The governing board for the Port of Tacoma on Thursday unanimously approved a settlement with NYK Line and NYK-subsidiary Yusen Terminal Tacoma, Inc., over the cancelled Blair Waterway NYK container terminal.
The board gave approval to port CEO John Wolfe to sign a previously negotiated release and settlement agreement between the three parties. Under the terms of the agreement, the port will pay YTTI $2 million and YTTI will pay the port $7.75 million.
The agreement states that the payments, "are agreed to represent a compromise and settlement of doubtful and disputed claims and shall not be construed as an admission of liability, which is hereby expressly disclaimed, on the part of [the port] or any of the YTTI Parties (YTTI and NYK)."
The settlement grew out of a 2007 agreement that called for the port to develop the east side of the Blair Waterway into a new terminal for NYK, after relocating tenant Totem Ocean Trailer Express and constructing road and rail infrastructure.
In October 2009, after spending more than $190 million on the project, the port and NYK cancelled the terminal development. The reasons for the cancellation of the project – at the time scheduled for completion in 2012 – were cited as unforeseen increases in projected costs and a drop in port revenue. Updated estimates of the project in late 2009 predicted a total bill $400 million higher than the $800 million original estimate for the terminal.
The port has already spent $35 million in design costs for the Blair Waterway NYK terminal, relocation of Totem to another site and infrastructure development. In addition, the port spent $146 million to acquire property and demolish vacant buildings, $6 million on site remediation and permitting, and $3 million in staff costs.
A new deal was signed with NYK in late 2009 that calls for NYK to begin using the port's existing APM Terminal by July, 2012. Maersk previously called at the terminal until the shipping line vacated the facility in May, 2009, to head to the Port of Seattle.
The collapse of the deal also led to the departure of then port executive director Tim Farrell after serving in the top executive role at the port for five years.
The $2 million payout to YTTI in the settlement approved Thursday is to cove the return of an "Excusive Negotiation Fee" to YTTI.
The $7.75 million settlement payout to the port "represented the amount expended by the port," for design work, "that was directly related to the YTTI terminal premises."
According to the port, the settlement will cause no profit and loss statement impact to the port in 2011 because the settlement expense was recognized in the port books for 2010. The settlement will cause the port's on-hand cash to rise by $5.75 million.
Friday, May 27, 2011
