Courtney Sherwood, April 4, 2014, Vancouver Business Journal
NW Packing CEO Matt JonesThe leaders of a Clark County food processing company will bring their efforts to negotiate a lower lease rate out into the open on April 8, when they bring their case to the Port of Vancouver Board of Commissioners.
Neil Jones Food Co., which also operates under the name Northwest Packing Co., has been a tenant at the port since the 1970s, and signed its last long-term lease there back in 1987. That agreement allowed the company to pay rent based only on the land it used, and didn’t charge more for buildings or other infrastructure.
By the time the lease was up in 2011, the Port of Vancouver had changed its policies: Tenants were now being asked to pay full market-value rents for the land and structures they used. The port asked Neil Jones Food to pay more.
But the food processing industry had also changed, with most of Neil Jones Food’s competition moving outside of the Portland-Vancouver area and more and more food processing shifting overseas. To stay competitive, company officials argued, they actually needed a rent cut.
“It was the middle of the recession when the lease came up,” said Theresa Wagner, spokeswoman for the port. So rather than leave Neil Jones Food without anywhere to operate, the port agreed to a temporary three-year extension to allow negotiations to continue.
That extension expires later this year, and still both sides don’t see eye-to-eye.
Wagner said the Port of Vancouver’s developed properties are 98 percent occupied.
“We think it’s our responsibility to charge fair-market rates for the property we have in our stewardship,” she said. “We have upward of 50 tenants at the port. It is a fairness issue. We need to be consistent.”
Neil Jones Food officials maintain the port is measuring market-rate rents using the wrong metrics. Rather than look at what industrial renters are paying, the port should look at typical fair-market value rates for food processors, according to Matt Jones, president and CEO of the company.
Instead of paying more, if food processing use was the fair market use the port based their proposed contract on the company would likely pay less. Its current rent is about $150,000 per year, and the company has proposed cutting that down to $100,000.
Meanwhile, the port wants to double his business’ rent, Jones said.
If rent at their current location jumped to twice as much it could force the company to move its plant and nearly 500 jobs out of Southwest Washington in search of a more affordable location.
Jones points out that the port’s last amended plan identified food processing as an industry the port wanted to support – although that planning document is nearly 20 years old at this point.
Over two days last week Neil Jones Food held briefings about the situation for business and community leaders. During those briefings Robert Shaefer, attorney for the company suggested, “It is a policy issue for the Port Commission to address. Their current comprehensive scheme includes food processing as an industry sector they want in their tenant mix at the Port of Vancouver.”
At the April 8 Commission meeting Neil Jones Food is going to ask the commission to affirm that position. “If they affirm it then we think the fair market metrics should be what food processors are paying rather than what they have been proposing,” Shaefer concluded.
After failing to convince Port of Vancouver staff of their argument through two years of negotiations, Neil Jones Food officials hope to have more luck by bringing their concerns to the elected board that oversees the port.
“We remain hopeful,” Jones said. “We employ hundreds of people at this facility. It obviously has a big economic impact on the community. It’s our hope we can come to an agreement.”
“We are having a bit of trouble coming to resolution” on lease negotiations, Wagner said. “But they’re an important tenant. We value them enormously.”
Neil Jones Food’s lease expires at the end of 2014.