Port authorizes court action to regain Blue Spirits space as vacancies are prioritized

CASHMERE — The Chelan-Douglas Regional Port Authority has authorized court action to regain possession of space previously leased to Blue Spirits, saying delays in clearing the bankrupt company’s assets are preventing it from renting a building that could generate approximately $15,000 a month.

CEO Jim Kuntz said the bankruptcy trustee and secured lenders had 120 days to remove personal property or assume the lease. That deadline has passed without action, he said, leaving the port unable to rent the premises.

“The Regional Port is concerned the bankruptcy trustee is taking too long in liquidating Blue Spirits assets and returning the premises back to the Regional Port,” Kuntz said in a written response to questions from Ward Media.

Kuntz said the board authorized staff to pursue an unlawful detainer action and would ask the court to grant immediate possession of the building. His response did not specify when the action would be filed.

The dispute illustrates one obstacle facing the port as it works to fill vacant buildings and strengthen recurring rental income. During an Oct. 27 preliminary budget review, Kuntz said staff had identified approximately $1.7 million in potential rental revenue associated with getting available buildings leased.

Improving occupancy will be a major topic at the board’s Nov. 4 retreat, where commissioners will consider capital projects and priorities. Kuntz said some properties still have unresolved tenant issues that limit the port’s ability to make them available.

The effort comes as the port prepares for temporary construction-related revenue to decline. Approximately $1.3 million in administrative revenue from Malaga water-system improvements is anticipated in 2027, but that income will diminish as the projects conclude.

“We’ve got to be cautious in what we’re doing on one-time revenues,” Kuntz told commissioners.

The port receives a 5% administrative fee for managing the Malaga improvements. Construction reimbursements also appear in the budget, but those dollars pay project expenses. For 2027, the waterline project accounts for $26 million in anticipated construction reimbursements and $1.3 million in administrative revenue.

At the Cashmere Mill District, the preliminary budget includes no 2027 rental income from Building A, identified in the budget as Blue Spirits space. Finance Director Monica Lough said tenant issues remained unresolved and staff did not have a strong prospect for the building or a firm timeline for making it available.

Building B revenue is also expected to decline because Blue Spirits paid rent for part of that building in 2026.

Total Mill District operating revenue, including utility reimbursements and miscellaneous income, is projected to fall from approximately $248,000 in the 2026 supplemental budget to $108,000 in the preliminary 2027 budget.

Other properties are expected to generate more income as tenants begin paying rent or move into a full year of payments.

At the Confluence Technology Center, office lease revenue is projected to increase from approximately $986,000 to $1.18 million. Lough attributed much of that growth to the Salcido lease in the building’s lower level, with full rent payments expected to begin Jan. 1.

On Columbia Street, projected rental income from buildings G and I rises from approximately $26,000 to $160,000. Lough said the increase reflects anticipated rent from Yonder Cider once improvements are complete.

At Olds Station Business Park, the preliminary budget includes approximately $557,000 in rent from Rosemount Specialty Products in Building IB 5, where no rental income is listed in the 2026 supplemental budget.

That gain is partly offset by changes elsewhere in the business park. Lough said Frito-Lay’s lease ended Sept. 30 and the company was still moving out. The port does not anticipate rent from Frito-Lay in 2027.

Kuntz cautioned that full occupancy may not be realistic, but said getting more available space leased would receive sustained attention in the coming year. In Cashmere, the first step is regaining possession of the former Blue Spirits premises so the port can offer the space to another tenant.

Andrew Simpson: 509-433-7626 or andrew@ward.media