Port of Olympia set to make first investment in Lacey

The Port of Olympia commission voted unanimously Monday to buy three buildings in northeast Lacey as investments.

The properties, known as the Lacey Business Commerce Center, total about 59,000 square feet spread across a 5-acre parcel in Meridian Campus that is home to light-industrial warehouses. The seller is Davis Property & Investment. The sale is expected to close the first week of February, said port Finance Director Jeff Smith.

The buildings are home to a number of existing tenants, including Stottle Winery and Salish Sea Organic Liqueurs.

The port will pay $6.5 million for the buildings and will issue bonds in an amount not to exceed $17.75 million to finance the deal. It will then use the proceeds to refund some remaining port bonds from 2008 — saving the port $200,000 in cash — repay a line of credit and acquire the Lacey property.

“It’s just really important that the port diversifies its investments,” Commissioner Joe Downing said, adding that it’s also important to get Lacey involved because the port already has extensive real estate holdings in Olympia and Tumwater.

Of the port’s four divisions — marine terminal, Swantown Marina, Olympia Regional Airport and real estate — the real estate division is one of the best performing of the four, Commissioner E.J. Zita said, citing a “49 percent contribution margin.”

“Real estate looks good,” she said, “and it’s going to make our real estate even better.”

She said that northeast Lacey is growing, plus the port gets to work with existing buildings.

“We don’t need to log forest, or pave, or create any new impermeable surfaces,” she said. “It’s the right kind of real estate.”

Because the buildings have tenants, it’s revenue generating and it offers “flex space,” which is in high demand in the county, said Mike Reid, senior manager of business development for the port.

Lacey Mayor Andy Ryder and Councilman Michael Steadman attended Monday’s meeting and rolled out the welcome mat.

“Let’s begin this great partnership that I know we can have,” Ryder told the commissioners.

“The people of Lacey invest in the port (by paying a property tax levy) and they deserve your presence,” Steadman said.

But Denis Langhans of Olympia, who frequently attends port meetings and keeps an eye on its finances, said:

“The (port) staff is putting forth a lame argument that, since these are flex-use buildings, they could be used in the future for business development purposes,” he said. “This is a pretty thin argument for a $6.5 million capital expense.”

This story was originally published October 24, 2016 at 11:59 PM with the headline "Port of Olympia set to make first investment in Lacey."