An ambitious plan to develop a shipyard at an under-utilized industrial area near Astoria has come into question recently. Several lawsuits claim that a shipyard project at Tongue Point isn’t living up to promises made to partners, the community and the state. Among other claims, the lawsuits say a boat lift intended to help inspect and repair up to 50 boats a year has only lifted two vessels, even as the project has received $21 million in state funding and a 15-year break in local property taxes. KMUN news director Katie Frankowicz joins us to explain.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Dave Miller. An ambitious plan to develop a shipyard at an under-utilized industrial area near Astoria has come into question. Several lawsuits claim that the shipyard project at Tongue Point is not living up to promises made to partners, to the community and to the state.
KMUN news director Katie Frankowicz joins us now with more details. Great to have you on the show.
Katie Frankowicz: Thank you so much for having me.
Miller: So before we get to the lawsuits, let’s start with some context. Can you just describe the area known as Tongue Point?
Frankowicz: If you are someone who lives in Portland and you’re driving Highway 30 to Astoria, you actually reach Tongue Point before you get to Astoria. It’s over there on the east side of Astoria, kind of beyond what visitors probably even think of as the city’s limits. It slopes down to the river, and it then extends out into the river. There are a number of facilities out there. There’s the Tongue Point Job Corps Center. There’s Clatsop Community College’s Industrial and Marine Technology Center.
The focus of my story was North Tongue Point, which is a former naval facility. It has these huge hangars, long piers and really important access to the Columbia River. I would say generally, the North Tongue Point site has been a property that’s had a lot of challenges but has generally been seen as a place with just huge potential.
Miller: What had happened to other shipyards in the area before this tug and barge building company said they were going to create this new shipyard?
Frankowicz: Obviously, we have really big shipyards in places like Seattle, Portland. But then there are these smaller, medium-sized shipyards across the Pacific Northwest, and there had been closures that we were seeing of those kinds of shipyards, and just fewer options for people who need to haul out. If they have bigger boats, you’re going to the places with the bigger shipyards. The local options really just weren’t there for you.
Miller: What kinds of promises did the company make?
Frankowicz: So Hyak saw the North Tongue Point site as really having a lot of potential to be a hub for repair and maintenance on vessels of all sizes, because of the closures elsewhere and also because there were increased federal inspection requirements – those are getting a bit tighter. There’s guys, for their boat insurance, they have to haul out every couple years. So having limited haul out areas, there was this real desire to have something local. Hyak hoped to be able to haul out pretty much any kind of vessel that you would see on the river. Not the super massive ships like the car carriers, but barges, tugs, commercial fishing boats.
One of the key pieces of infrastructure they wanted to bring in was this 1,500-ton travel lift. This is a machine that can lift really big boats out of the water, carry them over to where they’ll be staged for repairs. It’s huge, you can see it from the highway as you come into Astoria. And the vision was that with this lift there, this place could really become an anchor point in the local maritime industry.
Miller: What was it going to mean for vessel owners or operators?
Frankowicz: Options, proximity, a place where, say something happens to your boat nearby, you’re not trying to figure out how you get to Seattle or to Portland. If you’re a fisherman with a fishing vessel, time out of the water is time lost on the fishing grounds. And especially if you’re coming up to a season or you’re in the middle of the season, if you have somewhere that can haul out your big boat and get it back in the water quickly, that’s saving you time and money.
Miller: So this was the pitch, and it seems like there was a lot of community excitement. What kind of state help did this company, Hyak, get?
Frankowicz: Hyak received various grants from the state. There’s one grant that was several hundreds of thousands of dollars. And then they got around $7 million through the Oregon Legislature, and they leveraged that money to land $13.9 million in Connect Oregon funding – a competitive grant program for non-highway transportation projects. Public entities like ports apply for those kinds of funds, as do private entities like Hyak.
Miller: What about local incentives?
Frankowicz: Locally, they got a 15-year tax abatement. And that agreement was technically with one of Hyak’s anchor tenants, WCT Marine & Construction. This is a tenant that is now bringing a lawsuit against Hyak. Basically, they got a 15-year tax break that came with requirements to hire a certain number of employees over a certain period of time, and to pay those employees very well. High wages, good jobs, break on your taxes.
Miller: When did the shipyard actually open?
Frankowicz: So WCT has been repairing boats there. But when we’re talking about the travel, that key infrastructure piece, that went into operation just over a year ago.
