City Council may extend freezer lease

Looks like Pate Stevedore doesn’t want to take any chances on the election. It is pressing to extend its freezer lease with the City. Watch for Jack Nobles and Marty Donovan to push this through. This just makes it harder to get mixed-use at the Port of Pensacola. This should be tabled until the new council is sworn in.

From CC Elebash:

City Council will soon be considering a revision to the Pate Stevedores lease at the Port of Pensacola. City Staff has advised Council of the coming proposal and its major provisions.

The current Pate Stevedore cold storage warehouse lease began in 2004. It is a five-year lease with two five-year extensions. Both parties must agree to the extensions. Extensions would take the lease to 2019.

The proposed amended lease would provide for extensions to 2019 but at the option of the lessee (Pate) only. It would also provide for an extension to 2024 if mutually agreed upon.

The major change is the 2014 option. The existing lease requires both parties to agree to an extension whereas the proposed amendment gives sole option to Pate. This change is justified on the basis that Pate needs 10 years “to amortize the estimated $1.5 to $2.5 million private investment required to complete the project.”

The 2014 option should not be granted as proposed.
* Five years should be adequate to recoup the $1.5 – $2.5 million investment. Anything more than five years indicates a marginal business that may be risky for the City and Pate.

* Any new or amended lease should require an annual independent audit of Pate’s full-time-equivalent (FTE) jobs at the port. This would helpful for both lessor and lessee when they negotiate lease renewals.

* Consideration should also be given to penalties if FTE employment does not meet a specified level.

Unverified job claims should not be the basis for long-term contracts. The economic justification for the frozen chicken business is jobs here at the port. These should be verified. Actually, the real benefit of exports occurs at the point of origination and not at the port. The chicken originates in AL, MS and GA, and our struggling City has no obligation to support out-of-state chicken processing plants.

C. C. Elebash