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Rent increase squeezes small businesses at Richmond port

on September 10, 2012

Doug Kidder, the owner of a small Richmond boat company, said he wasn’t surprised when the Port of Richmond called him last summer to let him know it was going to increase the rent on his small lot in the Richmond Shipyards. It had been a few years, and Kidder said he was probably paying slightly below market value. But he said he was shocked when the new lease terms arrived — the Port was nearly tripling his rent.

Port Director Jim Matzorkis said that the increase reflects the findings of a City Council-mandated internal audit, and was long overdue. Other businesses are interested in the area, he said, and are ready to pay higher rent. Kidder, however, said he’s baffled by the Port’s demand, and pointed to multiple empty docks and long-vacant buildings in the vicinity.

“The thing I don’t get is that I don’t see anyone lining up for this building,” Kidder said. The adjacent building has been empty for years, he said, and the enormous World War II-era concrete warehouse down the road is also vacant.

He stood next to a plywood table cluttered with molds for boat parts, upstairs in the loft above his main shop. For the 5,000-square-foot property, which includes a corrugated steel building and a small fenced lot, Kidder had been paying $1,700 monthly, or $0.34 per square foot. He said he expected the Port to ask for roughly $2,000 — a fair price, he said, for what he characterized as an old, run-down building.

Instead, the Port asked for $4,500, or $0.90 per square foot.

“‘Are you out of your mind?’” Kidder remembered thinking. He said he protested to Matzorkis, who told him that he had been paying too little.

“They got a sweetheart deal for a long time but it’s just not going to be available any more,” Matzorkis said. The Port’s internal audit found that the properties were worth far more than the Port had been charging. Matzorkis eventually agreed to lower Kidder’s rent to $3,500-a-month, or $0.70 per square foot, which he said is at or below market value for the waterfront property. But Kidder isn’t interested.

The rent increases are also reflective of growing interest in the property, Matzorkis said. Although the Port only has tenants for 50-60 percent of its available property, he said he expects that number to go up in the near future. He said he’s negotiating with multiple businesses interested in leasing land at the Port. Matzorkis said he couldn’t publically name the potential clients.

Kidder said the “waterfront” designation is dubious. Out the dusty window bay water is visible, but it’s behind a chain-link fence topped with rows of barbed wire. “There’s no waterfront here,” he said.

Across the road, Doug Niemeth said he has a similar problem. His tugboat business, Oscar Niemeth Towing, is located on one of the Port’s graving docks, where during World War II thousands of workers stitched together cargo ships for the war effort. Last summer, Niemeth said, Matzorkis contacted him and said that rent would be increasing by more than 500 percent. (Neiman wouldn’t reveal his original rent, although he said it was substantially more than Kidder’s.) The new number was non-negotiable, Niemeth said Matzorkis told him.

Both business owners said they think that the new rent is far above market prices. Matzorkis disagreed. The bottom line, he said, is that the port has to be fair. Its other tenants, most of which are much larger than Maas Boats and Oscar Niemeth Towing, also had to renegotiate their leases. “We’re not in the position to offer space to one customer at one rate and another customer at another rate,” he said. “That’s just not a good way to do business.”

Niemeth and Kidder made their case to Richmond City Councilmember Tom Butt and City Manager Bill Lindsay, but both declined to get involved.

“It’s not my job to micromanage the Port,” Butt said.

The Port’s role is to make money for the city, he said, and that includes charging what rent it thinks is reasonable. “At the end of the day I told [Kidder and Niemeth], look, if you think you can get a better deal somewhere else maybe you’d better go there,” Butt said.

Niemeth stood in the door of his double-wide trailer that hold his offices, and pointed out multiple empty docks and buildings. The Port can do what it wants with its property, he said, but there should be room for small businesses, particularly when there’s empty space. He said he’s not sure whether he and his 12 employees will stay in Richmond.

Kidder, meanwhile, is preparing to pack up shop. He’s looking for a new home for Maas Boats and its half-dozen full and part-time employees, most of whom live in Richmond. The company, which supplies its hand-crafted rowing shells to dealers nationwide, and ships its boats around the world, was barely scraping by before the rent increase.

“The rent increase isn’t going to drive us out of business,” Kidder said, an electric sander whining in the background.  “Because we’re going to move.”

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