Port of Port Angeles commissioners approve rewritten lease policy

By Arwyn Rice, September 11, 2014, Peninsula Daily News

Port of Port Angeles commissioners Tuesday unanimously approved a policy increasing commissioner oversight of leases and detailing procedures for how property leases are governed.

 

Commissioners also adopted an employee travel expense policy that was the first update of the policy since May 9, 1994.

 

The rewritten lease policy requires all month-to-month leases and “holdover” leases to be reported to the commission annually, along with the reason why a longer-term lease has not been established.

 

It also requires a third-party “qualified independent professional” to establish current market rates and allows staff to negotiate for a variation of 10 percent above or below market rate without commission approval.

 

A “holdover” lease is when a longer-term lease expires and the tenant continues to pay per month without a renewed long-term lease agreement.

 

According to the policy, market conditions must be re-evaluated every five to seven years.

 

Tenant bonds

 

It also requires bonds or proof of security funds from tenants, which can be waived for leases of seven years or longer, or for tenant improvements of the property with commission approval.

 

“This is the big-picture view. It is the commission and the staff holding each other accountable,” said Commissioner Jim Hallett.

 

The new lease policy is the latest step to correct port lease policies after state auditors found that lease-related issues had cost the port $200,000.

 

The audit was triggered by a whisteblower complaint — filed May 16, 2013, by then-director of port business development and current Commissioner Colleen McAleer — that many port leases had not been updated in several years and were well below market rates.

 

In February, state auditors reached a finding — the most serious level of reporting — that the port lacked adequate internal controls over lease contracts.

 

The finding said the port had to write off $200,000 because it did not obtain adequate surety on the former Peninsula Plywood site, according to the audit.

 

In addition, eight leases were not up-to-date, and three did not have current contracts.

 

McAleer made the motion Tuesday to bring the resolution to a commission vote, which was seconded by Commissioner John Calhoun.

 

Travel expenses

 

The updated travel policy defines what expenses are covered, when personal vehicles can be used for travel, how travel is paid for, when it must receive pre-approval by the port commission and limits for meals and other expenses.

 

It details the distribution and use of port credit cards for travel, which can be used only for port expenses, and requires receipts for meals costing more than $25.

 

Commissioners must approve air travel and employee international travel — except for British Columbia — or any trip that will cost more than $5,000.

 

Employee travel outside of Washington state and British Columbia must be approved by the executive director.

 

Reimbursement for alcoholic beverages is prohibited, and purchase of alcoholic beverages must be billed separately at the time of purchase.

 

Expenses for a spouse traveling with the employee are not covered by the port.

 

The policy also requires employees and commissioners to minimize costs to the port by using lower-cost hotels and basic airline travel.

 

Consideration for a premium fare or extra cost “must demonstrate a clear business purpose and must be approved in advance.”

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