Port lawsuit settlement gives borough leasing freedom

WASILLA -- The Mat-Su Borough Monday agreed to a nearly $2.5 million settlement of a lawsuit brought by one of its early tenants at Port MacKenzie.

While the borough characterized the settlement as a win-win for both sides, one borough official took special notice of the deal when a reporter told him of it on Tuesday.

Mat-Su Borough Assemblyman Ron Arvin was chief operating officer of the port tenant, NPI LLC, when the company sued the borough in 2006. He left the company after winning the District 3 borough seat in December, saying he ran for office in part because of the borough actions that prompted the lawsuit.

NPI had been in the business of chipping wood for shipment to Taiwan and South Korea. The Wasilla company owns a wood-chip conveyer and two long-term leases at Port MacKenzie.

NPI sued the borough claiming the borough breached its contract by putting a cutting moratorium on 100,000 acres of borough timber land after residents living near the land complained about operations there. NPI had paid $3 million for the dock lease in 2003, and the moratorium became a hardship on the company, it argued.

The company had sought $1.7 million in lease credits and demanded $12 million to $20 million in cash for the borough's interference with timber harvests.

The borough responded that it didn't owe NPI anything because the company didn't need the borough timber to survive. It could have looked to 750,000 acres of state timber land, as well as that from private properties.


After three years of legal battles, the borough brought in a mediator last month. Under the agreement, the borough will pay NPI $1.1 million, plus $1.375 million in lease credits for wharfage and dockage fees.

In exchange, NPI lost its right of first refusal to lease nearby borough land. That frees the borough to find other tenants.

"By removing this layer we have obtained an important clarification over how the borough leases land near the port," Acting Borough Manager Elizabeth Gray said Tuesday.

The borough also now can collect fees from NPI beginning in 2013 that are based on gross revenue -- not profits. The settlement also allows the borough to insist that both the dock and uplands lease are assigned the same tenant.

An amendment to the uplands lease also enables the loading of more than woodchips at Port MacKenzie. Gravel, sand, peat, grains and coal are now allowed, as well. NPI must modify the conveyor to prevent coal dust from scattering and it must include a watering system.

"Overall, the settlement allows both parties to move on and look forward to a rail extension and other port business," Borough Attorney Nicholas Spiropoulos said Tuesday. "The lawsuit was kind of a cloud over activities. And being able to tie both leases together allows for some very positive things for investors and whatnot."

Arvin, who recused himself from borough discussions and decisions involving the NPI lawsuit, said he had decided to run for Assembly last year to try to keep the borough from making decisions such as the timber moratorium that hurt residents and outside investors' rights to make a living.

Arvin, who has owned RA Environmental for the past 15 years, said the timber moratorium reduced NPI's employee base from 100 to about two or three today.

"I know a couple of people lost their homes because of it," Arvin said, his voice becoming noticeably louder and his demeanor more agitated. "God bless Walmart and Target and Fred Meyer, but most people can't live on those kinds of wages and need the $80- to $100,000-a-year wages. There was literally only a handful of people who got borough administrators' ears to get that timber moratorium through and look what it did. It cost the borough, it cost the company, and it cost over 100 people their jobs."