April 28, 2014






Economic downturn affects port budget
by Edward French


   Reflecting the hard winter and the slow arrival of spring, the Eastport Port Authority board adjusted its 2014 financial projections downward, at its April 22 meeting. The year's income is now projected to be $3.385 million, following the board's approval of a first quarter budget adjustment of approximately $100,000.
     The adjustment includes a reduction by 40,000 tons of the 380,000 metric tons of wood pulp that was projected at the start of the year to be shipped by Woodland Pulp through the port in 2014. Although the fire at the Fulghum Fibres chip mill in early March affected the pulp mill's production some, Port Director Chris      Gardner said that mill executives have assured him that shipments through the port "will remain strong" and that there "is nothing to be concerned about." Even with the mill set to add two tissue machines, Gardner said that he is confident that the pulp volume through the port will remain healthy. "Anything that makes the mill more competitive is good for us." He did note, though, that the mill does ship some pulp to domestic markets and also uses the Port of Saint John for container shipments overseas that the Port of Eastport is not equipped to handle. "We will be aggressive to find a solution that brings that pulp back to Eastport," Gardner said.
     Gardner also reported that Thermogen Industries, which plans to construct a wood pellet facility in Eastport, has not made any lease payments to the port authority since the beginning of the year. The port authority's lease agreement with Thermogen calls for monthly payments of $5,000. However, Gardner says that John Hallé, president and CEO of Thermogen's parent company, Cate Street Capital, told him that the company is "still very committed to the Eastport project." However, Cate Street has "a lot on their plate right now," with the IRS having filed liens totalling $2.49 million for nonpayment of corporate income taxes in 2012 by companies owned by Cate Street. The companies also owe $2.3 million in property taxes to Millinocket and at least $1.32 million to vendors. Gardner, though, is confident that Thermogen will make the payments to the port authority at some point.
     Finally, projected cow shipments will be reduced by half in the budget adjustment for the year, but Gardner said he is not concerned about the port authority's financing. He noted that the downturn will mean that "we won't be banking nearly as much as we had hoped." The projected loss in revenue will affect the port authority when it needs to provide funding for rebuilding the breakwater, which it might not be able to do with cash in hand.
Breakwater commitment increased to $2 million
<TEXT>Along with possible decreases in anticipated revenue, the port authority also had to consider a significant increase in possible expenses at the April 22 meeting. The latest estimate on the cost of the breakwater project is $13.1 million, which is up $2.1 million from the anticipated $11 million cost. After discussing the project with Maine Department of Transportation (DOT) Deputy Commissioner Bruce Van Note in executive session, the port authority agreed to increase its potential funding commitment for the project from $1 million to $2 million. The DOT will increase its commitment from $4 million to $5.1 million. Gardner says the port authority and DOT are still hopeful that they can "get the cost down" for the project, which may begin this fall.
Gardner noted that although there has been some consideration for eliminating the partial break wall that would extend from the southern end of the new pier to the southern dolphin, it was agreed that part of the project will be included, as fishermen have expressed concern about protection of boats in the inner basin from wind and swell action if the wall is not built.

Other business
     Noting that people may ask why the port authority is building a new office building when its revenues are trending down, Gardner said that the project should break even, through lease payments from the Eastport Area Chamber of Commerce, the University of Maine Sea Grant program and possibly another agency. That potential commitment has led the port authority to expand the original floor plan of the office. The delay in spring's arrival has caused some delay in the construction of the new building, and Gardner was not sure whether the public bathrooms would be ready before the Fourth of July.
     Gardner noted that the port's new conveyor, which has not yet been used, was finally put into use by being loaned to the Fulghum Fibres mill, following the fire there. "Chips are finally going over one of those conveyors --  just maybe not here," he commented.
     Concerning the potential wood chip deal that would use the new conveyor system at the port, Gardner said that the port authority "is extremely close" to a deal. The reason that biomass products have not yet been shipped through the port is because the recession hit the global market, and "the market has just embarrassed us for a year and a half."
     Concerning the U.S. Coast Guard's proposal to install a fuel system for its boats, Gardner said that Childs Engineering, which is doing the engineering for the breakwater, has put forward an engineering proposal of $28,320. The Coast Guard is now considering the proposal. He stressed that the project has "nothing to do" with the port authority and that the port authority is not trying to compete with any local fuel providers. "The Coast Guard is choosing to do this."
     In other business, the port authority will consider adding more moorings around the island, since they will be needed during the rebuilding of the breakwater. Tim Sheehan of Gulf of Maine Inc. in Pembroke had contacted the port authority about leasing a 60' x 20' space on the breakwater to buy scallops and urchins, but the board agreed to not lease any space now, although it will review the matter of how the pier is used once the new breakwater is finished.


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