WALLA WALLA -- The Port of Walla Walla plans to sell its 88,000-square-foot Melrose Street building complex to electric cooperative Columbia REA in a roughly $5.3 million deal expected to close in September.
Port of Walla Walla commissioners unanimously approved the sale through a letter of intent this morning.
The sale of the roughly 10-acre property would make way for a burgeoning Columbia REA to expand its Walla Walla and College Place presence in a building that has been vacant for five years, officials said.
The complex -- including an 88,267-square-foot tilt-up building, 10,280-square-foot office building, and 4,060-square-foot Quonset building -- was initially built by the Port in 1988 for Strauser Manufacturing for about $4.1 million. Strauser filed bankruptcy in 1990 and moved out of the building. From 1995 to 2005 the property was leased by Key Technology.
The co-op would likely sell its Rees Avenue service center and relocate much of the equipment it stores in its Dayton location, said Scott Peters, Columbia REA's manager of marketing and member services. He said the operation's headquarters will remain in Dayton, where the co-op got its start in 1939.
"The majority of the cooperative's growth for the last two years has been in the Walla Walla/College Place area," Peters said. "We've been looking for a way to expand our presence and give us the space we need, and this building is going to do that."
Les Teel, chief executive officer of Columbia REA, said in a prepared statement the co-op has outgrown its Walla Walla site and has been fortunate to find a space that meets the company's long-term strategic needs.
Under terms of the letter of intent, Columbia REA will pay a $10,000 cash deposit to the Port. A 60-day due diligence period will allow Columbia REA time to inspect the property and locate any structural, environmental or compliance issues that could impede the purchase. That 60-day period begins today. If all goes smoothly, Columbia REA would pay $5,330,416.70 to the Port.
Only one person from the general public attended the 8 a.m. Port meeting where the letter of intent was approved. Rich Monacelli, a candidate for Port commissioner challenging incumbent Mike Fredrickson, said the facility has been a "white elephant" for the Port for a number of years. Its size has been too big for smaller manufacturers but too small for larger ones. He said the idea of subdividing the property had been discussed. His concern about the Port selling the property was the agency's use of the money, as well as another roughly $4 million the Port has in reserves.
He told commissioners money is fuel for economic development, but only if it's used.
"Cash sitting in the bank is not an economic driver," he said.
"It's not what the public is electing people to do on their behalf," he said.
Port Executive Director Jim Kuntz responded to Monacelli's concern and said the money will likely be used to help fund construction of a new sewer system for the Port's Burbank Business Park.
Monacelli also expressed his concern that Kuntz's signature, rather than the commissioners', is the one on the letter of intent. Kuntz said the document had been reviewed by the Port's attorney, Tom Baffney, and falls in line with the Port's usual protocol.
After the 8 a.m. meeting, which ran roughly a half-hour, Fredrickson, commission president, said the sale of the property helps anchor businesses to the community. The property had been difficult to market, he and Kuntz acknowledged.
Fredrickson said money from the sale would likely be dedicated to development of the sewer system in Burbank, where residents, the school district and businesses are still served by septic. The Port has been working on a possible partnership with the city of Pasco for possible sewer treatment.
Preliminary engineering costs for construction of a sewer transmission line under the Snake River into Pasco is estimated at $2.1 million. The Port would also pay Pasco a one-time connection fee, which has not yet been solidified. Port officials originally offered $750,000 to the city, but plan to increase that proposal later this week. Infrastructure work would also include construction of the system into the business park, officials said. Port officials had previously planned to pay for the project through cash reserves or a combination of borrowed funds.
Fredrickson said the Port was first approached by Columbia REA about the Melrose complex two years ago. The offer at the time was not feasible, he said. Co-op officials re-engaged the Port about two months ago, he said.
For the co-op the larger space represents opportunities to streamline the operation for future growth. Equipment -- from transformers and wire to poles and water heaters -- is all stored in Dayton, which means workers have to drive back and forth to pick up materials for work that is primarily taking place in Walla Walla and College Place. The co-op's Rees Avenue site is too small for storage, even with three trailers behind the building.
Peters said the co-op has no intention of abandoning its headquarters in Dayton. But the operation that employs 51 people -- 18 of whom have been based in Walla Walla -- expects to see more growth in membership and employment in the coming years. He said officials hope to have a start in the facility early next year.
Columbia REA owns and operates 1,200 miles of electric lines through Walla Walla, Columbia and Umatilla counties and serve more than 4,800 member accounts.
Vicki Hillhouse can be reached at firstname.lastname@example.org or 526-8321.