Miller: So this brings us to the lawsuits. One was filed, as you mentioned, by WCT Marine & Construction. What is their relationship with Hyak?
Frankowicz: So they are an anchor tenant of that site. If they weren’t there, Hyak would have had to bring somebody in to repair the boats that they wanted to lift out of the water. WCT was actually the company that was going to be operating the lift and bringing in a lot of the day-to-day customers. They were the ones who are also initially going to be creating all the jobs required under that local tax abatement agreement.
Miller: What are they alleging in their lawsuit?
Frankowicz: They’re saying that Hyak has not abided by its contracts and agreements with WCT, the company. They’re saying that there are concerns about the condition of the travel lift that were not addressed, that Hyak has been making their work difficult, kind of talking about them to potential customers, sabotaging work by scrutinizing what they’re doing. This is all in the lawsuit, this is what they allege. They say that Hayek has also established rates for the shipyard that pretty much make it impossible to compete. And that all of this goes counter to the promises about who this boatyard was going to be for. WCT, in its legal filings, is pointing very strongly at the creation of the shipyard using public dollars and claiming that Hyak has not followed through on promises made to the state and to the community.
Miller: So that’s one suit. And there’s another filed by Bergerson Construction. What are they alleging?
Frankowicz: Bergerson was the other key tenant at this site when the shipyard project was being developed. They built a lot of support infrastructure to enable this travel lift to be there and enable this shipyard to potentially be a big deal. They are saying they were not paid a final chunk of money that was owed to them, around $700,000.
Miller: How has Hyak responded to these two suits?
Frankowicz: Hyak has pretty much denied the substance of all the claims. In Bergerson’s case, they claim that the work was incomplete. Bergerson says that Hyak reported the work as complete to the state in order to get a disbursement portion of the grant.
Miller: One of the parts that has been confusing to me about this is what Hyak would get out of the current situation. How are they making any money if they’re not bringing in vessels, lifting them up and working on them?
Frankowicz: And I think that is a really big confounding question to everyone. To back up a bit, Hyak Tongue Point is the entity that owns this property, runs the shipyard. They are just in a constellation of LLCs associated with Hyak, a bigger company that’s owned by Gordon Smith. Hyak Tongue Point was co-owned by this man, Robert Dorn, and he was the one who was really the face of Hyak in Astoria, people really trusted him.
He is no longer with Hyak, apparently in any capacity. And I think, maybe if he was still around – lawsuits aside – I don’t think anybody would have concerns that he was committed to the vision of that shipyard. But he’s no longer involved and you have the lawsuits. And so I don’t think anyone can quite make sense of what Hyak’s goal is now.
Miller: Just to clear up any potential confusion if people heard the name Gordon Smith, the owner of this conglomeration of companies, it’s not the Gordon Smith who is a former Republican U.S. Senator for Oregon, it’s a different one.
This seems like a small and tight-knit community. Does it seem like the various parties in this maritime world can find a way to work together and to move forward?
Frankowicz: I pretty much asked Greg Morrill, the owner of Bergerson Construction, that same question. And for him, it really feels like a bit of an impossibility. Obviously, he’s in the middle of this lawsuit, they also have an arbitration process in the works. But for him and other people I’ve talked to, a lot of trust has been broken in this process.
And I think the confusion around what does Hyak ultimately want from this property, is the shipyard something they still want … they have said they’re still committed to a shipyard there. But there’s just so many questions right now. And again, these anchor tenants who really were bought in on the idea don’t feel a lot of faith in the process, if you look at their lawsuits.
Miller: So in the bigger picture, what does this mean for the maritime community?
Frankowicz: Lack of options, pretty much. One vessel owner I spoke to was really stunned by how much Hyak was going to charge him to lift out his boat for fairly routine maintenance. And he was convinced he could get that same work done elsewhere for much cheaper, even after factoring in fuel costs, the cost of paying his crew to take the boat somewhere else. The next closest place for him was Portland, but when he called to try to get his boat in there, it was full. So now he’s trying to get in up in Seattle. So lack of options in terms of places you can go and what you’re going to be paying.
For a company like WCT, I think it’s a little complicated. They’re not a shoe store where they have an issue with their landlord; they’re just going to find a new retail space. We’re talking about very specific infrastructure, very large spaces, long piers, access to the river. Their options just look completely different if they don’t have Tongue Point.
Miller: Katie, thanks very much.
Frankowicz: Thank you.
Miller: Katie Frankowicz is the news director at KMUN.
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