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Refinance scheme was too optimistic

The Pier One Building in Astoria (Cindy Yingst)
Thursday, April 29, 2021

The Port of Astoria’s loan refinancing arrangement proved just a little too good to be true.

When port commissioners approved a refinance plan for the Pier One Building on April 6, it was estimated the agency would save more than half a million dollars.

On Tuesday, they learned the news wasn’t quite that good.

The proposal from Kitsap Bank was contingent on the building qualifying for tax-exempt status. But because port offices are no longer in the building and much of it is leased to tenants it’s actually a port money-making venture.

It means the new loan’s interest rate will be 2.75 percent instead of what initially was thought to be 1.95 percent.

“The good news is that there’s still substantial savings and benefits to the port,” consultant David Ulbricht told commissioners on Tuesday.

The port’s lawyer who specializes in bonds made the discovery while going through the documents, Ulbricht said. “Due to the nature of the private use of the facility and not having a lot of port use, bond counsel was not in a position to give a tax-exempt opinion. … It’s a tax-code issue.”

The bank went back to its board and revised the offer, which was approved by port commissioners Tuesday.

Terms on the old loan with Lewis & Clark Bank would have required the port to pay $1.65 million on the with a balloon payment of $1.05 million due June 2025. The Kitsap Bank loan is estimated to save the port $35,000 per year.

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