farm group must use the state funding by June 30, 2005, or it will be reappropriated by the state. The board approved a five day turnaround, and appointed Weber as the liaison who could make project approvals.
The state funding time crunch also caused concern with a default provision, which said the lease would be terminated if the state grant was terminated “with or without cause” before the farm could use all the money. The state disburses the funds by reimbursing the recipient, not in one lump sum.
In a worst case scenario, the provision could mean the farm group would lose its lease if the improvement projects were not completed by June 2005.
No one wanted that to happen, and Roundy suggested changing the wording to “with or without substantial cause.”
The leasehold tax discussion centered around who should pay the 12.84 percent state tax levied on rent.
Van Patten offered that it would be unfair for the farm board to have to pay the tax until it had signed a lease with a tenant for barn number two, but after that the farm group should pay.
Without knowing what the rent and tax would be, Roundy suggested the wording simply be changed to “lessee shall pay,” with the rest worked out later.
As the contract discussion wound down, Bryson took the opportunity to thank Van Patten for “expending a tremendous amount of effort,” in the negotiations.
Weber acknowledged it has been a difficult time for all, and thanked the farm board for their “goodwill and patience.”
The contract will now go before the farm board for final approval at their March 25 board meeting, after which Van Patten can sign it on behalf of the Port.
