Borough settles lawsuit with port tenant

MAT-SU — The borough has agreed to pay $1.1 million to settle a long-running dispute with the main tenant at its fledgling port.

According to a borough statement, the settlement amount was close to what it would have had to pay to continue defending the lawsuit NPI filed in 2007. The borough estimates the suit could have dragged on for four to six years.

In addition to the $1.1 million, NPI will receive $1.375 million in credits to wharfage and docking fees. NPI leases borough property at Port MacKenzie, both on the dock and land atop the bluffs behind it.

The borough statement describes the settlement as a compromise, noting that NPI had asked for $12 million to $20 million in the suit and that in agreeing to settle, the company let go of its “right of first refusal” to lease parcels near its leaseholds at the port.

First refusal meant that the borough had to check with NPI to make sure the company wasn’t interested before leasing to anyone else.

“In the extreme, this could include the dock, which is the prime real estate at the port,” the press release states.

The case had a half-dozen hearings as it spent years in the court system. Essentially, NPI argued that when the borough agreed to lease it the land and the space on the dock, there was an understanding that the company would be able to log nearby. NPI was in the wood chip business — it converted logs into chips to be sold abroad for use making particle-board furniture.

The company had conveyors running from the bluffs above the port to the dock. Those conveyors had sat mostly unused at the port until last month when they were used to load a test shipment of coal onto a freighter bound for Japan.

When the borough imposed a moratorium on logging in 2006, citing complaints from nearby landowners, NPI argued in court the moratorium essentially shut down NPI’s operation.

The borough argued the logging moratorium did not stymie NPI. The borough had 100,000 acres of land available for logging, but the state had 750,000.

NPI could have logged there. The borough said a poor timber market played a role in its decision.

With the settlement, the borough’s statement said local officials are glad to have fixed that first-refusal section of NPI’s lease, “at a time when a coming rail and ferry connection and barge dock expansion will be creating tremendous economic opportunity at the port.”

Contact Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.