PORT ANGELES — Peninsula Plywood has been given the go-ahead to receive about half of a $500,000 grant needed to keep it afloat after its investors agreed to contribute more from their pocketbooks.
The city of Port Angeles, the grant’s intermediary, expects $212,500 from the state Department of Commerce to come through this week, said City Manager Kent Myers.
To receive that amount, the Port Angeles mill had to raise $230,000 on its own, as recommended by a third-party appraisal. The mill must meet those recommendations in order to receive the grant.
PenPly President Josh Renshaw wrote in a letter to the city Thursday that the mill’s investors will provide those funds.
To receive the rest of the grant, the mill must raise $470,000 over the next two months.
Renshaw, who could not be reached for comment Tuesday, wrote that the mill “is in the process of putting this package together.”
The grant is intended to give the mill, which owes nearly $400,000 to the city and Port of Port Angeles, the influx of cash needed to stay in business by giving it enough funds to buy raw materials and increase production.
Renshaw said Friday that the mill is meeting new orders, including those from Japan, and repeated that on Tuesday in a voice mail message.
One of the reasons the mill sought the grant was to break into that market, which he has said will help the company “stabilize.”
The Port Angeles City Council agreed to apply for the Commerce grant on behalf of the mill June 7, the same day the company temporarily furloughed 50 workers.
The money is expected to allow the mill, which employs about 115 people, to hire between 15 and 20 more people.
The funds come from U.S. Department of Housing and Urban Development’s allocation to the state.
Lee Jones, a spokesman for HUD in Seattle, said using the money to help a mill cover its operating expenses is unusual but still an appropriate use of the funds.
“Under the statue,” he said, referring to the 1974 Housing and Community Development Act, “grants of this sort may be made to address economic development issues, whether it be the creation or retention of jobs.”
Renshaw has told the port he will have a repayment plan for the mill’s owed rent the first week of July, said port Executive Director Jeff Robb.
The mill owes $82,783 in rent after missing its June payment.
PenPly owed the city $315,331 for utilities as of June 7. The city is requiring that the mill use $50,000 from the grant to start paying those bills.
The grant isn’t the first time PenPly has received assistance from state and federal governments.
To help it acquire and reopen the shuttered mill, Commerce loaned the company $1 million from its forest products loan fund, said agency spokeswoman Penny Thomas.
Kenny Spain, Commerce business loan program manager, said any information regarding whether the mill is meeting its loan payments is confidential.
The mill reopened in March 2010. The former owner, Klukwan Inc., closed it in November 2007 after going bankrupt.
The U.S. Department of Agriculture’s rural development program allocated stimulus funds to provide a 90 percent guarantee for two other loans in order to help the mill reopen, said Tuana Jones, the rural development’s state director of business and cooperative programs.
The loans with Sound Community Bank and Enterprise Cascadia total $1.9 million, Jones said.
If the mill defaults on the loans, the federal agency would cover 90 percent of the delinquent payments.
Jones said USDA would be notified if PenPly was 30 days past due on either loan.
She said she wasn’t “free to talk about” the status of the loans since they are with private banks but added that the agency has not had to make any payments on the loan guarantees.
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Reporter Tom Callis can be reached at 360-417-3532 or at tom.callis@peninsuladailynews.com.
