Jessica Cejnar Andrews / Tuesday, Aug. 1, 2023 @ 5:26 p.m. / Local Government
Crescent City Harbor Seeks To Spread Out Fashion Blacksmith Payment
Crescent City Harbor commissioners seek to spread out a judgment award of an estimated $1.8 million it owes Fashion Blacksmith. | Jessica C. Andrews
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Pointing out that their current general fund has a balance of just over $609,712, Crescent City Harbor commissioners authorized their legal counsel to negotiate a payment plan with Fashion Blacksmith.
Instead of paying the total judgment at once, the Harbor District seeks to spread those payments out into equal annual installments over a period of 10 years. The total judgment is expected to exceed $1.8 million, according to a resolution the Board of Commissioners unanimously approved Tuesday.
The Harbor District is seeking those installment payments under California Government Code Section 970.6, according to the resolution.
According to Commissioner Brian Stone, both legal counsels would arrive at an agreed-upon specific amount as well as a lower interest rate than the 7 percent per year that was included in the arbitration panel’s final decision on June 5.
On April 20, an arbitration panel issued an interim award of nearly $1.3 million to Fashion Blacksmith. The panel indicated the amount could increase if the Harbor District doesn’t repair the Fashion Blacksmith by September and resume dredging by the end of October.
According to the panel’s final decision, Fashion Blacksmith could withhold rent to the Harbor District starting Nov. 1 “until such time as the respondent completes the dredging.”
On June 5, the arbitration panel also awarded $134,927 in costs and $418,925 in attorneys fees to Fashion Blacksmith and will apply annual interest to the entire award of 7 percent, according to the Harbor District’s resolution.
“The ongoing litigation with Fashion Blacksmith has resulted in substantial time, legal expenses and a significant commitment of District resources to resolve the matter, including, but not limited to, expenses incurred for dredging and repairs to the Fashion Blacksmith building,” the Harbor District’s resolution states. “The current financial status of the district does not provide assurance that it will possess adequate financial resources to fully cover the potential expenses arising from any judgment rendered against the district.”
Fashion Blacksmith, which has been a Crescent City Harbor District tenant for more than 42 years, filed a complaint against its landlord on Feb. 9, 2022. In its complaint, the business accused the Harbor District of breach of contract because it did not maintain a depth of 18 feet below its Synchrolift — a wooden platform that lifts boats onto land for maintenance work.
Fashion Blacksmith also stated that the Harbor District failed to maintain its facility.
In their final decision, arbitrators found that Fashion Blacksmith lost about $3.3 million in revenue because it wasn’t able to use its Synchrolift. Of that revenue, about $1.293 million is an estimate of the profits Fashion Blacksmith lost in 2021, 2022 and 2023.
Fashion Blacksmith owner Ted Long testified that if dredging isn’t completed this year, he would be forced to shut down his business and could lose $3.5 million in future profits.
The dredging was a stipulation included in Fashion Blacksmith’s 1996 amendment to its lease with the Harbor District. Arbitrators found that the Harbor District was contractually bound to maintain a water depth of at least 18 feet under the Synchrolift.
The Crescent City Harbor District has been pursuing a beneficial use permit with the California Water Resources Control Board to free up some 90,000 cubic yards of soil it has been storing in its dredge ponds for nearly a decade.
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