Posted by: arbeam | February 20, 2015

Discounted lease helped keep SAFE Boats in Bremerton

Safe Boats Defender

BREMERTON — The Port of Bremerton offered a steep rental discount to keep a major Kitsap County employer from leaving town.

Port commissioners are expected to approve a lease extension with SAFE Boats International next week that will lower the base rental rate for the manufacturer’s facilities by 41 percent, or $200,000 annually. Lease documents were released with an agenda for the Feb. 24 commission meeting.

SAFE Boats had considered pulling up roots in Bremerton and consolidating its operations in Tacoma. Port of Bremerton CEO Jim Rothlin said the port had to weigh the need to get a fair return from its property with the desire to keep its flagship tenant and a prominent employer from departing. “You pull that business out, you pull those jobs out, it doesn’t just affect our lease rate, it affects the community as a whole,” Rothlin said. “There are a lot of things you need to look at.”

SAFE Boats employs about 190 workers in the port’s Olympic View Industrial Park, where it manufactures small boats for law enforcement and military agencies. SAFE is building a series of larger boats at its Port of Tacoma property.

The company’s existing lease in Bremerton is set to expire at the end of June. Executives explored the option of combining operations in Tacoma.

In a recent interview, SAFE Boats CEO Dennis Morris said the company’s decision to stay in Kitsap was based on its employees’ desire not to relocate and the willingness of the port to craft a flexible agreement. “We’ve had a great relationship with the Port of Bremerton,” Morris said.

SAFE Boats leases three buildings and a 3.5-acre parcel of land from the port. The new agreement will align all those properties under the same terms.

The agreement includes an initial two-year term beginning in July, with the option for up to four, one-year extensions. Exercising all those options would keep SAFE Boats in Bremerton through mid 2021. The flexible terms are designed to allow SAFE Boats to contract and expand to match demand for vessels, Rothlin said.

Base rents will drop significantly for all the properties SAFE Boats leases. When it last renegotiated its lease in 2012, SAFE Boats agreed to pay a total monthly rent of about $41,000, with set annual increases. Under the new agreement, SAFE will pay a total of $24,000 a month, which will increase to $34,000 if SAFE Boats renews through 2021.

The rent reduction drops the port’s annual revenue from the lease from about $489,000 to $288,000. The change was accounted for in the port’s 2015 budget.

The agreement includes an incentive for SAFE Boats to exercise the optional extensions. If the company terminates the lease early, it will be responsible for the cost of removing alterations to the buildings and restoring them to their original condition. If SAFE Boats renews through 2021, the port would split those costs.

The Port of Bremerton commission will meet at 6 p.m. Tuesday at Bremerton National Airport.

Kitsap Sun article by Tad Sooter




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