(Editors note:   I received the following e mail from  Port Commissioner Paul Telford regarding the future of KGY.   I print it here for your information.  Bear in mind that I do not agree with many of Telford’s points, particularly the part about the port not being able to assist the station.)

The question of the future of the KGY building on the port peninsula is controversial.  The previous port commission and until of late 2/3 of the current commission were operating on the basis that the KGY building has seen its day and would have to go as this area is finally reclaimed from the industrial legacy of the past. 

Commissioner Barner has led the charge to leave KGY where it is.

Port discussions with KGY began  in 2004 in anticipation of their 50 year lease running out at the end of 2009 and the end of the Cascade Pole cleanup in sight.   Finally, and long overdue, the port requested proposals from developers to redevelop the area. Three public open houses were held 10 days ago on the proposal(s) received.   Public input is now being evaluated. 
It became obvious that some of the public have no idea how the port arrived at this point or the considerations surrounding the KGY question. 

Consequently, I prepared the attached document KGY BUILDING FACTS & CONSIDERATIONS.  It is labeled as a draft as I will be happy to accept corrections or omissions.
I believe that the general public expects port commissioners to make long-term decisions based on facts, reason, and reality not emotion and whimsy.

KGY BUILDING FACTS &  CONSIDERATIONS

BACKGROUND

50 year land lease expires 12/31/09   – .539 acres 

Lease extended 5 years- Port may terminate upon Northpoint development.

·        Jan 2010 lease rate – $29,055 annually 

·        Plus antenna tower space – fee of $9,000/yr

Building –KGY owned

·        Built in 1959 – approx. 3000 sq ft.

·        Over water at high tide- On piling. (Inspected 2008, fair/good condition)

·        1950’s era construction- wood. Out of date on Bldg. Codes 

·        Septic system

·        No stormwater facilities for building or parking.

Transmission tower – newly erected 2009 on Cascade Pole boat trailer parking lot

          Tower relocation saves KGY  approx. $124,000 annually in ground lease area rent.  (KGY was never charged for acreage for old antenna “ground array” area.)

 

DECISIONS FACING KGY OWNERS- LONG TERM

·        Cost to hook up to City sewer. (pumping station required)

·        Costs for energy efficiency upgrade.

·        Costs to upgrade parking w/stormwater runoff system- Or lease parking.

·        Life of current piling? Permits to rebuild over water environmentally problematic.

·        Possible environmental pressure to remove creosote pilings regardless?

·        Facade upgrade to complement re-development investments at Northpoint?

·        Land values/lease costs will increase at Northpoint. – Premium property.

·        Sustainability- Viability of current radio business model has been questioned. 

·        Lower cost space is available.   KGY studio may be located anywhere.

·        KGY required to remove all improvements at end of lease.

·        Port prohibited by law from subsidizing KGY

 

PORT IMPACTS  IF KGY BUILDING REMAINS

·        Blocks premium views of redevelopment project(s).  Reduces value.

·        Reduces buildable area available by consuming limited available space. 

·        May make private investment in redevelopment economically unsustainable.

·        Reduces space available for public open space, views, and waterfront access. 

·        If KGY business model fails – Port stuck with buildings and impacts.

 

POSSIBLE CONVERSION TO PUBLIC PIER

·        Provides public amenity- water and scenic overview.

·        Existing piling and framework- permits to convert might be easily obtained

·        Leaving piling and foundation in place removes KGY financial burden to remove everything when lease expires or when piling reaches end of life.

·        When piling eventually removed – no negative effects on the upland investments.

 

ALTERNATIVES

A)    KGY buildings stays – Upgrades required.  Higher land lease costs. Major impact on Northpoint redevelopment.

B)     Relocate studio to: a) lower cost space on State St., b) space on new building at Northpoint, c)space on new building at East Bay, d)space in Boatworks building.

 

 

 

COMPARATIVE ALTERNATIVES -ECONOMICS

 

KGY LONG TERM COST PICTURE – (Port land value reappraisal scheduled in 2010- new land values expected to be around $50/sq ft.  Port required to charge based on current values. Subsidy to KGY illegal.)

 

                                       Land Lease-                    Land Lease-                          Alternative-

                                    Current .539 acres          Future min. – .273 acres        Office Space Lease

A) Land lease cost –             $96850/yr

B) Land lease cost –                                                   $49,000/yr

   Parking –  8 cars                                                          5,200/yr

   Sewer upgrade                                                                 ?

 

C) Relocate- Office space lease-(2000 sq ft.[1])                                                                                     

      New @Northpoint or East Bay                                                                             $48,000

      Capitol & State[2]                                                                                                    $30,000

      Boatworks Building                                                                                              $13,200

 

 

 

 

 

IMPACTS TO PORT IF KGY BUILDING STAYS

 

Loss of 2^nd new building at Northpoint- Impacts

·        Construction cost investment in community.

·        Sales tax on construction costs

·        Leasehold Excise taxes  to City, County, Schools and State.

·        Lost land rents to Port of Olympia 

 

Potential – Loss of economic viability of any investor redevelopment at Northpoint

·        Lost Port land lease revenues –  around $200,000 /yr[3]  

---

[1] KMAS- the AM station in Shelton operates out of 1500 sq ft.

[2] Evergreen Plaza bldg- ~$17.50.sq ft;   State and Capitol building- $15/sq ft ground floor, $7.00 upstairs

[3] Conservative estimate based on 1.4 acres valued at $40/sq ft.  Does not include 1 acre parking inside slurry wall area.